Are you looking for a way to earn passive income on your ADA (Cardano) tokens? In return for validating transactions on the Cardano blockchain, you have a chance to earn up to 5% APY on your ADA. In this article, we take a look at some of the best methods and platforms for staking ADA.
Quick Overview For Staking ADA (Cardano)
Follow these steps carefully to start staking ADA tokens:
Step 1 - Get A Crypto Wallet
In case you don’t have a crypto wallet that supports this digital asset, it is time for you to download it. You can store your private keys in your crypto wallet. Private keys allow you to access your digital assets on the blockchain (not inside your crypto wallet). Some of the best wallets for staking Cardano include:
You can connect the Ledger Wallet to both Yoroi and Daedalus if you want to stake Cardano (ADA). You can also link the Trezor Wallet to Yoroi.
These are some of the best wallet options you can find that are also available in the US. Pick the one you want based on your preferences but keep in mind that Yoroi and Daedalus are non-custodial while Coinbase is a custodial wallet. Non-custodial wallets allow you to control your own crypto keys.
Step 2 - Buy ADA Using Your Wallet Or An Exchange
Depending on your locations as well as the type of wallet you have, you can either purchase ADA coins directly through the wallet or through an exchange. As of now, ADA tokens can be bought directly on Coinbase and Yoroi.
The minimum amount for purchase varies between platforms. In order to stake ADA on Daedalus, for instance, you need to purchase the tokens on an exchange. Most of the popular exchanges support ADA (Cardano), including:
Once you have purchased ADA, send it to your crypto wallet, following your wallet’s best practices. Most importantly, send your crypto only to an address that is dedicated to that crypto.
Step 3 - Find A Good Staking Pool For ADA (Cardano)
Staking pools are groups of people who are charged with staking on a blockchain network. One of the best ways to get started with staking cryptocurrencies is to join a pool run by a reliable operator.
To see the list of available staking pools, find and click on the “Delegation List”. The interface is probably going to differ, depending on the wallet you use. Nevertheless, you should be able to see information on staking pools such as:
Step 4 - Enjoy Your Rewards
In the Cardano ecosystem, the rewards are always distributed at the end of epochs. Epochs are periods of 5 days after which the system calculates the rewards for its participants. You will receive your rewards after about 3 epochs, which is approximately 15 days.
Best Places For Staking ADA
When staking crypto, it’s important to choose the proper platform for Cardano staking as well as finding a staking pool. Some of the best staking platforms include Daedalus, Yoroi, and Uphold.
If you have extraordinary computational power and significant experience in crypto, you could create your own pool and be the operator. This way, you don’t have to use a wallet or an exchange.
With Uphold, you will be able to earn up to 4% APY for staking ADA. You can also deposit the tokens from other external wallets and just convert these to the national currency so that you can withdraw your funds in the bank.
To start staking ADA on this platform, click “More” and select “Staking”. Choose ADA (Cardano) from the list of cryptocurrencies. Click “From” and select your wallet. Enter the amount of ADA you want to stake and press “Start Staking ADA”.
Uphold Disclaimer: Assets available on Uphold are different per region. All investments and trading are risky and may result in the loss of capital. Cryptoassets are largely unregulated and are therefore not subject to protection.
Daedalus is one of the best staking options in terms of safety. Do note that this full-node wallet takes up a lot of storage space as it stores the transaction history of the whole blockchain. The minimum amount of ADA you need to start staking on this platform is 5 tokens.
If you decide to go with Daedalus, you have to download the latest version from their official website. Once you have installed the wallet, launch the desktop app and follow the installation instructions. After that, you will be able to transfer ADA tokens to your wallet. At this point, you will be able to access the delegation center which allows you to see all the available staking pools. Select the pool, approve the fees and start earning interest.
Yoroi is a really good choice if you are looking for a lightweight wallet to stake and delegate your Cardano. Unlike with Daedalus where you have to download a copy of the ledger, Yoroi is connected to the cloud version of the ledger.
The staking process is pretty similar to Daedalus. Download the app from the Yoroi website or use an iOS or Android version. If you are planning on purchasing through Yoroi, input the payment information and select whether you want to use a cold or hot wallet. Once you have ADA tokens, click on the delegation icon and choose a staking pool. Add your funds to the pool, accept fees, and start earning interest on your tokens.
4. Options Not Available In The US
To stake ADA on your Binance mobile app, go to “Wallets” and “Earn”. Choose “Locked Staking” and press “Confirm” to enable the auto-staking option before locking up your ADA.
eToro is the choice of many users outside the US because it is simple, transparent, and offers a pretty high yield. To make your first deposit, open an account on the platform, choose ADA from the list of supported assets and start earning your staking rewards.
How To Find The Best Staking Pool
Choosing the right staking pool is essential. As such, we are going to cover some of the most important terms and considerations to keep in mind.
Check The ROA
Return on assets or ROA is similar to APY or ROI. ROA represents the interest you will earn from staking a particular cryptocurrency. In other words, it is the expected annual return of ADA tokens based on the staking results of the last month.
Pool saturation is when the amount of stake delegated to a particular staking pool is over the ideal point. Once the pool becomes oversaturated, it will offer diminishing rewards.
Larger staking pools offer more consistent rewards than the smaller ones. However, even though more blocks are created, the interest rate is usually lower. Smaller pools, on the other hand, create blocks less often but offer a better yield to its participants. That is why the rewards will probably be less consistent.
As of now, the Cardano ecosystem is encouraging users who stake ADA to join smaller pools to increase decentralization and cap the rewards at 0.65% APY. Pools with 10% of total ADA staked get disproportionately smaller rewards.
Costs, Blocks, And Pledges
Costs are what you are charged for using a particular staking pool, and also include the fixed rate charged to the whole pool. Blocks represent the number of blocks that have been created throughout the history of a certain staking pool. Each of the blocks represent the reward issued to the pool. Lastly, the pledge. The greater the amount operators pledge for their staking pools, the more they are motivated to create more blocks.
There are always potential risks to keep in mind. The market price of ADA (Cardano) tends to fluctuate. Cryptocurrencies are not subject to SIPC and FDIC protections as they are not legal tender. Plus, if you choose a custodial wallet, you will not have access to your private keys.
As is the case with all digital assets, ADA (Cardano) is also subject to price volatility. This could affect the value of ADA, along with your staking rewards. So, if the value of your ADA coins change while your funds are subject to a certain fixed lock-up period, you won’t be able to liquidate your crypto.
Our Final Verdict
Staking ADA (Cardano) is a great way to earn passive income on your crypto. To start staking, check out the platforms mentioned above and see which one suits your needs the best. Remember: just like any other method of earning passive income, staking comes with certain risks.