What is Cardano Staking?

Updated on January 7, 2024

At a Glance

  • Staking is a process where participants contribute to a blockchain network and earn additional cryptocurrency.
  • Cardano staking in proof-of-stake blockchains involves locking away coins in a node to validate transactions and produce blocks.
  • To stake Cardano, create an account on a crypto exchange, deposit ADA tokens, choose a staking duration, and select a staking pool.
  • Pros of staking include passive income and network participation, while cons include volatility and pool selection.

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. 

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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.

Frequently Asked Questions (FAQ)

What is Cardano staking?

Cardano staking is the process of participating in the Cardano blockchain network by holding and delegating ADA cryptocurrency to a stake pool to support the network’s security and operations.

How does Cardano staking work?

Cardano staking works by holding ADA in a compatible wallet and delegating it to a stake pool. The stake pool, operated by a trusted entity, will then participate in the network’s consensus protocol on behalf of the delegators.

What are the benefits of Cardano staking?

The benefits of Cardano staking include earning rewards in the form of ADA cryptocurrency for participating in the network, contributing to the decentralization and security of the blockchain, and supporting the overall ecosystem.

How can I stake my ADA on Cardano?

To stake your ADA on Cardano, you need to choose a compatible wallet that supports staking, delegate your ADA to a stake pool of your choice using the wallet’s staking features, and start earning rewards based on the pool’s performance.

Can I unstake my ADA anytime?

Yes, you can unstake your ADA anytime. However, there is a waiting period known as the “epoch” in the Cardano network, which typically takes a few days, before you can move your staked ADA to another pool or spend it.

Are there any risks involved in Cardano staking?

While Cardano staking is generally considered safe, there are some risks to be aware of, such as the risk of selecting a poorly performing stake pool or encountering technical issues with the staking process. It’s important to do thorough research before delegating your ADA.

How are staking rewards calculated?

Staking rewards on Cardano are calculated based on various factors, including the amount of ADA you stake, the performance of the stake pool you delegate to, and the network parameters set by the Cardano protocol.

Are staking rewards guaranteed on Cardano?

Staking rewards on Cardano are not guaranteed. They depend on the overall performance of the network, the pool’s performance, and other factors. However, by delegating to a reliable and well-performing stake pool, you can increase your chances of earning rewards.

Can I delegate my ADA to multiple stake pools?

Yes, you can delegate your ADA to multiple stake pools. However, keep in mind that delegation to multiple pools may result in higher fees and may require more active management compared to delegating to a single pool.

How can I track my staking rewards on Cardano?

You can track your staking rewards on Cardano through various tools and websites that provide staking dashboards. These dashboards show you the rewards earned, the performance of the stake pool, and other relevant information.

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Frank Gogol

I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.