When the Internet was nascent, many investors wondered if this technology would be profitable. Fast-forward to today's reality, many investors are in a similar position, but this time missing out on the blockchain.
This budding industry has a promising future and holds great earning opportunities. One such is Cardano, among the most popular cryptocurrencies. This article will provide an extensive guide on how to stake ADA.
Namely, you will get an explanation of staking Cardano. Moreover, with a detailed overview, you will find your best wallet for staking. So without further ado, let's dive in and learn how to accrue coins with high-value potential.
What is Cardano Staking?
To understand how to stake Cardano, you must know what staking is. It stems from a consensus mechanism – a process of validating transactions in a blockchain – called Proof-of-Stake. Cardano is a blockchain built with PoS.
Every PoS blockchain relies on validators – network participants that lock a particular stake of native tokens. By staking their tokens, validators keep the network decentralized and secure. In exchange for this commitment, they earn tokens as a reward.
What is Cardano?
Cardano was created in 2017 by Jeremy Wood and Charles Hoskinson. Its native token is called ADA.
As one of the first successfully launched PoS blockchains, Cardano stands out from the crowd of similar projects. The main component of its uniqueness is Ouroboros — proprietary proof-of-stake protocol, which is also the first-ever protocol based on peer-reviewed research.
Input Output, the company behind Cardano, submitted Ouroboro's research papers to various experts for feedback. After receiving academic validation, these scientific papers were published and presented at top-tier cybersecurity and cryptography conferences. Thanks to Ouroboros, Cardano takes pride in being a secure, sustainable, and scalable chain.
How does Cardano (ADA) Delegation Work?
Those who want to know how to stake ADA without running a node need to understand how staking pools, delegation, and delegator choice work.
Staking pools. ADA holders are responsible for staking to entities called staking pool operators. SPOs have enough expertise and efficient hardware equipment to perform such a complex task.
Delegation. ADA token holders join staking pools of other enthusiasts who want to stake. This process of handing over the tokens is called delegation.
Delegator choice. Anyone who wants to stake ADA is free to choose any validator. However, it's essential to make a thought-through decision, as the productivity of your investment depends on the SPO.
How to Stake ADA
Now that you know Cardano and its network structure, it's time to learn how to stake it to receive rewards.
What you Need to Start Staking
To begin staking, you must have a wallet where the tokens are stored. Don't worry if you have no such wallet in mind – we'll guide you through the most popular wallets later in this article.
Once you're ready with your wallet, deposit ADA tokens on it. There are two ways to do that. First, you can purchase them in the wallet app by paying with your bank card or exchange your other currency tokens for ADA if the wallet of your choice has an inbuilt exchange option.
A Step-by-Step Guide to Stake ADA
The process of staking Cardano is simple and can go smoothly, even if it's your first time staking. It takes four steps, which we'll get into below.
Step 1. Choose a wallet
You can stake ADA either through a wallet or via an exchange. Unlike exchanges, the first option is more popular as it gives you full custody over your keys. To demonstrate the steps involved, we use the Yoroi wallet as an example. Below you'll also find a list of other wallets which support ADA staking.
Step 2. Select a staking pool
As mentioned above, to stake ADA, you need to delegate your tokens to a staking pool. It means that the success of your staking depends on how efficiently the validator works. Therefore, go to the "Delegation List" on your Yoroi dashboard and take your time to research the available staking pool options.
Pay attention to such metrics:
- ROA — check the pools interest rate
- Costs — what are the fees are which you would have to pay
- Pool saturation — how much of the pool's capacity is already taken
- Pledge — how much of their assets the pool owners are staking there
- Blocks in epoch — how many blocks the pool minted in one epoch
- Lifetime luck — the ratio of how many blocks the pool produces compared to how many it was supposed to
Step 3. Delegate
Once you've found the SPO that fits your needs, select it and click "Delegate." After you click it, your funds will be staked in the pool.
Step 4. Get rewards
That's it; now you must wait some time to get APY. The Cardano network distributes rewards after each epoch. One epoch is estimated to take five days. However, to receive your rewards, you need to wait for three epochs to pass.
Pros and Cons of ADA Staking
So, staking Cardano is relatively easy. But that's not the only criterion for choosing passive income opportunities. For this reason, below, you'll find a list of advantages and possible drawbacks of staking Cardano to make your choice easier.
Pros of ADA Staking
Great APY. The average yield offered by Cardano staking platforms varies from 4% to 6%.
Easy process. As you saw above, staking Cardano takes only a few steps that any newbie can complete.
Low threshold. Most Cardano staking platforms don't have the minimum tokens required to join a pool.
Cons of ADA Staking
Pool corruption. As it turns out, untrustworthy staking pool owners might take a more significant share of the rewards than they claim to. You can thoroughly research and check other participants' reviews to ensure safety.
ADA volatility. As with any currency, Cardano is exposed to deflation. It's been showing unpredictable changes in price with the recent trend of continuous fall. However, its unpredictability can cause it to move upwards just as much as downwards.
Where to Stake Cardano?
The two main ways of staking Cardano are through wallets and exchanges. However, staking ADA through wallets is more secure as your funds remain in full custody. Below you'll find a detailed overview of wallets where to stake Cardano.
Wallets to Stake ADA
Unlike on cryptocurrency exchanges, staking Cardano with a crypto wallet offers higher security. Thus, your private keys to log into your wallet aren't stored on the third-party server (exchange). Preferably, you get full ownership and confidentiality so that you, and only you, have access to your assets.
Daedalus Wallet
This advanced wallet supports only a desktop version for Linux, Windows, and macOS. You can delegate your ADA tokens or run an independent Cardano node with Daedalus.
Daedalus is highly secure as it uses a seed to generate keys for each transaction. Moreover, it has passwords, backup, and recovery seeds. You can find a detailed guide on staking ADA with Daedalus here.
Eternl Wallet
Eternl is a Cardano light wallet that offers many essential features users require to interact with the Cardano network. It features browser extensions for Chrome, Edge, Brave, and Opera and an iOS and Android mobile app.
Check out detailed instructions on how to stake ADA with Eternl here.
AdaLite Wallet
AdaLite is a web wallet. It also works with major wallets such as Trezor T, Ledger Nano S, Ledger Nano S Plus, and Ledger Nano X.
It's protected with mnemonic seeding and supports multiple hardware wallets, adding to its security. If you're eager to get started, read our step-by-step guide on how to stake ADA with AdaLite.
Yoroi Wallet
Yoroi is the most straightforward Cardano wallet for staking ADA, which is why it would suit a beginner. It comes with a mobile version with an intuitive interface.
It also has a browser version with the full functionality of a mobile one. However, it doesn't support the option of trading or buying tokens with fiat. Read more about how to stake ADA with Yoroi in our related articles:
- How to stake Cardano (ADA) via the Yoroi mobile wallet
- How to stake Cardano (ADA) via the Yoroi browser wallet
Exodus Wallet
Exodus is a Cardano wallet for staking ADA and 225+ other cryptocurrencies. It comes with a mobile version and a browser extension.
With Exodus, you stake your ADA address rather than tokens. This implies that you must wager your entire balance and cannot choose a certain amount to bet in the pool.
Exodus has a minimum amount of 5 ADA for staking. For step-by-step instructions on how to stake ADA with Exodus, take a look at our detailed guides:
