Algorand Staking: How and Where to Stake ALGO and Earn Money

  • January 17, 2023
  • 4 Min Read

With Algorand staking, you’re using your ALGO tokens to help secure the Algorand network. The good news is that all Algo holders earn a small yield just for holding one ALGO token or more in an on-chain wallet. But by participating in governance (voting), you can increase your earnings. Some exchanges also offer staking, allowing you to start earning with your ALGO tokens easily.

Key Takeaways

  • All ALGO holders earn basic participation rewards.
  • Earn additional rewards by registering for governance and voting on important issues for the Algorand ecosystem.
  • You must commit your tokens for 3 months to earn governance rewards.

Editor’s pick for staking Algorand: Uphold

Click to stake Algorand at Uphold.com

Uphold.com APY for Algorand1% APY
Current FeeVaries depending on asset (included in estimated APY)
Lockup Period for Staking ALGO4-day initialization, 3-day unstaking on Uphold

What is Algorand Staking?

Every crypto network uses a consensus mechanism to validate transactions on the network.

  • Consensus Mechanism: Individual computers on the network are called nodes, and to add transactions to the blockchain, these nodes must agree that the transactions are valid. The primary consensus (agreement) mechanisms used by cryptocurrency networks include proof-of-work (PoW) and proof-of-stake (PoS).
  • Proof-of-work: Used by Bitcoin, Monero, and other blockchains, PoW uses complex math problems to validate blocks of transactions added to the chain. The “work” is the energy required to solve cryptographic puzzles, a process called mining. In PoW, the node that solves the puzzle gets to add a block of transactions to the ledger and receives a reward.
  • Proof-of-stake: As an energy-friendly alternative to proof-of-work networks, proof-of-stake (PoS) networks use the network’s native token as part of the consensus mechanism. The “stake” refers to the tokens or coins used as a way to prevent fraudulent transactions from being added to the blockchain.

Algorand takes a novel approach to staking by using pure proof-of-stake (PPoS) to validate transactions on the network. This method differs from proof-of-stake and delegated proof-of-stake (DPoS) protocols used with other well-known crypto blockchains in that ALGO holders don’t need to choose a staking pool or a remote validator.

Instead, all ALGO holders help validate transactions (and earn rewards) simply by holding tokens in a supported wallet such as Pera Wallet or MyAlgo. These basic earnings, called participation rewards, serve as a first earnings tier that rewards all wallets holding at least one ALGO token. However, these basic rewards are low by design, encouraging users to participate in governance to earn more.

Algorand’s governance rewards offer stronger potential yields, bringing earnings as high as 10 to 15%, depending on how much of the network participates in governance. Fewer participants mean higher yields, while increased participation reduces individual yields.

How Much Can I Earn by Staking Algorand (ALGO)?

Staking Adj Reward %Avg Reward %Avg Fee %InflationMarket CapStaked Ratio

Algorand

2.82%6.76%0.00%3.83%$1,853,874,42154.34%

Earnings for Algorand staking vary depending on which method you choose. Basic participation rewards from keeping one ALGO or more in an on-chain wallet like Pera Wallet typically pay just a fraction of a percent annually. By contrast, exchange staking using a centralized exchange like Uphold can pay about 1% APY. On the higher end, you can earn up to 10 or 15% APY for participating in Algorand governance and voting on issues that affect the blockchain.

Online staking calculators may not offer a true measure of yield for ALGO because the yield for each governor depends on the overall participation for each governance period. In other words, yields become smaller as more ALGO tokens get locked when approaching each governance deadline.

Staking Algorand (ALGO) - What to Know

ALGO Staking Minimum 1 ALGO minimum to earn participation rewards
Staking Lockup PeriodNo lockup for participation rewards, 3-month lockup for governance rewards
Staking Options AvailableWallet, exchange, liquid staking (governance only)
Unstaking periodAllow up to 3 days for unstaking if using an exchange.
Governance lockup period3-month lockup
Governance periodsOnce per quarter/four times annually
SlashingAlgorand does not use slashing

One major exchange refers to Algorand staking rewards as inflation rewards. The moniker holds some truth because Algorand doesn’t follow the same staking model as other well-known blockchains. The ALGO rewards system adds to the circulating supply of tokens, which is inflationary.

Other factors also differentiate Algorand from other popular projects: ALGO token holders don’t delegate to a third-party validator, Algorand nodes don’t earn staking rewards, and the network protocol does not utilize slashing — a method of enforcement that discourages validation of fraudulent transactions.

In many other proof-of-stake networks, at stake is synonymous with at risk. But because Algorand does not use slashing, risks for Algorand are largely limited to network security risks present with all blockchains and price and liquidity risks common to all asset markets.

Algorand pays token holders rewards from the remaining balance of 10 billion ALGO tokens mined at launch, encouraging participation and governance of the network. Network participants that don’t commit tokens to governance (and vote) don’t earn governance rewards.

  • What are ALGO Governance Rewards?

    Expand to learn more

    If you hold at least one token of ALGO in an on-chain wallet address, you earn participation rewards simply for keeping a balance. However, Algorand also offers governance rewards which provide a higher yield.

    To earn governance rewards, connect your on-chain wallet to the Algorand Governance Platform and commit a percentage of your ALGO tokens for three months. In addition, you must vote on issues regarding the blockchain during the governance period. You also can’t use or trade your tokens during the lock-up period.

    The voting structure is similar to shareholder votes for corporations. Algorand governance periods occur quarterly each year, giving you four chances annually to earn accelerated rewards.

How to Stake ALGO

Earning potentialSelf custody walletLock-up requiredComplexity
Delegate via a centralized exchangeModerateNoVaries, 3-4 day unstaking periodEasy
Earn participation rewardsLowYesNoEasy
Earn governance rewardsHighestYes3 monthsIntermediate
Liquid staking AlgorandModerate to highYesUntil voting is completeAdvanced
Run your own nodeN/AN/AN/AAdvanced

Algorand offers four ways to earn additional tokens through staking, ranging from easy options like staking through an exchange to more involved options, such as participating in governance or even liquid staking. You also have the option to run your own node, but running a node does not currently provide additional token rewards.

  • Delegating via a centralized exchange: Some exchanges, such as Uphold and Coinbase, allow you to stake Algorand directly through the exchange. With this option, the exchange keeps custody of your tokens. There may also be less clarity regarding how the exchange uses your tokens.
  • Earn participation or governance rewards: Algorand pays a nominal reward, called a participation reward, for holding tokens in an on-chain wallet address. By committing some of your wallet balance to governance for three months and voting as required, you can earn additional tokens, boosting your yield compared to participation rewards. These two strategies allow you to keep control of your ALGO tokens, but the latter (governance) requires a three-month commitment and comes with voting responsibilities.
  • Liquid staking Algorand: With liquid staking, you can earn the higher yields available from governance rewards while reducing the time commitment. After you meet your voting commitment for governance rewards, you may be able to use your tokens for other purposes, such as trading or using your tokens as collateral elsewhere.
  • Run your own node: Any user can set up a participation node to support Algorand’s consensus protocol. However, Algorand does not pay additional rewards for running a node.
  • Staking Via a Centralized Exchange [Easy]

    Expand to learn more

    If you buy ALGO from a centralized exchange, you may be able to stake your tokens directly through the exchange. For example, Uphold offers ALGO staking. After purchasing your tokens on Uphold, you can start earning with just a few clicks and without transferring your tokens off the platform.

    Editor’s Pick: Uphold

    How to Pick a Centralized Exchange

    Not all exchanges offer staking, and those that do won’t support all stakable assets. If you think you’re considering staking ALGO through an exchange, research this aspect first. Transferring your tokens to another exchange that supports staking for ALGO tokens can be a multi-step (and potentially costly) process. Currently, Uphold supports staking for ALGO.

    Also, weigh these other considerations:

    • Fees: High trading fees can take a bite out of earnings, but you should also weigh deposit fees and withdrawal fees, as well as any commissions for staking. For example, some well-known exchanges charge staking fees as high as 25% of rewards.
    • Security: Choose an exchange that puts security first. Remember, the exchange is the custodian for your tokens in this scenario, becoming an attractive target for hackers and scammers.
    • Tax reporting: Both trading and staking cryptos create taxable events. Consider exchanges that make taxes easier by providing easy-to-read tax reports.

    You might also want to weigh factors such as which other cryptos are supported and whether the exchange uses a proprietary wallet.

    Pros And Cons of Staking ALGO Via a Centralized Exchange

    Pros

    • Exchanges make it easy to start earning yield.
    • An exchange can provide a higher yield compared to basic ALGO participation rewards.
    • Manage your tokens in one place with an easy-to-use custodial wallet.
    • Receive simple earnings reports for submitting your taxes.

    Cons

    • The exchange may limit withdrawals or access to your tokens.
    • The exchange may charge a staking fee.
    • Exchanges often use a proprietary wallet that restricts transfers to other wallets.
    • A hack of the exchange (or your account) puts your crypto at risk.

    How to Stake Your Algorand on a Centralized Exchange

    Staking ALGO tokens through Uphold is a straightforward process.

    Step 1: Create an Uphold account

    To get started, first create an Uphold account and complete identity verification if you don’t have an Uphold account.

    Staking Algorand on Uphold

    Once you have an account and have purchased ALGO tokens to get started, choose “More” from the menu on the left. Then select “staking.” This will show a list of staking options on Uphold.

    You’ll also see a disclaimer, shown below. Uphold pays a yield for staking ALGO, but on exchanges, the amount you’re paid may differ from the amount earned with your tokens.

    Staking Algorand on Uphold

    Step 2: Choose Algorand from the staking menu.

    Staking Algorand on Uphold

    Expect a preparation period of 4 days. Also, when unstaking, expect to wait 3 days before your tokens are available for use.

    Staking Algo on Uphold

    Step 3: Acknowledge the special terms for staking.

    Staking ALGO on Uphold
    Staking Algorand on Uphold

    That’s it. You’ve staked your ALGO tokens on Uphold. Currently, Uphold pays rewards for ALGO weekly.

  • Earn ALGO Participation Rewards [Easy]

    Expand to learn more

    The Algorand network pays participation rewards to everyone who holds tokens (1 ALGO minimum) in an on-chain wallet address. For example, you can earn rewards for keeping your ALGO tokens in Pera Wallet, MyAlgo wallet, or Exodus wallet.

    Yields for participation rewards are lower than you’ll typically find on exchanges, but you keep control of your tokens in a self-custody wallet.

    Editor’s Pick: Pera Wallet

    Staking Algorand on Uphold

    How to Choose an ALGO Wallet

    Formerly known as the Algorand Wallet, the now-rebranded Pera Wallet provides a well-supported open-source wallet specifically for storing and managing ALGO tokens.

    Consider your use case when choosing a wallet. Pera Wallet is mobile only, but if you think you’ll need to use your ALGO in browser-based applications, you can also consider MyAlgo Wallet or Exodus Wallet, both of which offer (Chrome) browser integration.

    Pros And Cons of Participation Rewards

    Pros

    • Earn yields from participation automatically.
    • Support the security of the Algorand blockchain.
    • Maintain control of your ALGO tokens to use in web3 apps, as collateral, or in trading.

    Cons

    • Low yield for participation rewards.
    • No recovery method for self-custody wallets.
    • Need to manually reconcile your earnings for tax reporting

    How to Earn Participation Rewards

    You don’t need to take any extra steps to earn ALGO participation rewards, but you will need to transfer your ALGO tokens to a supported wallet, like Pera Wallet. You’ll find Pera Wallet in the App Store (iOS) or Play Store (Android).

    Step 1: Start a new wallet.

    Download the Pera Wallet app and select “create an account” to get started. You can also import an existing Algorand account using a passphrase or connect a Ledger hardware wallet.

    Staking Algorand on Uphold

    Step 2: Create a passphrase backup.

    Your passphrase is a 25-word phrase that allows you to restore your wallet if your phone becomes lost or damaged. Pera Wallet creates the phrase for you. Write this phrase down and keep it safe.

    Staking Algorand on Uphold

    You’ll also be asked to verify certain words from your passphrase.

    Staking Algorand on Uphold

    Step 3: Add ALGO to your wallet.

    You can purchase ALGO through your wallet, but fees may be lower by buying through a centralized exchange. You can transfer tokens you’ve purchased on Coinbase, for example.

    Pera Wallet offers a QR code, or you can use the wallet address to make the transfer.

    Staking Algorand on Uphold

    This is a public key:

    Use this key to transfer tokens from an exchange such as Coinbase:

    Staking Algorand on Uphold

    Look for confirmation that the transaction is completed.

    ALGO Staking on Uphold

    Once you have ALGO tokens in your wallet, you’ll earn participation rewards automatically. You’ll need to keep at least one ALGO token in your wallet to be eligible for rewards.

  • Earn ALGO Governance Rewards [Intermediate]

    Expand to learn more

    Algorand participation rewards don’t pay much, but you can boost your earnings by participating in governance. To be eligible, you just have to register your wallet address, commit a percentage of your tokens (3-month commitment), and vote on blockchain issues as required.

    Pros And Cons of Governance Rewards

    Pros

    • Earn higher yields compared to exchanges or participation rewards.
    • Take part in the direction of the Algorand project.
    • Keep control of your ALGO tokens.

    Cons

    • 3-month lockup
    • No recovery method for self-custody wallets.
    • Balance can’t fall below commitment
    • Not voting makes you ineligible for rewards

    How to Earn Governance Rewards

    To earn governance rewards, you’ll need to connect your wallet to the Algorand Governance Platform, commit a balance, and vote as required.

    Step 1: Connect to the Algorand Governance Platform.

    Visit the Governance Platform. You’ll be invited to connect a wallet.

    Algorand staking

    You can connect your Pera Wallet or another supported wallet.

    Algorand staking

    Scan the QR code with your Pera Wallet app to connect to governance.

    Algorand Staking

    Step 2: Commit ALGO tokens to the vault.

    Select the account.

    Algorand Staking

    Choosing “Max” still leaves a small amount of ALGO tokens in your account. This safeguard is important because if your balance falls below the committed amount, you lose eligibility for rewards.

    Algorand Staking

    Now, you’re eligible for voting and rewards.

    Algorand staking

    Check back for voting sessions. If you don’t vote, you won’t earn governance rewards. You can learn more by reading the Algorand Governor's Guide.

  • Liquid Staking ALGO [Advanced]

    Expand to learn more

    Algorand governance rewards require a lockup period, during which you can’t use your tokens for collateral or trading. Liquid staking offers a solution by offering an equivalent token that you can use instead, bypassing the need to lock up your tokens for three months.

    Current options for liquid staking platforms include AlgoFi Vault, Folks Finance, and GARD.

    Editor’s Pick: AlgoFi

    Pros And Cons of Liquid Staking

    Pros

    • Earn higher rewards without a lengthy token lockup.
    • Use your tokens for trading, borrowing collateral, and more

    Cons

    • Liquid staking adds a third-party protocol, perhaps bringing more risk.
    • Liquid staking tokens may differ in value from ALGO tokens.

    How to Stake Your ALGO With Liquid Staking

    In this example, we’ll use AlgoFi for liquid staking, paired with the Pera Wallet. This example assumes you have already purchased tokens and funded your Pera Wallet.

    Step 1: Visit AlgoFi and connect your wallet.

    Visit the AlgoFi governance page to view the current governance period stats and connect your wallet.

    Algorand Staking

    Select Pera Wallet or whichever wallet you’ve chosen.

    Algorand Staking

    Scan to connect.

    Algorand Staking

    Step 2: Add tokens to the vault.

    Use the slider or type an amount of ALGO tokens to commit to the vault.

    Algorand staking

    Opt-in to AlgoFi’s DeFi protocol.

    Algorand staking

    You’ll also receive prompts on your phone if using Pera Wallet. Agree as needed to proceed. After granting permission in your wallet app, you’ll show a vault balance on AlgoFi.

    Algorand Staking

    Step 3: Choose an amount for governance.

    Use the slider or type an amount you wish to commit to governance.

    Algorand Staking

    Step 4: Vote as needed.

    Liquid staking allows access to your (liquid) tokens without waiting until the end of the governance period. However, you’ll still have to vote. You can generate keys for voting through AlgoFi.

    Algorand Staking
  • Run Your Own Participation Node [Advanced]

    Expand to learn more

    First, it’s important to note that Algorand does not offer rewards for running a node. Instead, the new rewards system provides participation awards and governance awards.

    Algorand’s network comprises both relay nodes and participation nodes. Relay nodes are limited to just 120 nodes listed by the Algorand Foundation. These specialized nodes communicate throughout the network. Non-relay nodes, or participation nodes, can participate in consensus and archive all or part of the blockchain but do not earn rewards.

    Technical users interested in supporting the Algorand network by building an archival participation node can learn more at Algorand’s developer site.

    First, it’s important to note that Algorand does not offer rewards for running a node. Instead, the new rewards system provides participation awards and governance awards.

    Algorand’s network comprises both relay nodes and participation nodes. Relay nodes are limited to just 120 nodes listed by the Algorand Foundation. These specialized nodes communicate throughout the network. Non-relay nodes, or participation nodes, can participate in consensus and archive all or part of the blockchain but do not earn rewards.

    Technical users interested in supporting the Algorand network by building an archival participation node can learn more at Algorand’s developer site.

    What You Need to Run Your Own Network Validator Node

    Algorand’s reasonable hardware requirements for node hardware make running a node accessible to anyone, but the process is best suited to technical users.

    • Computer with 4GB of RAM (8GB recommended)
    • Fast SSD drive (archival nodes may need larger drives)
    • 100 Mbps internet connection (1 Gbps recommended)

    Detailed instructions for installing node software are available on the developer portal. Supported operating systems include Windows, Mac, and DEB or RPM-based Linux systems such as Debian (DEB) or Fedora (RPM).

    Pros And Cons of Running Your Own Algorand Node

    Pros

    • Support network decentralization and consensus.

    Cons

    • Nodes do not earn rewards.
    • Technical for some users.

How to Unstake ALGO

  • Exchange: If staking through an exchange, follow the instructions on that exchange to unstake your ALGO. For example, on Uphold, you would just select your ALGO staking account and unstake from there. Exchanges may require a short unstaking or cool-down period of a few days.
  • On-chain wallets: When using an on-chain wallet to earn participation rewards, you don’t need to take any additional steps. You can trade or lend your tokens at any time. However, if you’ve committed your tokens to governance, you have to wait until the governance period has ended. At this point, you are free to use the formerly locked tokens.
  • Liquid staking: If you’re using a liquid staking option, such as AlgoFi, you can remove your committed tokens after voting. Follow the instructions on the platform you’ve chosen.

To Sum it Up

Designed with speed, scalability, and affordability as primary features, Algorand offers a unique value proposition in the crypto space. Already home to one Central Bank Digital Currency (CBDC), Algorand’s future looks promising.

For those holding ALGO tokens, earning opportunities can return higher yields compared to many other crypto projects for token holders willing to commit tokens and participate in governance. Liquid staking offers additional flexibility.

If you prefer the convenience of staking through a centralized exchange, there are also earning opportunities available.

Frequently Asked Questions

  • What’s the best place to stake Algorand?

    Expand to learn more

    Uphold offers easy ALGO staking with no commission. ALGO holders who want to participate in governance can earn more by committing a percentage of their holdings for three months and voting on blockchain issues during that period.

  • Does Algorand stake automatically?

    Expand to learn more

    On-chain Algorand wallet addresses that hold at least one ALGO token earn participation rewards automatically.

  • How long will Algorand staking last?

    Expand to learn more

    Staking rewards are a part of the pure proof-of-work consensus mechanism used by Algorand and should be part of Algorand’s protocol for the foreseeable future. However, the structure of ALGO rewards may change in the future, as determined by governance and as happened early in 2022.

  • Can I stake Algorand on Coinbase?

    Expand to learn more

    Coinbase now offers staking rewards for Coinbase, which Coinbase calls inflation rewards.

  • What are Algorand wallet staking rewards?

    Expand to learn more

    Wallet-based Algorand staking rewards come in two forms: participation rewards for holding tokens and governance rewards for committing tokens in addition to voting.

Contributors

  • Avatar of Eric Huffman

    Eric Huffman is a staff writer for MilkRoad.com. In addition to crypto and blockchain topics, Eric also writes extensively on insurance and personal finance matters that affect everyday households.

  • Avatar of Shannon Ullman

    Shannon Ullman is a senior editor for MilkRoad.com. Shannon specializes in cryptocurrency and personal finance. Her work has appeared in publications like The Motley Fool and Insider.