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Learn about BNB Chain Staking
To earn a yield on your BNB, you can either lend them out to custodial providers or via a Defi lending protocol, run your own validator or delegate your tokens to validators of your choice.
We recommend using a Ledger Hardware Wallet to keep full control over your funds. To delegate your tokens, you should ensure you have your BNB on your Ledger or Trust wallet and follow the steps below:
Step 1: Download Trust Wallet and ensure that your BNB is stored in this wallet.
Step 2: Open the Finance dashboard and select BNB, click on “More,” and then on “Stake.”
Step 3: Enter the amount of BNB you want to stake, and choose a validator. If you’re not sure who to delegate to, consult our FAQ for guidance on selecting a validator.
Step 4: Click “Send” to confirm the transaction and begin staking.
Once you have delegated your BNB, there are things you need to consider going forward:
- Firstly, delegating from one validator to another can be done without waiting for the unbonding period. You might consider redelegating if your current validator raises their commission rate or gets jailed for misbehaviour on-chain. Once redelegated, you have to wait for 7 days before you are able to redelegate again. It is good practise to check in every now and then to make sure the validator is still performing well.
- Secondly, rewards are not auto-compounded. To maximize the value of your tokens, you may want to claim and stake your rewards more frequently. However, keep in mind that each transaction will incur gas fees, hence, please optimise your strategy for that. By using our BNB staking calculator, you can calculate the optimal re-stake frequency for your amount of BNB.
It is essential for users to stake their PoS tokens with dependable and highly performant validators, which is why we have rolled out our Staking Rewards Verified Staking Provider (VSP) Program in June 2022. Through this program, we thoroughly scrutinize potential validators, evaluating factors such as security measures, their on-chain reliability, their provider setup, and value-added services for the whole ecosystem.
There are many metrics to consider when selecting a validator to delegate to:
Commission Rates: The commission rate a validator charges is the % of your reward that the validator keeps for themselves. A high commission rate means your rewards will be lower whilst a low commission rate could mean that the validator is not profitable and could cause issues for them in the future. Keep in mind that validators can adjust their commission rates up or down over time.
Number of Users: A high number of delegators could indicate positive sentiment towards a validator.
Validators Self-Staked balance: A provider that has a high amount of staked tokens likely has more incentive to continue operating their services as they have more to lose than those with low self-staked balances.
Current Status: You can see whether the validator is currently active or not by checking the validator list shown on this page. Validators that are active have a green ‘Active’ label.
Network Share: You typically don’t want to choose a validator with the highest voting power or a validator with a low network share. Delegating to the most popular validators increases centralisation risks within the network as those validators will have more say in governance and a larger share of the blocks. A validator with a low network share, might not be profitable and hence increases the risk of them discontinuing their services.
Performance: Make sure you pick a validator with the highest possible uptime performance by viewing the validator information on the Validator Dashboard. Our recommendation is to only pick those with a >=99% performance and a long history of not getting slashed.
Value Add to the Ecosystem: Some providers offer extra services to their delegators, such as tax reporting tools, explorers, etc. This can be another great way to filter for validators that are thinking long-term. You can view the value-added services of staking providers by searching for their profile on our website and scroll down towards the bottom of the page.
The Staking Rewards on BNB are generated by:
- Transaction Fees – Each transaction processed by the network comes with transaction fees. Transaction fees are collected by the network and distributed to each delegator proportional to their stake. The Staking APR will vary with network usage.
- Burns (Negative Inflation) – Binance conducts quarterly burns of BNB in order to reduce the supply and increase the value of the token. The burns act as negative inflation which actually increases the staking yield for BNB. The amount of BNB burned each quarter is determined by the trading volume on the Binance exchange. This burn schedule will continue until a total of 100 million BNB (50% of the total supply) has been destroyed. The calculation behind BNB burns can be found here.
Please note that the total annual rewards are divided by all active stakers; hence, as the amount of staked tokens goes up, the reward rate goes down.
Whilst we want to ensure staking is as safe and transparent as possible, there are still things to consider regarding whether a specific staking option is right for you.
Slashing risk: Your BNB cannot be slashed. The only risk for delegators is the loss of potential rewards when their staked validator is jailed and not receiving rewards. Their staked BNB will not be impacted.
Unbonding risk: The unbonding period for BNB is 7 days. Crypto markets are highly volatile, and investors need to be aware that they cannot sell their tokens immediately once they have staked them. They first need to wait 7 days for the tokens to unbond before they become liquid. Please take note of this lockup before you decide to stake. Consider keeping funds liquid if you do not intend to hold BNB long-term.
Protocol security risks: There is an inherent risk that the protocol could contain unknown bugs. This not only applies to staking but your BNB investment in general.
Please note that this is not an exhaustive list of all the risks related to staking.
BNB is an exchange-based token that powers the BNB-Smart-Chain (BSC) network and is issued by the cryptocurrency exchange Binance. It is used to carry out the key functions of the platform as detailed below:
- Governance: Delegators can not individually vote on proposals, running a validator is the only way to have a vote in BNB governance. As such, delegating to a validator is tantamount to delegating your voting power to its governance participation and views.
- Staking: Users can temporarily lock BNB up to contribute to the security of the BNB chain.
- Gas token: BNB is required for transactions and value transfer from one wallet to another on the network. Each transaction processed by the network requires a small fee which gets returned to stakers.
- Exchange Benefits: Get discounts on Binance Exchange if you pay in BNB (25% on spot and margin trading, 10% on futures trading). You also get access to exclusive new token sales on the Binance Launch Pad by holding BNB.
BNB Chain uses a variation of the Proof-of-Staked Authority (PoSA) consensus mechanism. At its core, this consensus algorithm called Parlia is built on a network of 21 validators and delegators, who vote for validators. In a PoSA system, the right to validate transactions and add them to the blockchain is determined by the amount of tokens a node holds and locks up as stake. This is similar to a Proof-of-Stake (PoS) system, but in a PoSA system, multiple validators are selected to produce blocks and validate transactions, rather than just one. This can make the system more efficient and secure, since multiple validators are working together to secure the blockchain.
The total supply of BNB is capped at 200 million. Binance conducts quarterly burns of BNB in order to reduce the supply and increase the value of the token. The amount of BNB burned each quarter is determined by the trading volume on the Binance exchange. This burn schedule will continue until a total of 100 million BNB (50% of the total supply) has been destroyed. The calculation behind BNB burns can be found here.
Initial Distribution Breakdown
0% of the total token distribution is reserved for staking rewards. The staking rewards are purely generated by transaction fees. The Initial token distribution of BNB is as follows:
- 40% is allocated to founders
- 10% is allocated to Investors
- 50% is allocated to the Public sale investors