As a writer for StakingRewards.com, I feel that it is important to create the most informative tutorials which show cryptocurrency investors, like you, the process of staking, what to expect upon/during/after staking, the passive income potential and any other important information regarding the process. The information herein is not financial advice, these tutorials are created to equip you with enough information, so you can decide if it makes sense to add staking to your cryptocurrency portfolio.

      Introduction

      Staking has become the status-quo among many cryptocurrency projects in the digital asset industry. The reason being, blockchains using Proof of Stake (PoS) as the consensus mechanism come with newsworthy benefits over blockchains that rely on Proof of Work (PoW) consensus. Speaking of newsworthy, the Ethereum Foundation Blog, recently explained that upon shifting Ethereum from PoW to PoS, the power consumption will be reduced by an estimated 2,000X!!! Ethereum’s power consumption will no longer be “…on the scale of countries, provinces, or even cities, but that of a small town…”(1).

      When staking is in the news, it’s just another reason why we are dedicated to providing you with staking info! Reminder – By bookmarking this tutorial you can easily get back here when it’s time to modify your stake.

      Table Of Contents

      Binance Coin (BNB) is a cryptocurrency that allows its hodlers to earn passive income through staking. This tutorial will cover the following:

      • What is BNB?
        • The Binance Ecosystem
          • BNB Chain/Binance Chain
          • Validators/Delegators
          • Reward calculation example
      • Prerequisites for staking
      • How to stake BNB
        • Alternative Staking Strategy
          • Managing Account Health
        • Alternative Strategy – Process
        • Staking Binance Coin – Process
          • Check Your Stake
        • Unstaking Process
        • Redelegate Proces
        • Swap to Binance Chain
      • Conclusion

      What Is Binance Coin (BNB)?

      Binance Coin started as an ERC-20 token on the Ethereum blockchain in 2017. Binance has since migrated away from Ethereum and onto the Binance Chain and BNB Chain as BEP2 and BEP20 tokens.

      Traders using the Binance Exchange or Binance Exchange for US can use BNB for trading fees and receive a discount on those fees. BNB is also used for gas fees on both chains.

      The Binance Ecosystem

      The Binance Ecosystem consists of networks, exchanges and protocols. The 2 networks are the BNB Chain (BNB) and Binance Chain. Exchanges include Binance’s centralized exchange (CEX) found on their website, the Binance DEX found on the Binance Chain Network and DEXes running on the BNB Chain Network that use smart contracts to facilitate trading. Protocols, or dApps that simplify the process of transacting on a blockchain also run on the BNB Chain Network. BNB Chain is very similar to the Ethereum blockchain, is equipped with smart contract functionality and BNB Chain is compatible with the Ethereum Virtual Machine (EVM).

      In order to utilize everything Binance has to offer within their ecosystem, users need to migrate assets to the ecosystem. Users who are not located within the U.S. can skip some of the headache and use the Binance Bridge to migrate many coins/tokens from their native blockchain networks to tokenized versions which use the BEP token standards on the Binance Chain and BNB Chain networks. The bridge currently supports the conversion to and from the Ethereum, Tron, BNB Chain and Binance Chain networks.

      BNB Chain & Binance Chain

      These are two separate blockchains/networks which increase the utility of the Binance Coin. Utilizing these chains can be very confusing, so let’s go over some basics. Binance Chain addresses (or public keys) start with “bnb” and assets on the network use the BEP2 token standard. The BNB Chain (BNB) addresses will look identical to Ethereum addresses and start with the prefix “0x”. Assets on BNB Chain’s network use the BEP20 token standard. Remembering the difference between the two networks can help you send funds to and from these networks without error. Take your time and double check when sending assets to/from exchanges and if in doubt, send a small amount to test first.

      BNB Chain uses Proof of Staked Authority (PoSA) which is a combination of the Proof of Authority (PoA) and Delegated Proof of Stake (DPoS) consensus mechanisms used to secure the blockchain. BNB Chain also adds the functionality of smart contracts to the Binance ecosystem. This allows dApps like Pancake Swap, 1inch and Venus to function as well as BEP20 tokens to be used on the BNB Chain. BEP20 tokens are very similar to Ethereum’s ERC20 tokens.

      Binance Chain is essentially a decentralized exchange (DEX) platform. The DEX consists of many assets which are pegged to underlying assets. This means that when using the DEX to trade, the assets you are trading are tokenized versions of the asset which can only be used within Binance’s ecosystem. Migrating assets from the Binance ecosystem takes a few steps when trading on the DEX. To begin migration, this generally requires users to trade these tokens into BNB. Then sending BNB to Binance Exchange to trade into the asset of choice. And finally, withdrawing the asset from Binance Exchange using the correct network. Some examples include: 

      • ETH and ERC20 tokens use the Ethereum blockchain/network
      • USDT is a token which resides on multiple blockchains/networks including the BNB Chain as BEP20 tokens, Binance Chain as BEP2 tokens, the Ethereum blockchain and Polygon Network(MATIC) as ERC20 tokens

      So when sending assets to/from the Binance Ecosystem, you must make sure the address format is correct, the token standard is correct AND the correct blockchain/network is used during the withdrawal/deposit processes.

      Validators & Delegators

      A validator is a technically savvy individual or a team who creates a node on the Binance Chain network. A node is a server or computer system which has the required specs to process transactions and secure the network. Validators are also required to self-delegate 10,000+ BNB (worth $4,875,300 USD at the time of writing). This couldn’t possibly be “decentralized” needing so much capital and needing the technical skills to start a node. 

      To make the network more decentralized, everyday BNB hodlers can help choose the validator(s) on the network and be rewarded for helping secure the network. The process of staking BNB involves delegating BNB to a validator or multiple validators on the Binance Chain. The minimum a delegator can stake is 1 BNB. This helps secure the network by making it more costly to attack since only the top 21 validators, ranked by BNB staked, process transactions and sign blocks to secure the network. When choosing a validator to delegate to, be aware of how much BNB is staked with the validator. Staking with a validator who is ranked 21st by BNB staked will create more decentralization, but is risky because if that validator falls to 22nd, the validator and their delegates will no longer earn rewards.

      Binance Chain validators, like on many other blockchains such as Polygon Network, receive a commission from their delegators. Validator specific commission info can be found by going to the BNB Chain Staking Page. Commission is calculated by taking the sum of all delegated BNB minus the BNB self-staked by the validator and then multiplied by the commission percentage. Validators receive 100% of their self-staked rewards, which is different from calculating staking rewards on other blockchains, such as The Graph (GRT).

      An example for calculating rewards:

            DATA FOR CALCULATION
      Validator commission3%
      Validator self-staked amount15,000 BNB
      Amount we delegated1,000 BNB*
      Amount others delegated4,000 BNB*
      Total Stake with validator20,000 BNB
      Block reward10 BNB
      # of blocks signed500
      Total rewards5,000 BNB
      Validator self-staked %75%

      5,000 BNB x 75% = 3,750 BNB  in validator self-staked rewards

      5,000 BNB – 3,750 BNB = 1,250 BNB gross rewards for delegators

      1,250 BNB x 3% = 37.5 BNB for validator commission

      1,250 BNB – 37.5 BNB = 1,212.5 BNB net rewards for delegators

      (1,000 BNB / 5,000 BNB*) x 1,212.5 BNB = 242.5 BNB is our reward

      *- 5,000 BNB is the amount of BNB that was delegated to the validator. Derived from adding 1,000 BNB of what we delegated and 4,000 BNB that others delegated.

      Prerequisites for Staking

      Same as with any blockchain where you can stake, you first need to obtain the blockchain’s native currency, which is Binance Coin (BNB) for this tutorial. BNB can be found at the following exchanges:

      • Binance.com/Binance.US/Binance Chain’s DEX
      • FTX
      • KuCoin
      • Gate.io
      • Bithumb 

      To ease the staking process, I would highly recommend using the Binance Ecosystem to obtain the BNB you’d like to stake. Using Binance exchange will allow you to easily send the BNB to the Binance ecosystem.

      When I first staked BNB, I had some extra USD Coin (USDC) on Coinbase Pro. So, I sent the USDC to Binance.US exchange. Traded USDC for BNB on the Binance.US exchange. Then withdrew BNB to one of my BEP2 addresses that was accessible using the Trust Wallet mobile app.

      There are a few wallet apps you can use for staking BNB. I have found that Trust Wallet seems to be the easiest to use. This is why we will be using the Trust Wallet mobile app for this tutorial. Trust Wallet is available for download on Android and iOS).

      In order to stake Binance Coin (BNB) you must have at least 1 BNB and the coins must be on the Binance Chain. If you remember from earlier, it is the BEP2 token standard and addresses start with “bnb”. The Trust Wallet mobile app utilizes multi-coin wallets which means coins and tokens can be sent to/from the wallet app on different blockchains. Some coins have different names within the app to distinguish between blockchains/networks. Binance Coin on the BNB Chain is labeled as “Smart Chain (BNB)” and Binance Coin on the Binance Chain is simply “BNB (BNB)”.

      The wallet app has a built-in bridge between the two blockchains. To access the bridge go to the ‘Wallet’ tab and tap the asset. Tap ‘More’, then the bottom option will say ‘Swap to <name of chain>’. If the wallet app does not display ‘More’ or ‘Swap to…’, then the asset is not supported on both chains. Binance Coin within the app will have the ‘Swap to…’ option, allowing users to move their BNB to the Binance Chain which can then be staked. For more information on the bridge, scroll down to “Swap to Binance Chain”.

      All transactions on each blockchain will incur gas fees. The gas fees on both blockchains, BNB Chain and Binance Chain, will be paid out in BNB and be taken from your BNB balance. If you plan to utilize both blockchains, you will need some extra BNB on BOTH chains. I would try to keep a balance of at least 0.1 BNB on each blockchain to provide some cushion for transactions.

      How to Stake BNB

      Now that we have Binance Coin (BNB) on the Binance Chain, we can start the staking process. Let’s get started!

      This tutorial includes an alternate strategy you can try which is designed to take some of the risk out of staking. It does add a risk, that if not managed properly, can cause your portfolio to incur a loss through liquidation of deposited funds. The good thing about the alternate staking strategy is that BNB can lose 99% of its value and if using this strategy, you will not have incurred any loss, but more than likely, have added to your portfolio balance!

      If you simply want to stake for x amount of time or do not have the extra time needed to keep a close eye on your account’s loan-to-value ratio, then skip ahead to the section titled “Stake BNB”

      Alternative Staking Strategy

      Through research and trial and error, I have found a strategy to stake BNB without the biggest risk investors face when staking cryptocurrencies, the price of the coin decreasing. It works well with BNB since the current network fees are quite low (usually less than $2 per transaction). This strategy requires more transactions, which means it may not be a good investment decision on other more expensive blockchains, such as Ethereum.

      The strategy involves using a DeFi protocol, which we will be using Venus for this tutorial. A short summary of the process is as follows:

      Deposit a stablecoin (either BUSD, USDT or USDC) using the Venus DeFi app. The stablecoin will need to be on the BNB Chain in order to deposit. Once deposited, it can be used as collateral, currently up to 80% of the deposited stablecoin amount. Use the collateral to borrow BNB. Swap the borrowed BNB from BNB Chain to Binance Chain. Then stake the BNB.

      Using this strategy will allow you to earn on your initially deposited funds with a very nice, variable APY. The borrowed BNB will be accumulating at an APR which will increase the amount of BNB within your borrowed balance. Staking the BNB should earn a higher yield than the APR needed to repay the loan. Also, both deposits and borrows, will be earning a variable APY paid out in the Venus token (XVS) giving you more diversification to your portfolio.

      I currently use this strategy on about half of the BNB that I have currently staked. So far, this has reduced my risk to BNB price volatility. You may choose to use this strategy because you would like less risk of BNB losing value, you don’t mind frequently checking the health of your Venus account and you like the idea of there being very little chance that this strategy will lose value so long as you keep your account healthy.

      Managing Account Health

      What does a healthy account look like? Well, using Venus is like using a bank. Banks allow you to deposit money and take out loans, or borrow money. The difference is, Venus only allows you to borrow up to the amount that you have deposited multiplied by the collateral factor of the asset.

      Say that you deposit $10,000 worth of USDC. Currently Venus allows you to use 80% of USDC deposits as collateral for borrowing, or $8,000. Now, you choose to borrow $4,000 worth of BNB. This means that you are borrowing 50% of the total amount in which you could borrow. It also means that BNB would have to double in price in order to put your account at risk of becoming liquidated. Luckily, you have multiple options you can choose so that your account remains healthy.

      What are your options if BNB increases in price and puts your account in danger of liquidation? You could deposit any asset that Venus allows to be used as collateral, which would increase your borrowing power. You could use the rewards you have earned from staking to repay some of the loan. Or you could unstake some or all of the BNB you have staked to repay the loan. Each option gives you the freedom to keep your account healthy while either adding to or removing from the total value of assets within your account.

      From the other perspective, BNB is losing value. Using the example above, what if BNB loses 50% of its value? You would now be borrowing <25% of the total amount you are able to borrow. Let’s say your yield from staking is much greater than your borrow APR. Why not increase your position? Now you have the option to borrow more BNB, to increase the amount of BNB in which you are earning a greater return. No matter what you choose to do, so long as your staked BNB earns more than the borrowed APR, you have not suffered any loss when it comes to your BNB and USDC balances.

      Alternative Strategy Process

      Now that you have Trust Wallet installed on your mobile device and the stablecoin of your choice in the wallet and on BNB Chain, we are ready to begin. On your mobile device, open the Trust Wallet app. Near the bottom of the screen, tap the ‘DApps’ tab. Scroll down until you see the section titled ‘DeFi’. Locate ‘Venus’ within the list and tap to open the app.

      Trust Wallet BNB

      When the Venus dApp opens, you will be on the ‘Dashboard’. You will want to scroll down until you see ‘All Markets’. Since we will be depositing a stablecoin, tap ‘Supply Market’ and then select the stablecoin of your choice.

      You should see the name of the selected stablecoin at the top of the screen. Make sure the ‘Supply’ tab is selected. If this is the first time you have supplied (deposited) the asset, you will need to tap ‘Enable’ which is approving the asset for use on the Venus Protocol.

      Now you will be able to enter the amount of the stablecoin you would like to supply. To supply 100% of your address’s balance, tap ‘MAX’. Be sure to take a look at the ‘Borrow Limit’ and verify that your borrow limit is increasing in value.

      Scroll down and tap the ‘Supply’ button. 

      Trust wallet will display a transaction summary, if all looks good, tap the ‘Approve’ button.

      Now that we have deposited a stablecoin, we need to enable the value of our deposit to be used as collateral (to borrow against). From the Venus dashboard, scroll down until you see ‘All Markets’. The list of coins has a column titled ‘Collateral’. Find the stablecoin you have deposited. Tap the radio button to enable the asset as collateral.

      Now that you have deposited funds and chose to collateralize them, go back to the Venus dashboard. Scroll down until you see ‘All Markets’ and tap the ‘Borrow Market’ tab. Find BNB within the list of coins and tap to display the borrowing information.

      Enter the amount of BNB you would like to borrow, or tap ‘Safe Max’ to see 40% of what can possibly be borrowed. Notice the ‘Borrow Balance’ should increase in value. Also, make sure that the ‘Borrow Limit Used’ percentage is acceptable for your risk. The higher the percentage the more risk you have and more frequently you’ll need to check your balances. Scroll down and tap  the ‘Borrow’ button once you have reviewed everything.

      The Trust Wallet app displays the transaction summary. Verify everything is correct and tap the ‘Approve’ button.

      Go back to the Venus dashboard. If you have done everything correctly, you should see a yellow box showing your available credit and borrow limit.

      Staking Binance Coin – Process

      Open the Trust Wallet mobile app and go to the ‘Wallet’ section where you see your total wallet balance and a list of coins and tokens.

      You should have a BNB balance, of more than 1 BNB, within your wallet. If not, get some BNB from one of the exchanges listed above or use the Trust Wallet app’s ‘DEX’ feature to trade another compatible asset into BNB. If you have BNB scroll down and tap on ‘BNB’ to see more details on your BNB balance. Below is a screenshot showing the details:

      NOTE: If you don’t have BNB, but think that you should, it may be on the BNB Chain and needs to be transferred to the Binance Chain. Scroll down to the section titled “Swap to Binance Chain” within this tutorial for help getting your tokens on the correct blockchain.

      Looking at the above screenshot, verify that the top of the screen says “BNB (BNB)”. Once verified, tap ‘More’ to bring up a list of menu items. Next, tap ‘STAKE’ to bring up the ‘Stake BNB’ screen.

      On the ‘Stake BNB’ screen, below where it says ‘VALIDATOR’, you will see a validator’s name, symbol and the current APR in which will be paid out when staking with the validator. Tap the validator’s name, highlighted in the screenshot below, to bring up a list of validators.

      Screenshot: ‘Stake BNB’

      The validator list, below, shows you the validator’s name, symbol and current APR they are offering. Scroll through the list of validators and select the one that you would like to delegate BNB by tapping the validator. After you make your selection, you will be shown the ‘Stake BNB’ screen, shown above. Tap ‘MAX’ or enter another amount which represents the number of BNB you would like to stake. Once entered, tap ‘CONTINUE’.

      Now you should see the ‘Stake’ screen, shown below. The ‘Stake’ screen allows you to verify all the information regarding your stake. If the information is correct, tap the ‘CONFIRM’ button to send the transaction to the blockchain. Congratulations!! This is the final step in staking BNB.

      Check Your Stake

      Now that you have staked BNB and it is recorded on the blockchain, you may want to see the details of your stake. In order to do this open the Trust Wallet app and go to the ‘Wallet’ section where it lists your token balances. Tap on ‘BNB’ to bring up the following screen. You’ll notice that there is a new section on this screen, encircled in green in the screenshot below. You can tap anywhere within the section highlighted to view your stake.

      This screen shows you information regarding your stake, available wallet balance, the minimum amount of BNB required to stake, current APR on your stake and the lock time. This screen also has options that you will need to use to modify your staking position including stake, unstake and redelegate. It is important that you know how to get to this screen so that you will be able to make changes to your stake.

      Screenshot: Modifying Your Stake

      Unstaking Process

      Ok, so you have used this tutorial for staking your BNB, now it’s been 5 years and you’ve earned (hopefully) hundreds of thousands of dollars! Great job! So now, you would like to go ahead and get back your initial investment that is currently staked. You’ve come to the right place, let’s begin.

      First, you will need to open the Trust Wallet app and navigate to the “Modifying Your Stake” screen, as shown in the screenshot above. To do this go to the ‘Wallet’ tab within the app, then tap ‘BNB’. Next, you’ll tap where the app is displaying your staked amount and your available balance amount. You should be at the screen where you can modify your stake, as shown below. You’ll want to tap ‘Unstake’ to begin.

      You should be at the ‘Unstake BNB’ screen. From this screen you can enter in a value or tap ‘MAX’ which will be the amount of BNB that you are unstaking. If you have diversified your stake into multiple validators, you can select which validator you would like to unstake from as well. Once you are happy with your selections, tap ‘CONTINUE’.

      NOTE: Please take notice, that currently, unstaked funds will take approximately 7 days before appearing within your wallet after confirming the transaction on the next step.

      On the ‘Unstake’ screen you will see all the details of the transaction should you choose to unstake. If everything looks correct and you want to unstake, then tap the ‘CONFIRM’ button.

      That’s all there is to unstaking your BNB. Go to the BNB (BNB) token details in order to view how long is left in the unstake process. To do this, open Trust Wallet and go to the Wallet tab. Within the token list, select BNB. Looking at the screenshot below, the time remaining in the unstake process will be shown in the highlighted area.

      Redelegate Process

      If you have a position within your portfolio of staked BNB, then you may be a long-time holder. As time goes on the greater the chances you may want to choose to redelegate your BNB. Some reasons for choosing to redelegate include if the validator you have staked with becomes inactive or is rewarding delegators with a lower APR than other validators. Let’s begin the redelegate process.

      NOTE: It may take 7 days for your stake to be moved to the new validator and may not earn any rewards while the process takes place.

      You will want to navigate to the screen within the Trust Wallet app where you are able to modify your stake, as shown in the screenshot below. Tap ‘Redelegate’ to start the process.

      BNB redelegate

      The ‘Redelegate BNB’ screen allows you to select the ‘From Validator’ (current validator), the ‘To Validator’ (the validator you wish to move stake to). Once you have made those selections, tap ‘MAX’ or enter a BNB amount which represents the amount of BNB you would like to redelegate. Double check your selections and BNB amount, then tap ‘CONTINUE’.

      BNB redelegate

      On the ‘Redelegate’ screen you will see all the details of the transaction should you choose to redelegate. If everything looks correct and you want to redelegate, tap the ‘CONFIRM’ button.

      BNB redelegate

      Swap to Binance Chain

      This section is very important and details the process of moving BNB, and other tokens, from the BNB Chain to the Binance Chain. You can follow the steps to move from the Binance Chain to the BNB Chain as well. With BNB having so much utility, it creates a more difficult ecosystem to navigate, this tutorial is meant to simplify it for you.

      To begin, open the Trust Wallet app and make sure you are within the ‘Wallet’ tab showing your total balance and the coin/token list. Scroll down and select the asset in which you need to transfer to the Binance Chain. In this scenario, we will be transferring BNB. In the Trust Wallet app, BNB residing on the BNB Chain is called “Smart Chain (BNB)”. Once the asset is selected, you’ll see a screen similar to the screenshot below. Go ahead and tap ‘More’ as highlighted.

      BNB Swap

      A menu should pop-up from the bottom of the screen. You will want to select ‘SWAP TO BINANCE CHAIN’. (If you are moving assets to the BNB Chain, then you would select ‘SWAP TO BNB CHAIN’.)

      You should now see the “Swap” screen. This is where you will input the amount of the asset you wish to transfer. You can either enter an amount or select one of the percentages below. Once you decide on the amount, tap ‘SWAP’.

      Now you will be shown the transaction detail screen. Review and make sure that everything looks correct, then tap ‘CONFIRM’.

      A pop-up may appear once you confirm the transaction. Just tap ‘OK’ to continue. A swap usually takes just about a minute of time, however, I have had a swap take around 10 minutes. So, be patient and keep checking your wallet balances, or if you get notifications through the Trust Wallet app, you’ll be notified once the swap has taken place.

      Conclusion

      Staking BNB can be very profitable for long-time hodlers given that the APY earned is quite high. I’ve been within the DeFi space since its conception and have been staking cryptocurrencies since 2017 and found that it was pretty simple to stake BNB. Binance has built itself a very reputable status in the cryptocurrency industry in several key areas. Long-term, Binance is here to stay. If BNB is not in your portfolio, it is worth researching the project and their BNB tokenomics. The return you can currently get on staking BNB and the extent of the Binance ecosystem really deserves some attention from investors who have not yet built a BNB position.

      Hope that you have enjoyed this tutorial and upon the knowledge you have gained increases the value of your portfolio. Keep up with StakingRewards.com for the best tutorials and articles on staking and earning passive income in the cryptocurrency industry!

      REFERENCES:

      1. Quote from the post, A country’s worth of power, no more! On the Ethereum Foundation Blog. https://blog.ethereum.org/2021/05/18/country-power-no-more/

      About The Author

      Craig Miller

      started his investment in cryptocurrencies through mining in 2017. In 2018 he began extensive research and analysis of a multitude of digital assets and their 'real world' use cases. Craig is an active community member on the Compound, 1Inch and MATIC forums. He is author of the Digital Fiat Currency (DXFC) whitepaper published on July 4th, 2020.