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How to stake Neo (NEO) in 2023

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Neo is a blockchain network that powers the smart economy, a decentralised secure environment where people can digitise and trade physical assets.

This general-purpose blockchain is like the Ethereum network, but with serious upgrades. The most popular is its 15 second block finality time, a snappy performance compared to Ethereum that could take up to 5 minutes and cost a small fortune. Another upgrade is Neo's smart contract technology. Developers can build smart contracts using popular programming languages like Python, C#, Go, and Java that they are already familiar with. These smart contracts can execute complex financial transactions like loans, insurance, and even forward transactions.

The Neo blockchain also powers services like oracles, decentralised file storage, decentralised name services, and identity management services that originally need more than one blockchain to run. An example of this is Neo’s decentralised file storage system, NeoFS. Neo provides this service natively on its blockchain while other blockchain networks rely on external providers who run their own blockchains. 

Essentially, developers who need storage can access the service on the Neo blockchain instead of seeking an external provider on another blockchain. The result is that developers stay within the same ecosystem when building apps, easing the development process.

This page walks you through the pros and cons of NEO and why you might want to consider staking it.

Neo staking: How to stake in 3 simple steps

Staking on Neo is different from other Proof-of-stake (PoS) blockchains. Typical PoS blockchains lock your tokens to maintain security in return for yields, Neo doesn't. It uses a two-token system where one is for governance and another for transaction fees.

NEO is the governance token for the Neo blockchain while GAS is the transaction currency. Transaction fees and staking rewards get paid in GAS.

This system allows for staking without needing to lock up NEO coins, making NEO an interest-bearing currency.

Centralised exchanges abstract the back-end process and offer locked NEO staking vaults to users looking to profit from Gas rewards. To stake Neo:

1. Buy Neo

You need NEO to earn rewards. You can use any of our recommended exchanges known for their security and reliability. Sign up for an account and deposit money into your account using any of their flexible funding methods like bank transfers or credit cards. After depositing, swap your fiat for NEO on their exchange.

2. Stake NEO

Next, deposit NEO into any of the vaults offered. Most exchanges that support NEO staking have many vaults with varying lockup periods and percentage yields that start from 30 days up to 120 days with 30-day increments. However, you may occasionally see a 15-day or 45-day lock-up. Yields change with time, pool, and exchange, so you may want to first shop around before registering with an exchange

3. Unstake your NEO when you're ready

Different exchanges pay gas rewards in different ways. Some pay once a month, and others wait until the lock-up period elapses to remit the NEO and its Gas rewards. You may restake after the lock-up elapses. A good strategy is to stake for shorter days and then restake the principal and interest for a longer period to gain higher rewards than you’d have made staking for the longer period in the first place.

Where can I stake Neo?

1. On a centralised platform -  If you wish to stake NEO immediately, explore this option on one or more of the centralised exchanges below. When you find one where you can stake NEO that also provides the sort of yield you're looking for, register and stake to start earning Gas rewards on your NEO. Keep in mind any lock-up period and make sure you're happy with the terms before you commit.

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PRO TIP: You can also stake NEO on a Ledger wallet. If you haven't got a Ledger Wallet yet, just hit the orange button below.

2. On a decentralised platform - If you wish to stake NEO for more extended periods than centralised vaults or wish to bypass minimum and maximum quotas imposed by said vaults, stake NEO on a decentralised wallet.

To do this,

  1. Download a compatible decentralised wallet: Unfortunately, many of the well-known wallets like MetaMask are incompatible with the Neo blockchain. You’ll be much better off using the Neon or Neoline wallets.
  2. Purchase NEO: If you already own NEO on a centralised exchange, send it to your decentralised wallet. If not, you can buy some on any one of our recommended exchanges.
  3. Hold Neo in your wallet: Immediately you receive NEO, GAS rewards begin to accrue.
  4. Claim Gas Rewards: You can claim earned GAS at any time on the staking interface.

How to choose a staking platform

The only two choices for NEO staking are centralised exchanges and Neo-compatible wallets. In both cases, security is the first priority. Look out for platforms with battle-hardened smart contracts. They are usually audited by reputable blockchain security auditors.

Another factor to consider, both for centralised exchanges and decentralised wallets, is reputation. Good staking platforms have a reputation for providing reliable services and being responsible with client funds.

For centralised exchanges, ensure that they distribute GAS to NEO holders, otherwise, lock your coins in a vault designed to stake NEO. For decentralised wallets, ensure they are open source and compatible with the Neo blockchain.

Finally, consider the yield offered. Centralised exchanges provide higher returns at the expense of flexibility. The ideal platform balances all three factors in a way that works for you.

Where can I get the highest reward for staking Neo?

From a monetary standpoint, centralised exchanges offer higher yields. But, other factors bear on the matter.

Firstly, yields generated by centralised staking vaults are not perpetual. When the lock period ends, so do the high earnings.

Alternatively, decentralised wallets generate perpetual yield at a significantly lower rate than their centralised counterpart. They also offer flexibility as users retain control over their funds always.

Why should I stake Neo?

GAS rewards constitute earnings that require no effort on your part, essentially creating a passive income stream that is unaffected by downturns and bear seasons.

Also, you can convert GAS rewards to NEO and use it to earn more rewards. This action creates a compounding effect that geometrically increases your investment over time without any additional investment cost, usually measured as the cost of purchasing more NEO.

Note that GAS rewards remain viable so long the Neo blockchain generates enough transaction fees to remit sufficient gains. If this ever changes, the rationale to stake NEO becomes invalid.

How long should I stake NEO?

As long as you want, depending on your chosen platform.

If you use a centralised exchange vault for their superior return, you're allowed to stake for a limited period. Eventually, the lockup period ends, your funds are unlocked and earning stops.

Certain exchanges distribute Gas rewards to NEO holders without the vault lock up. In this case, you can leave their funds on centralised exchanges indefinitely and still earn rewards. However, the yields offered are a bit obscure.

For decentralised wallet users, it's best to have a long-term horizon (at least two years). However, If your primary objective is earning the highest yield, limit yourself to the lockup periods on centralised vaults.

Frequently Asked Questions

How does staking on a centralised exchange differ from a decentralised wallet?

On a smart contract level, the process is the same. Centralised exchanges use vaults to ensure that users do not withdraw their coins abruptly.

Are there other ways to earn yields with NEO?

Yes. Neo rewards holders that participate in governance. Voting in governance proposals earns you more GAS as you actively participate in the future of the network.

How does Neo pay staking rewards without locking tokens?

The Neo blockchain doesn't rely on the traditional proof-of-stake consensus model. It uses a delegated Byzantine fault tolerance (dBFT) consensus model where token holders elect delegates who propose and agree on the blocks to add to the chain.

Can I stake NEO with Ledger?

Yes, the Neo blockchain is compatible with the Ledger Nano S using the Neon wallet. To use Ledger, download the Neon wallet and navigate to the Connect Ledger Icon.