What is Cardano Staking?

Posted by in Crypto | Updated on November 28, 2022
At a Glance: As a Cardano investor, you can choose to hold your ADA tokens on the Cardano network. In return for contributing to the network, you receive an income known as a staking reward.

Staking is the crypto dream – no expensive mining rigs, but passive income. Cardano staking can feel like getting free money.

Additionally, Cardano staking is very safe. The ADA coins used for staking don’t leave your wallet. While staking, you earn rewards in a way that is similar to interest in a savings account. You can move or unstake your coins at any time.

Staking is appealing to many investors as it is a form of passive income. If you’re interested in Cardano staking, take a look at the details of how to stake Cardano below. 

What is Staking?

Some blockchain protocols allow participants to earn additional cryptocurrency by contributing to the network. Staking is an easy way to earn passive income and support the stability of the blockchain network.

Staking is used to validate transactions on the blockchain network. In proof-of-work blockchains like those used by Bitcoin, transactions are verified by cryptocurrency mining. Miners compete against one another to be the first to solve problems, and in this way contribute to the network.

Nodes Explained

In a proof-of-stake blockchain, like that used by Cardano, verification is done through node selection. Each new block of the blockchain needs to be added to a node. The algorithm selects which node will be used next based in part on how many coins the node has staked, or locked away. 

Nodes often comprise groups of people who have pooled their stakes together. By joining a node, you lock your ADA coins away in a node. The more coins are locked away, the higher the node’s chances of producing blocks. When blocks are produced, the node earns rewards that are then paid out to all the pool contributors.

ADA Coins

The ADA coins used for staking never leave your wallet. While staking, you earn rewards in a way that is similar to interest in a savings account. You can move or unstake your coins at any time.

Staking is appealing to many investors as it is a form of passive income. Additionally, you are also making the blockchain faster and more stable.

Can Cardano Be Staked?

Similar to Ethereum, Cardano staking is common. As a Cardano investor, you can choose to hold your ADA tokens on the network. In this way, you have a stake in the overall network that is proportional to the number of tokens held.

Cardano staking is more effective if you delegate your tokens to a staking pool. The staking pools are a part of the security and governance of the Cardano proof-of-stake blockchain. When you delegate your tokens to a staking pool, you are participating in the network by validating new blocks and processing transactions.

In return for contributing to the network, you will receive an income known as a staking reward. This process is referred to as staking.

How to Stake Cardano

Understanding how to stake Cardano is quick and easy on most crypto exchanges. 

First, you will need to create an account with a reputable crypto exchange platform. You can find a list of exchanges that support Cardano staking below.

Next, you need to deposit ADA tokens into the wallet on your exchange platform. You can either buy ADA directly on the exchange or transfer any tokens that you already own into your exchange wallet.

Navigate to the “Staking” page on your exchange platform and select “Cardano”.

Most exchange platforms will now give you an option of choosing your staking duration. Similar to a fixed deposit at a bank, this duration indicates how long your ADA tokens will be locked away. If you withdraw your ADA before the end of the staking duration, you will not receive the staking rewards.

Enter the amount of ADA tokens you want to stake and click on “Stake Now”.

Pros and Cons of Cardano Staking

Staking is completely safe in that you will not lose your ADA tokens through staking.

If you are already a long-term holder of ADA, Cardano staking is a simple way to increase returns. But because of the volatility of the crypto market, it is probably not worth buying Cardano purely to stake it.

Pros of Staking

If you are already holding ADA tokens for the long term, staking is a no-brainer. You will be earning a passive income and the yields are typically higher than traditional investments.

If you are holding your ADA tokens for the long term, there is no downside to staking all of it.

Unlike crypto mining, you can earn income from Cardano staking without the hassle, cost, and risk associated with a mining rig. When you stake your ADA tokens, you help to secure crypto networks with minimal energy consumption and setup.

Cons of Staking

Cardano staking involves no more risk than simply holding it in a wallet. The only true risk is losing the wallet’s private key, which is a risk with all cryptocurrencies regardless of whether or not staking is involved.

When you use a reputable wallet, you will get separate keys for spending and staking. This means if you decide to stake your ADA tokens, they will never leave your wallet. You can stake as much as you have since you can unstake your ADA at any time.

You should divide your stakes among different pools. This will diversify your portfolio and decrease the staking fees you may have to pay.

While your crypto asset is always safe, pool owners can take advantage of you by taking most or all of the rewards from the pool. Do your homework and choose a pool that you feel comfortable with.

Like any income-generating dividend stock, the value of the underlying asset is an important consideration. The price of ADA is extremely volatile and unpredictable. If the ADA tokens themselves lose a great amount of value, the potential losses from crypto investments can quickly exceed the income earned from staking.

Where to Stake Cardano

Cardano can be staked using a cryptocurrency exchange or wallet to earn passive income.

Some popular exchanges that offer Cardano staking are:

  • Binance – Binance is a very popular crypto exchange and is a good bet overall for staking.
  • Kraken – Kraken has a competitive fee structure and gives good returns of staking. 
  • Crypto.com – Crypto.com is easy to use and understand, making it ideal for beginners.
  • CEX.IO – If you are based in the UK, CEX.IO is a good crypto exchange for Cardano staking.
  • KuCoin – KuCoin offers ADA fixed rates which makes your investment a little more predictable.
  • Yoroi Wallet – If you are wanting to do Cardano staking directly from a wallet, Yoroi Wallet is very easy to use.
  • Daedalus Wallet – The Daedalus Wallet supports many features that advanced users need.

Conspicuously absent from the exchanges that offer Cardano staking is Coinbase. Coinbase cryptocurrency exchange does not support the staking of ADA coins on the trading platform. 

Read More

Final Thoughts

Now you know how to stake Cardano. Cardano staking is very safe. The ADA coins used for staking never leave your wallet. While staking, you earn rewards in a way that is similar to interest in a savings account. You can move or unstake your coins at any time.

Staking is appealing to many investors as it is a form of passive income. Additionally, you are also making the blockchain faster and more stable.


Need a Loan? Get One in 3 Simple Steps

If you are considering applying for a personal loan, just follow these 3 simple steps.

Apply

Apply online for the loan amount you need. Submit the required documentation and provide your best possible application. Stronger applications get better loan offers.

Accept

If your application meets the eligibility criteria, the lender will contact you with regard to your application. Provide any additional information if required. Soon you’ll have your loan offer. Some lenders send a promissory note with your loan offer. Sign and return that note if you wish to accept the loan offer.

Repay

The loan then gets disbursed into your U.S. bank account within a reasonable number of days (some lenders will be as quick as 2-3 business days). Now you need to set up your repayment method. You can choose an autopay method online to help you pay on time every month.

CTA

About Stilt

Stilt provides loans to international students and working professionals in the U.S. (F-1, OPT, H-1B, O-1, L-1, TN visa holders) at rates lower than any other lender. Stilt is committed to helping immigrants build a better financial future.

We take a holistic underwriting approach to determine your interest rates and make sure you get the lowest rate possible. 

Learn what others are saying about us on Google, Yelp, and Facebook or visit us at https://www.stilt.com. If you have any questions, send us an email at [email protected]