How to Stake Cardano (ADA) and Earn Rewards on Your Crypto
Of all the cryptocurrencies that offer staking rewards, Cardano (ADA) is one of the best choices.
For one thing, Cardano is a solid, meticulously developed project with enormous potential. As a “platform” cryptocurrency, it’s emerged as an attractive alternative to Ethereum (ETH).
So Cardano investors are likely to see big price gains over the next year or so – as much as 10X, according to American Institute for Crypto Investors Chief Crypto Strategist Nick Black.
But because you can stake it, Cardano offers a bonus on top of those juicy gains. The reward rate varies slightly because of how the Cardano network is designed, but averages about 4.75%. It’s like owning a high-growth stock that also pays a fat dividend.
Buying Cardano is pretty easy. Because it’s a top-10 cryptocurrency, it’s available on most crypto exchanges, including Coinbase, Binance.US, KuCoin, and Kraken.
Staking Cardano, on the other hand, requires a bit more effort – but is totally worth it.
Here’s exactly what you need to do to get started…
The Mechanics of Staking Cardano
Staking exists in the crypto world because it is one of the ways of securing a network and verifying transactions. The term for this is proof of stake. (The other main method is proof of work, which what Bitcoin (BTC) uses.)
The Cardano team created its own distinct version of staking called Ouroboros. They designed it to be secure and scalable while rewarding honest participants for helping maintain the network. At the same time, the incentive mechanism discourages bad actors.
Proof-of-stake cryptocurrencies usually reward participants at regular intervals, typically every few days. Cardano calls its staking periods “epochs,” which last five days. After initially staking your ADA, there’s usually a waiting period of 15 to 20 days before you start receiving rewards (depending on how deep into the current epoch the network is at the time).
Staking Cardano is small-investor friendly, as it has no minimum requirement for staking. Large operators create pools (for which they receive extra rewards); regular investors can join those pools.
And unlike most proof-of-stake tokens, your ADA tokens are not locked even while staked. That’s because you’re staking the wallet address rather than the tokens themselves. You can transfer and sell them whenever you want. (If you transfer a portion, future rewards will be based on what remains.)
This features also simplifies unstaking. To unstake your ADA, you just move the tokens out of the staked wallet.
The details on how Cardano staking works varies a bit depending on where you do it. Now we’re going to look at exactly where you can stake Cardano…
The Top Six Places to Stake Cardano
You have several options for ways to stake Cardano. Generally, it’s best to do it in Cardano’s dedicated wallets, Daedalus and Yoroi. But you can also stake Cardano that you hold on exchanges or in some private wallets. There are pros and cons to each.
Note that two of the biggest exchanges, Coinbase and Binance.US, do not yet offer Cardano staking.
Here are your best options…
As mentioned, Daedalus is the official Cardano wallet. It’s also a “full node,” which means that when you launch it the first time it downloads the Cardano blockchain – all 10 gigabytes of it. That can take several hours, depending on your internet connection. On the plus side, Daedalus is the most secure, trustworthy wallet for your ADA.
It’s also integrated with the Cardano staking system. Staking has its own section (found by clicking on a button that looks like a cloud of connected dots).
Here you can choose your staking pool. There are over 900, but don’t stress over it. They’re organized in order of most rewards expected to least rewards expected. Look for a pool that is well short of saturation. Rewards can’t increase past the point of saturation, so an increase in staking ADA past 100% just means everyone’s rewards get diluted.
Folks have put a lot of effort into finding pools that will maximize your reward, but you’ll still do OK if you just pick a pool among the top 100 listed.
If you want to take a deep dive into the data, I recommend the Cardano PoolTool. In addition to research, you can use the site to track your ADA rewards (the operator charges a small fee in ADA, but it’s worth it). You can type in the name of a pool to find it in Daedalus.
Once you’ve delegated your ADA to a pool, there’s nothing more you need to do. After the initial waiting period, your rewards will drop into your wallet automatically every five days. Better still, the new ADA will be added to your stake, boosting future rewards (similar to how compound interest works).
Should you want to stake to multiple pools, you can create up to 20 wallets within Daedalus – each of which can be staked with a different pool.
Yoroi is a “light” Cardano wallet, which means it connects to the network without downloading the Cardano blockchain. That means you can set it up far more quickly than Daedalus. However, that means Yoroi is not as trustworthy as Daedalus.
The Yoroi wallet is available as both an extension for the Chrome browser (much like MetaMask) and a mobile app for your smartphone.
Once you’ve transferred the ADA tokens into a Yoroi wallet, the staking process is similar to Daedalus. Clicking on a “Delegation List” tab brings up a list of staking pools. (You can search for a pool by name as well.)
As with Daedalus, your staking rewards will appear in your wallet automatically and be added to your total amount staked. Unlike Daedalus, you can’t create multiple wallets.
Exodus is a private wallet available in both desktop and mobile versions (so you control your private keys). It is not exclusive to Cardano. In fact, Exodus supports more than 140 crypto assets. If you already use Exodus, the advantage here is that you won’t need to create a new wallet.
But because it is not a Cardano-specific wallet, staking works a bit differently on Exodus. For one thing, you can’t choose your staking pool. Instead, Exodus stakes your Cardano with a partner, Everstake.
Another difference is that you need to claim your ADA rewards – they don’t show up in your wallet automatically. And each time you claim, you’re charged a small fee.
Exodus also differs by having an unstaking process. It’s just a couple of clicks, but you do need to claim any outstanding rewards first.
One thing that’s the same: Because it’s the wallet address that’s staked, you can access, spend, and move your ADA freely without affecting your staking status (but you do need to keep a minimum of 5.5 ADA in the Exodus wallet to maintain the stake).
Returns on ADA staked in Exodus fluctuate slightly, but are about the same as staking in a Cardano-specific wallet.
Because it’s an exchange, the private keys to any Cardano kept on Kraken are not in your control. But staking at Kraken could be convenient for those with accounts at the exchange – unless they use the mobile app, where staking is not yet available.
Kraken does offer one compelling perk for the impatient: Instant rewards. In other words, no 15 to 20-day waiting period before you start getting rewards. The rewards fall in a range of 4% to 6%.
Rather than pay Cardano rewards by epoch (every five days), Kraken pays them once per week (every Monday).
Since you can buy Cardano on the Kraken exchange, you don’t need to move it from anywhere else. To stake, you just transfer it to your “staking wallet.”
As with the other staking options listed here, your ADA tokens are not locked in any way. To unstake you just move them from your staking wallet back to your spot wallet.
Kraken charges no fees for staking or unstaking but does extract an “administrative fee” from the rewards earned.
It should come as no surprise that the sprawling KuCoin exchange offers has a staking section (found by clicking on KuCoin Earn in the Earn dropdown menu), and that Cardano is included among the offerings.
But as with Kraken, holding Cardano at KuCoin means surrendering custody. And that’s always a risk.
KuCoin is unusual in that it operates its staking service in partnership with the Pool-X exchange. (You can’t choose a staking pool.) So staking Cardano earns both ADA and POL tokens; the POL tokens are converted to ADA when credited to the customer’s account. Rewards are distributed daily.
But the total yield is nevertheless significantly lower than what you get elsewhere – about 3.25% as I write this.
During the time your ADA is staked, you can trade the tokens in KuCoin’s Liquidity Trading market, but they are otherwise locked. There’s a one-day “redemption period” following unstaking during which the ADA is locked and does not earn rewards.
KuCoin has a minimum staking amount of 10 ADA.
The Bittrex exchange started offering Cardano staking in December 2021. The terms are similar to those at Kraken with a minimum requirement of just one ADA for staking.
You stake the Cardano you have in your Bittrex wallet, but you can’t choose the pool. You can stake and unstake freely, as often as you like. And while your ADA is staked you can still trade it on the Bittrex exchange.
And of course, holding Cardano on an exchange means you don’t control the private keys.
You start earning rewards immediately, and rewards accrue daily. But they’re only paid out monthly. So if you like more frequent payouts, Bittrex is not for you.
This guide was focused on Cardano – but if you’re interested in staking other cryptos, I encourage you to check out this Crypto Staking 101 guide my team put together.
And, as always, feel free to post your questions in the comments section below, and we’ll do our best to answer them!
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Advisory Board Member, American Institute for Crypto Investors
Follow me on Twitter @DavidGZeiler.
Never done anything like this so it’s all new to me but I’m going for it!!!!
Do your research to gain more knowledge and take your time, be patient