Cardano has created a leading-edge blockchain platform backing the ADA token and presents an extraordinary means for investors to earn passive income through staking. Unlike proof-of-work blockchains that require immense computing power, Cardano functions through its proof-of-stake consensus mechanism. Hence, it incentivizes users to have a role in securing the network by simply delegating their ADA holdings to receive rewards.
This article guides you through how to stake Cardano step by step, and all essential concepts are explained in the process.
Understanding Cardano Staking
Essentially, staking Cardano means delegating one’s ADA to a stake pool. These pools work almost similarly to being validators on the Cardano blockchain. The individual stakes their token in a pool; through validation of transactions and the creation of new blocks, this secures the network and runs its everyday activities. When a pool is selected to add a block, it rewards its delegators according to their size of stake proportionately.
Some of the major advantages of staking Cardano include:
- Passive Income: Be rewarded for simply holding ADA.
- Accessibility: No special hardware is required with minimal technical knowledge attached.
- Security: Staking adds to the overall security of the Cardano network.
- Flexibility: You are in control, remaining accessible to undelegated your ADA anytime. However, a waiting period might apply.
Before You Stake: Choosing a Cardano Wallet
The first step towards staking Cardano is using a suitable wallet. The following are some of the consideration factors for choosing a wallet.
- Security: Select a wallet that is well-known and has a clean record regarding security. Hardware wallets offer the maximum possible security, while software wallets from reputed providers are equally good options.
- Staking Support: The wallet should support staking Cardano natively. Many popular wallets include built-in staking functionality.
- Ease of Use: Go for an easy-to-use wallet that appeals to your technical expertise.
While some of the popular Cardano wallets with staking capabilities include:
- Daedalus Wallet: this is Cardano’s official wallet.
- Yoroi wallet: Lean browser extension.
- Ledger Nano: A Hardware Wallet.
- Trezor Model T: A Hardware Wallet.
How to Stake Cardano, Step-by-Step:
Choose a wallet below, then follow these steps to begin staking Cardano:
- Acquire ADA: You will need to have ADA in your wallet to delegate it to a stake pool. You can buy ADA from any cryptocurrency exchange and send it to your wallet.
- Researching Stake Pools: Conducting a proper study using pool delegation tools – a.k.a. Cardano pool tool or Wingriders – will need in-depth research into several stake pools. Look out for pool fees, the size of the pool, past performance history, and operator reputation.
- Stake Your ADA: In your wallet of choice, click on the staking section, then the stake pool in which you want to participate. Follow the screen prompts to delegate your ADA to the pool.
- Confirmation and Monitoring: Once your ADA has been successfully delegated, this is confirmed in your wallet. For the more significant part, rewards are automated, and one will, therefore be able to track the earnings in their purse.
Important Note: While staking Cardano is generally a low-risk business, here are a few things to glean from this method:
- Market Volatility: Being a market instrument, the values of ADA may fluctuate, which will impact your overall return.
- Pool Performance: The rewards are based on the performance of the chosen pool. It is important to research pools that are consistent.
- Staking Fees: Most stake pool operators charge fees for their services, which are then deducted from your rewards.
Conclusion
Staking Cardano is ultra-secure and incredibly convenient for the creation of passive income with your ADA. You can participate in the Cardano Network and get a reward while contributing to its growth if you understand the main concepts and follow the steps. Again, remember that conducting thorough research and choosing a reputable wallet and stake pool are the keys to successful staking.
