Do you have some ADA tokens sitting around? The good news is that now you can use them for passive income!
No necessity for technical or crypto market expertise! Staking allows you to get rewards by simply holding your ADA. In this article, we venture through everything about staking on Cardano explaining how it works, and suggesting the top platforms to help you start!
What is Cardano (ADA) Staking?
Cardano (ADA) is a blockchain platform that is one of the biggest cryptocurrencies by market cap. Cardano uses proof-of-stake protocol to validate transactions and allow users to stake their crypto for rewards.
But what is Cardano staking? Cardano staking is like earning interest on your ADA coins. You lock your tokens up for a period to help secure the network and get extra tokens in return.
How Does Cardano (ADA) Staking Work?
Cardano staking works by delegating your ADA to a stake pool. This pool participates in the network's consensus protocol on your behalf. When the pool performs well, you share in the rewards it earns.
Learn more about staking with our beginner's guide.
What are the ADA stake rewards? ADA staking rate is around 2.98% annually. Rewards are distributed every epoch, which is roughly every five days. Cardano staking APY is around 3% for now, but it can change due to the network conditions, ADA price, and the stake pool you use.
But how to stake ADA exactly? Well, it’s actually rather simple and you can quickly do it on most crypto exchanges. These are the steps of how to stake Cardano:
- Pick A Platform Where to Stake Cardano
- Transfer ADA Tokens
- Select A Staking Pool
- Delegate Your ADA
Where Can You Stake Cardano (ADA)?
While you can’t stake ADA on Cryptomus yet, there are loads of platforms that support it. Consider these platforms for staking Cardano:
- Daedalus around 5% APY
- Yoroi around 5% APY
- Exodus Wallet around 4% APY
The choice of the best Cardano staking platform depends on your priorities. Daedalus is the best place to stake Cardano If you seek a variety of stake pools and top security. In case you would like to stake on mobile, Yoroi will be a great option. And if you plan to stake other tokens, Exodus Wallet supports over 100 crypto, and it has mobile and desktop versions.
As for the stake pools, there are thousands of options to use. To pick the best Cardano stake pool, follow these guidelines:
- Pick a pool that has produced blocks
- Use a pool with less than 60% saturation
- Opt for the pools that have contact details listed and gather some information about it
Naturally, the best way to stake ADA depends on your situation. For beginners, the best way to stake Cardano is to leverage a reputable stake pool through a user-friendly wallet. For more experienced users, you can try smaller, potentially higher-rewarding pools. However, this path requires thorough research due to the increased risk involved.
Pros and Cons of Cardano (ADA) Staking
Staking Cardano can be worth it, especially for long-term ADA holders. However, buying ADA solely for staking might not be the best strategy. Let's talk about the good and bad sides to see if it works for you.
Pros:
- Passive Income: Staking is a no-brainer as you get rewards for simply holding ADA tokens.
- Token Liquidity: Cardano staking allows you to keep your ADA accessible. You maintain control over your investment and can still receive and sell staked ADA.
- Increased Security: Staking strengthens the security of the Cardano network.
- Low Entry Barrier: You don’t need expensive equipment or technical knowledge to get into ADA staking.
- High Yields: Staking ADA offers higher returns than traditional investments.
Cons:
- Market Volatility: The value of ADA can fluctuate, and it may impact your overall returns.
- Network Issues: Like any network, Cardano is susceptible to downtime or attacks. Such actions can affect your rewards and the overall stability of the network.
- Taxes: Depending on your location, you may owe income tax upon receiving ADA rewards and sometimes selling them. So, consider these costs into your overall earnings.
Make sure to read our article about the most effective staking strategies to maximize your returns.
What Is The Safest Way to Stake Cardano (ADA)?
Security, just like in any type of investment, is always on top of the list of things to watch out for. So, how do you stake ADA safely? For the most secure Cardano staking, choose a non-custodial wallet. This puts you in complete control of your funds. But there’s no such thing as being extra safe, so we’ve rounded up some additional security tips:
- Beware of Phishing: Crypto scams are quite common, so never share your private keys with anyone and double-check a website address before connecting to any stake pool.
- Consider a Hardware Wallet: This fact adds an extra layer of protection as you store private keys offline.
- Research Reliable Stake Pools: Don’t settle for a random pool. Opt for those with a transparent track record and avoid oversaturated pools.
- Make Sure To Be Updated: Keep your wallet software updated to get the latest security patches.
To recap, staking is probably the best way to get passive returns on your ADA holdings. By implementing the guidelines given in this article, you can start staking in ADA and generate profits in the short run. Note that staking requires additional research, so don’t rush, and don’t forget about security measures.
Thanks for reading! Share your thoughts in the comments below!
