{"id":946009,"date":"2021-07-23T15:04:36","date_gmt":"2021-07-23T05:04:36","guid":{"rendered":"https:\/\/www.finder.com\/ca\/?p=946009"},"modified":"2022-09-09T16:53:34","modified_gmt":"2022-09-09T20:53:34","slug":"how-to-stake-cardano","status":"publish","type":"post","link":"https:\/\/www.finder.com\/ca\/cryptocurrency\/earn\/how-to-stake-cardano","title":{"rendered":"How to stake Cardano (ADA)"},"content":{"rendered":"

Cardano<\/a> was created in 2015 by Ethereum co-creator Charles Hoskinson, an American computer programmer who wanted to create a blockchain that was based on high-level academic principles.<\/p>\n\n

The Cardano blockchain was developed for decentralised application (dApp) deployment. Its proof-of-stake consensus mechanism and internal architecture enable quick processing times and high throughput in comparison to direct competitors, such as Ethereum. It is also the first blockchain to be truly peer-reviewed by a community of scientists and academics.<\/p>\n\n

Cardano's native token is called ADA<\/a>. Although distinguishable, the 2 terms are often used interchangeably. ADA fulfils multiple purposes on the Cardano blockchain, however, its primary use is to validate and secure the blockchain through the proof-of-stake consensus mechanism. It achieves this through the process of staking.<\/p>\n\n

Staking cryptocurrency can be a relatively simple method to grow cryptocurrency holdings over time. However, there are pitfalls that every investor needs to be aware of. In this guide, we'll cover how Cardano staking works, the multiple options available and the risks involved.<\/p>\n\n

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\n Disclaimer:<\/b> This information should not be interpreted as an endorsement of cryptocurrency or any specific\n provider, service or offering. It is not a recommendation to trade.\n <\/div>\n<\/div>\n\n\n\n

What is Cardano (ADA) staking?<\/h3>\n

Staking refers to the process of locking up cryptocurrency coins in an associated proof-of-stake (PoS) blockchain. The PoS mechanism secures and verifies transactions in each block. In return for helping to secure and validate the network, users are rewarded with additional coins.<\/p>\n\n

Cardano implements a form of PoS called delegated proof-of-stake, which builds on the original protocol. Cardano refers to this consensus protocol as Ouroboros. The protocol involves 2 key parties: stake pool operators (SPOs) and delegators.<\/p>\n\n

SPOs are equivalent to nodes on the network that validate transactions and help run the system. The likelihood of SPOs being chosen to validate transactions depends on the amount of ADA staked within their pool. Staking ADA tokens as an SPO can be a complex process. It requires a big commitment, significant technical knowledge and familiarity with the Cardano blockchain. It is therefore a method best left to advanced cryptocurrency users. Luckily, ADA can still be staked through the simpler process of delegation.<\/p>\n\n

Instead of validating transactions, delegators can stake ADA tokens within a chosen SPO staking pool. By delegating ADA tokens, it boosts the likelihood of the chosen SPO being selected to validate transactions. If a node is chosen, rewards are then distributed between the SPO and the supporting delegators. Delegator staking can be completed directly through a cryptocurrency wallet or indirectly through a cryptocurrency exchange. Rewards are given out to Cardano stakers every 5 days. This period is called an \"epoch\" in Cardano staking jargon.<\/p>\n\n

Alongside staking ADA within the Cardano blockchain, ADA can also be lent through decentralised finance (DeFi)<\/a> and centralised finance (CeFi) service providers. While not technically classified as staking, loaning out ADA to other traders through a lending and borrowing service can offer higher annual percentage rewards, with the trade-off being that it poses a higher risk and more complexity than staking through a wallet or exchange.<\/p>\n\n

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How to stake Cardano (ADA)<\/h3>\n

As mentioned previously, there are 3 main methods of staking Cardano. These include staking through a wallet or exchange and lending through a DeFi or CeFi platform. The easiest method for beginners is to stake Cardano directly through a cryptocurrency wallet.<\/p>\n\n

To get started with staking ADA tokens, the first thing users will need is to hold ADA tokens within a cryptocurrency wallet. Investors can use popular multi-currency digital wallets, like Exodus, or incentivise a hardware wallet, like Ledger, to add an extra layer of security.<\/p>\n

Staking Cardano (ADA) on-chain using a wallet<\/h3>\n

For the process of staking ADA tokens, Cardano has 2 specific software (online) wallets it suggests using. The first is Daedalus, a desktop wallet for Windows, macOS and Linux, created by the Cardano development arm IOHK. The second is Yoroi, a more simplistic browser-extension wallet that can run on Google Chrome, Microsoft Edge and Firefox. Yoroi can also be used on Android and iOS devices.<\/p>\n\n

Daedalus is a full node wallet, which is intended for those wishing to create a node and become a staking pool operator in the network. The wallet downloads a copy of the entire Cardano blockchain, which is then updated through validation. The wallet is aimed at advanced users and will not be the focus here.<\/p>\n\n

Yoroi is a lightweight staking wallet designed for beginners. It is intended for those that wish to stake ADA tokens as a delegator.<\/p>\n\n

Note. There are lots of fake cryptocurrency wallets so it's worth going directly to the Daedalus<\/a> or Yoroi<\/a> website to download these wallets to ensure you're getting the correct one.<\/p>\n

How to stake Cardano (ADA) through Yoroi:<\/h4>\n
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  1. To stake ADA as a delegator using Yoroi, download the Yoroi browser extension and accept the terms of use.<\/li>\n\n
  2. You'll get 2 set-up options: Simple or Advanced. If you're a beginner, pick the Simple option. You can create Payment URLs to make it easier to pay people.<\/li>\n\n
  3. Now you're ready to start staking. Connect a hardware wallet that contains ADA tokens or buy some ADA from a cryptocurrency exchange like Binance, Coinbase, Huobi or Kraken. Transfer the ADA tokens into the Yoroi wallet.<\/li>\n\n
  4. The next step is to delegate your ADA to a staking pool. Each staking pool charges delegators fees for the process of node operation. These fees will vary between staking pools, so it is worth browsing options. Pools can alter fees at any time without warning, which is important to be aware of before you start. Investors often choose to divide up their ADA holdings by staking in different pools to spread the risk.<\/li>\n<\/ol>\n\n

    Once you have delegated ADA to a staking pool you will begin accruing rewards. When first depositing coins, a user will need to wait 20 days to be approved by the Cardano network. This authentication delay prevents spammers from overloading the network.<\/p>\n\n

    After this 20-day wait, stakers will begin earning rewards every 5 days. A user's first ADA staking reward will come 25 days after beginning to stake. The next reward will come after 30 days, and so forth.<\/p>\n\n

    Note: There is a network fee that stakers must pay when they claim rewards. Currently, this is between 0.1 and 0.2 ADA but it can change quite frequently. Many stakers wait to claim their rewards all at once so their gains are not eaten up by fees.<\/p>\n

    Staking Cardano (ADA) through an exchange<\/h3>\n

    As cryptocurrency exchanges have grown in popularity, they have begun to offer extra features outside of simply buying and selling cryptocurrencies. One of these features includes offering users the opportunity to stake cryptocurrency tokens directly through the exchange.<\/p>\n\n

    In the case of Cardano, the exchange acts as the staking pool operator and takes care of all technical aspects of staking ADA within the network. ADA rewards are then accrued within the exchange.<\/p>\n\n

    While Cardano is available to buy and sell on most major exchanges, not all support Cardano staking. The 4 major exchanges that currently support the option include Binance, Bittrex, KuCoin and Kraken<\/a>.<\/p>\n\n\n\n

    In comparison to staking through a cryptocurrency wallet, users are not able to choose and distribute ADA tokens across multiple staking pools.<\/p>\n

    Video: How to Stake on NDAX<\/h3>\n
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