How to Stake Filecoin in 2023

Filecoin is an open-source cloud storage marketplace with a key focus on public data such as historical archives or scientific research materials.

Powered by blockchain, Filecoin is designed for storing data in a decentralized form with cryptographic proofs serving to guarantee data immutability and security. With its help, users can earn passive income by renting out their unused storage to other network participants.

Another way of making profits with this blockchain platform is Filecoin staking. How does this process work? What are the most profitable options for users to stake FIL?

In this guide, we are going to cover these questions and provide a detailed guide for Filecoin staking.

Top Filecoin Staking Platforms

	Name	Score	Visit	Disclaimer
	1Binance	9.1	Visitbinance.com
	2Kucoin	7.8	Visitkucoin.com
	3OKX	7.7	Visitokx.com

What is Filecoin Staking?

Applied to digital assets that rely on the Proof of Stake (PoS) consensus mechanism, staking refers to the method of securing the network. In order to do that, one has to deposit a native asset of the given blockchain into a smart contract and lock it for a predefined period of time.

Things are a bit different with Filecoin staking, though.

While creating a decentralized storage network where anyone can lend storage for a crypto reward, Filecoin also introduces a unique method of securing this network. The method comprises two consensus mechanisms, Proof of Replication (PoRep) and Proof of Spacetime (PoSt).

The PoRep consensus enables the network to replicate data to a unique location. The PoSt, in turn, verifies that storage providers truly store this data for a selected period of time and that this data remains available and secure.

Thus, there is no way to directly stake FIL tokens since the Filecoin network simply has a different type of architecture. Yet, there are many third-party solutions that serve as intermediaries and enable Filecoin staking via their services.

How Does Filecoin Staking Work?

Briefly speaking, there are two key ways to earn passive income with Filecoin: via Filecoin storage mining and via depositing FIL in various earning products such as crypto savings accounts.

Below, we are going to give more details on both of these methods.

Storage Mining

Filecoin doesn’t support staking in the traditional sense. The project introduces Filecoin mining, but it doesn’t work in the same way as Bitcoin mining does either.

To get a better understanding, let’s first review how the platform works itself.

You may think of Filecoin as an AirBnb equivalent of digital storage. If you have some unused space on your laptop or a mobile device, you can rent it to someone else on the Filceoin platform and get paid in FIL coins for that.

In a nutshell, the process looks as follows.

1. Clients who need storage place their orders on the storage marketplace.

2. They specify the amount of storage they need and the price they are ready to pay.

3. Once storage miners agree on these proposals, users transfer hashed data to them.

4. Storage miners place this data on their disks and provide data owners with the private keys to their files.

5. To ensure the security of files, storage providers deposit FIL coins. They lose this deposit if they cannot confirm the data storage.

6. Also, for higher security, there are usually several storage providers who keep clients’ files.

7. Users can retrieve their files on a Retrievable Market for free upon agreement with receiving miners.

Such an approach makes it possible to earn a passive income within the system in a number of different ways.

Filecoin Earning Products

Centralized exchanges offer a number of general investment products where users can deposit or “stake” Filecoin. Some of these products include the following:

• Binance Earn

• Kucoin Earn

• OKX Simple Earn

Each of these products implies purchasing Filecoin on the exchange and entrusting them to this exchange for the sake of attractive returns. Exchanges typically generate these returns by lending out the tokens you deposit and charging interest to borrowers. You may be able to choose a flexible savings account or a fixed-term investment product that requires locking up your FIL for a specified period of time.

If you prefer solo mining, you may become a storage provider at Filecoin and earn rewards for providing your storage to the network. We are going to give more detail about each of these methods later in this article.

Filecoin Staking - Useful Words to Know

• Proof of Work (PoW) - This is a popular consensus mechanism used in many cryptocurrencies like Bitcoin for validating transactions. Network participants, also known as miners, solve complex computational problems and add new blocks.

• Proof of Replication (PoRep) - This is an alternative consensus mechanism that Filecoin uses to secure its network. This procedure helps to validate that a Storage Provider has truly created and stored a unique piece of data.

• Proof of Spacetime (PoSt) - This procedure helps to validate that a Storage Provider continues to store the unique piece of data during the preset period of time.

• Storage Provider (SP) - This is a participant of the Filecoin network who opts to lend out excess storage space for other users to rent in a decentralized manner.

• Storage Market - This is the data entry point in the Filecoin network where SPs publish their storage deals on-chain and negotiate the conditions with their customers.

• Retrieval Market - The term refers to the process where SPs negotiate with their customers the conditions of data retrieval. In contrast to the Storage Market, negotiations on the Retrieval Market occur primarily off-chain.

How to Stake Filecoin

It is possible to stake Filecoin in a few different ways. Each of these methods requires a different level of skill and size of initial funds one has to invest.

In this section, we are going to give a brief overview of each of these methods to give you an idea of where to start.

Staking Filecoin on a centralized exchange - Easy

Staking Filecoin on a centralized exchange (CEX) is so far the easiest way of putting your digital assets to work.

CEXes operate in a way similar to traditional banks and financial institutions. This imposes a counterparty risk as these exchanges may be hacked or go bankrupt. But still, they come with a number of benefits that may be particularly useful for crypto novices.

Joining a Filecoin staking pool - Intermediate

Filecoin staking in a pool is devoid of the counterparty risks inherent to centralized platforms since users can stake their coins in a non-custodial way. Yet, joining a staking pool is more complicated as it requires specific skills and knowledge.

First, staking Filecoin in a pool requires setting up your own wallet. It may be a popular browser wallet like Metamask or a hardware wallet such as Ledger.

Second, managing your funds in a non-custodial wallet implies various security measures since you are the only one responsible for the safety of your funds. While this is not a serious stop factor for tech-savvy users, it may still become an obstacle for those who prefer convenience over self-custody.

Becoming a storage provider at Filecoin - Hard

One more way to make money with Filecoin is to become a storage provider. You can become an integral part of the Filecoin system by registering as an SP and by providing your storage capacity to this decentralized storage network.

Yet, this method is the most complicated. It requires technical skills and at least some basic experience running your own business.

Filecoin staking options compared

Where to stake Filecoin

Below, we have listed our pick of the best Filecoin staking services and platforms to help you select the right option.

1. Binance Filecoin Staking - Best Overall

Binance is the world’s largest cryptocurrency trading platform by the size of the daily trading volume.

Not only does it support a few hundred digital assets. Also, it offers a huge variety of trading tools and indicators trying to fit the requirements of the most sophisticated traders and investors. Besides, the platform follows high-security standards with its thorough compliance checks and multi-factor authentication features.

What makes it a good fit for beginners is an easy onboarding process. With its peer-to-peer trading tool, you can buy some of the most popular cryptocurrencies like BTC or USDT from other cryptocurrency users located in your region. What’s more, you can pay with fiat through a bank transfer, card deposit, or via any of the 100+ available options.

With Binance, Filecoin staking comes as a part of Simple Earn products. At the time of writing, the platform offers more than 300 coins for staking in this section.

How to stake Filecoin on Binance

If you don’t have an account, you will have to sign up to Binance first and submit all the documents that the platform requires for verification.

After that, you can transfer your FIL to your wallet. If you don’t have any, you may purchase some with the Buy Crypto tab, or trade another currency such as BTC or USDT for FIL in the Binance Spot exchange.

Go to the Staking Page

Log in to Binance using your personal credentials. Select the “Earn” option in the top menu and click on the “Simple Earn” option from the drop-down menu.

Select the coin for staking

Type “FIL” in the search field. Check the current APR and select how long you want to stake the coin. Click on the “Subscribe” button on the right.

Specify the amount and other details

In the pop-up window, type the amount of FIL you want to stake. Check once again the duration.

If you want to, you can also select the “Auto-subscribe” feature that automatically extends the staking period once the time you’ve chosen runs out.

Finalize the transaction by clicking on the “Stake” button.

2. KuCoin Filecoin Staking - Best for Choice of Cryptocurrencies

KuCoin is another centralized cryptocurrency exchange offering Filecoin staking among its earning products.

The platform offers a large variety of trading tools that can meet the requirements of users with any level of experience. To simplify the onboarding process for newbies, it also offers a P2P trading tool that makes it possible to buy crypto from other users. However, the number of payment options is much smaller than on Binance.

Registered in the Seychelles, Kucoin does not have a license to operate in the US. Users can create accounts on the platform and even access some of its features. However, if the local regulators decide to ban the exchange for some reason, the risks of losing your funds may become really high.

Filecoin staking comes as a part of the Kucoin Earn product where users can select from a few dozen cryptocurrencies.

How to stake Filecoin on Kucoin

Before getting involved in Filecoin staking on Kucoin, you will need to sign up and transfer FIL from another wallet to your account on the exchange. Alternatively, you may deposit fiat currency via any of the supported methods, exchange it for USDT and then buy FIL with its help.

Go to the Earn Page

Log in to Kucoin with your credentials. Select the “Earn” option in the top menu and click on the “Kucoin Earn” option from the drop-down menu.

Select the coin for staking

Scroll down the page to find Filecoin or type the name of the coin in the search field. Click on the “Subscribe” button on the right.

Enter an amount and confirm

Check all the details of the deal carefully, confirm that you have read and agreed to the conditions, enter the amount for staking, and click “Subscribe”.

Monitor your earnings

After a successful subscription, you may check your staking history. For that, click on the Financial Account - Staking. You may find the profit from your savings at the “Savings” tab.

3. OKX Filecoin Staking - Best for Beginners

OKX represents a centralized exchange with a plethora of trading tools. In addition to basic spot trading, it also offers built-in trading bots, derivatives, a copy-trading feature, and many more tools aiming to facilitate the process for traders.

For regulatory and compliance reasons, the platform is not available in the US. VPN and other IT hacks could be used to bypass this restriction, though.

As for its staking products, OKX doesn’t charge any commission fees which makes it a good option for making passive income via Filecoin staking.

How to stake Filecoin on OKX

Before you get involved in Filecoin staking on OKX, sign up and make sure that you have some FIL coins in your account. You may transfer them from another address or buy them for USDT or any other asset supported by the platform.

Go to the Earn Page

Click on “Grow - Simple Earn” in the top menu. Type “FIL” in the search field or scroll down the list of supported assets to find the coin you need.

Choose an Earn Product

Click on the small arrow on the right. Select the best option considering the estimated APY and the duration of staking. Click on the “Subscribe” button on the right.

Specify the amount and other details

Select the corresponding terms for Filecoin staking, fill in the amount you want to put at stake, and click “Subscribe”.

Confirm the transaction

Read the Staking user agreement and tick “I have read and agree to Staking user agreement”. Click “Continue”. In the next step, the website will notify you that the transaction has been successful.

Filecoin Staking Platforms Compared

How much can you make staking Filecoin?

The size of rewards that you may gain while staking Filecoin changes over time. The key aspect that the reward depends on is the number of validators who contribute their assets to the network at every given moment in time.

Thus, the rewards were pretty large upon the launch of Filecoin staking in March 2023. Some platforms offered 30% APY and even higher. However, as the overall interest declined over time, the rewards decreased as well.

At the time of writing, the annual percentage rate that one can expect to earn ranges from 1% to 9.8% on the amount of FIL at stake.

Is there a downside to staking Filecoin?

While staking presents an enticing opportunity for passive income, it's crucial to consider the associated risks before you move on.

• Slashing - If a validator fails to maintain the network security or misbehaves in some other way, there’s a risk of the staked assets being slashed, i.e. confiscated. However, this risk isn’t applicable to users who subscribe to FIL earning products like those provided by the CEXes above.

• Lack of access to staked tokens - As long as you keep tokens locked in a staking contract, you won’t be able to sell them or use them in any other DeFi products.

• Counterparty risk - By staking your assets on a third-party platform, you risk losing them due to the platform’s failure. Thoroughly assess the reliability of a platform you choose to reduce these risks.

• Market volatility - The value of the staked assets may drop during the staking period. If your funds are locked for a set period, you won’t be able to cash them out in time to avoid losses.

• Regulatory risks - If you stake assets on a centralized platform, you may lose your funds if the regulatory landscape changes in the region where this platform is officially registered and the platform gets blocked by authorities.

Should I stake Filecoin?

Before investing in this or other assets, you should always do your own research first and thoroughly assess many different factors. Here are some considerations to help inform your decision:

• Risk vs reward - Evaluate the risks of Filecoin staking listed above and the potential rewards that you may earn. Think of how these factors come in line with your own risk tolerance and overall financial conditions.

• Skill level - Be honest with yourself when assessing your level of proficiency in staking. Think twice before engaging with complex DeFi platforms or deploying your own storage. If you are a novice, consider staking your assets through a centralized exchange.

• Investment goals - Your decision to stake Filecoin may be triggered by your future plans for this particular asset. If you intend to hold FIL as a long-term investment, getting additional rewards may come in quite handy. Alternatively, if you are an active trader or have a need for immediate liquidity, Filecoin staking may not be the right fit.

• Tax implications - Keep in mind that receiving liquid tokens through liquid staking constitutes a taxable event. Thoroughly study how crypto earnings are regulated in your region and make sure to submit tax declarations in an appropriate form.

• Long-term value of Filecoin - As the statistics show, even successful crypto projects rarely survive longer than one year. Filecoin has been around much longer and has managed to achieve significant milestones in its development. Yet, there is no guarantee that the project will evolve at the same pace in the future. Consider how these circumstances may influence the future price of FIL tokens.

Final Thoughts

Summing up, Filecoin staking is a nice opportunity to get additional returns while simply holding FIL tokens.

Becoming a storage provider requires advanced technical skills and is not suitable for the majority of regular users. Staking Filecoin on centralized exchanges or in staking pools is a different story.

Although rewards may not be as lucrative, this method still represents an easy way of making passive income. Filecoin staking on Binance represents the most user-friendly option with the highest rewards.

	Name	Score	Visit	Disclaimer
	Binance	9.1	Visitbinance.com

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