How to Stake Cardano
Here comes Cardano, an exciting and emerging blockchain platform.
If you haven't heard anything about Cardano yet, come out from under your rock because Cardano may be about to do some rocking in the cryptocurrency world.
Cardano describes their platform as "a blockchain platform for changemakers, innovators, and visionaries, with the tools and technologies required to create possibility for the many, as well as the few, and bring about positive global change."
Sounds good, but what does it mean, and why should we be interested in Cardano?
Cardano (ADA) is one of the fastest-growing blockchain assets. Since the release of Cardano in 2015, it quickly jumped its way to the top ten listed cryptocurrency by market capitalisation.
Ethereum was Bitcoin's smug little brother for a long time, but now Cardano looks to be muscling in on Ethereum with its efforts to build a vast blockchain ecosystem.
Some members of the Cardano team played a part in creating Ethereum, so it makes sense that they've brought the learning into creating an improved digital coin.
Cardano uses mathematical principles in its consensus mechanism, and the multilayer architecture stands Cardano way above most other competing blockchains.
The rumour on the grapevine is that Cardano is setting up to be the next generation of cryptocurrency solutions, and it is undoubtedly one to watch.
In this article, you'll learn a lot more about Cardano and discover how to stake Cardano so you can decide if now is a good time to start staking Cardano.
- What is Cardano (ADA)?
- What is Ouroboros?
- What is Cardano Staking?
- How Often are Cardano Rewards Paid out?
- Proof of Work vs Proof of Stake
- How to Stake Cardano (ADA)
- What Do You Need to Join a Pool?
- Where Can I Stake my Cardano?
- Should you Stake for Cardano?
- The Risks of Staking
- The Key Takeaways of How to Stake Cardano
What is Cardano (ADA)?
Cardano (ADA) is similar to other cryptocurrencies in that it's a digital coin used to store value or send and receive funds. It runs on the Cardano blockchain, which is a first-of-a-kind decentralised network.
ADA is the native token of Cardano, a digital asset used for peer-to-peer transactions
Designed by experts in cryptography and engineering, the Cardano blockchain is based entirely on scientific and mathematical principles.
The Cardano blockchain can build smart contracts and create decentralised applications and protocols. The ability to send and receive funds instantly with low fees opens up massive potential for use in business and financial applications.
With cryptocurrencies, we're all aware that enforced global regulation could inhibit crypto progress. But Cardano has thought of that. They are building the blockchain to factor in financial regulations to provide financial services for everyone.
Many of the early crypto tokens failed to consider possible future regulation. It shows inspired innovation from Cardono for thinking ahead.
There are problems with the blockchain industry, and Cardano wants to solve them. Notably –
- Using mathematics to provide a secure blockchain more resistant to attacks
- Separation of accounting and computational layers
- An infinitely scalable consensus mechanism
- Cardano blockchain architecture
Cardano works on a proof-of-stake (PoS) blockchain protocol for a highly scalable and sustainably secure consensus called Ouroboros.
What is Ouroboros?
Ouroboros is the first blockchain protocol based on peer-review research and the first provably secure proof-of-stake protocol.
Ouroboros combines unique technology and mathematically verified mechanisms, which then combines behavioural psychology and economic philosophy. This combo ensures security and sustainability for the blockchains depending on it.
The innovative combination results in security guarantees that can facilitate the propagation of global networks without the need for permission. And, one of the most significant benefits is the minimal energy requirements.
Cardano is a pioneer for sustainable and ethical growth.
The sustainability of the blockchain networks using Ouroboros is essential, so the protocol has an incentive mechanism, rewarding network participants for helping to create sustainability. More on staking Cardano later.
At the heart of Cardano's mission is
- Define the parameters of the new world – Cardano intend to lead the way from all angles of digital currency and PoS protocol
- Secure, scalable protocol – and provable
- Leading the way with energy efficiency – 4 million times the efficiency of Bitcoin
Cardano says, "Ouroboros ensures the continuity of each moment: the incremental building of an unbreakable chain. Through it, every addition – transaction, agreement, sharing of information – becomes part of an immutable past."
What is Cardano Staking?
Staking is the process of validating and processing transactions. Cardano's staking model was created to avoid decentralisation but reward those who staked Cardano.
To find out how to stake Cardano, read on.
If you want to stake your Cardano (ADA tokens), you could earn 4.5% a year from your investment. When you stake Cardano, it helps to build the security and stability of the network. You can either manage a stake pool or join an existing Cardano stake pool.
Cardano launched the stage 2 Shelley upgrade, which introduced staking rewards for holders of the ADA cryptocurrency.
There are three further stages planned for the progression of Cardano technology.
- Goguen (Smart Contracts Era) – planned 2021
- Basho (Scaling Era) - TBC
- Voltaire (Governance Era) - TBC
How Often are Cardano Rewards Paid out?
Cardano pay rewards every five days (called an epoch) and operate on a cyclical basis.
You have separate keys for staking or spending your ADA tokens, so the money you have staked stays in your wallet.
But, Cardano again leads the way because your ADA tokens do not need to be locked in. Currently, with Ethereum, your stake is locked in until 2022, so this is a massive attraction for staking in Cardano and sets them apart from the competition.
Cardano has their own wallet for the ADA cryptocurrency, called Daedalus. It's not like an ordinary wallet because you can run a full blockchain node, which gives you 100% control over your funds. It also ensures transparency across the Cardano blockchain. Having access to the Daedalus wallet allows you to take part in the Cardono staking system.
Read Also: Can Cardano Make Me Rich?
Proof of Work vs Proof of Stake
The Bitcoin network uses proof of work (PoW) to validate transactions. It's expensive, complex, and hard on the environment because of the need for high-tech computers. Bitcoin miners have to solve mathematical problems called the hash problem and be the first to solve it, or get near to solving it, to be rewarded with Bitcoin. The difficulty levels of PoW are intense, with seemingly impossible odds of success.
Proof of stake (PoS) is more straightforward, more efficient and cost-effective than the PoW process.
When you stake your money with Cardano, you are demonstrating a commitment to the Cardano Network. As we said earlier, your ADA tokens are not locked in, and you can take them out at any time.
The current minimum stake for independent validators is 10 ADA tokens.
Staking is a PoS system that is a consensus mechanism. Likely, PoS will eventually replace the proof of work (PoW) system for other cryptocurrencies.
How to Stake Cardano
Most blockchains rely on individual staking nodes, but Cardono depends on staking pools. They want a large validator network. An IOHK spokesman for Cardano said, "If people could get rewards without operating a pool or delegating to one, then there might not be enough node operators to have a successful network."
It's easy to stake your Cardano tokens with an existing Cardano stake pool, but if you want to operate a Cardano pool, Cardano say you will need the following:
- Consistent Internet connectivity
- Experience in development and operations (DevOps)
- System operation skills
- Server administration skills (operational and maintenance)
- Operating knowledge of how to run and maintain a Cardano node on a 24/7 basis
Unlike Bitcoin mining, you don't need powerful computers for Cardano as staking only needs minimal power. There are no advantages to using ASIC devices necessary for Bitcoin mining. Reliable Internet access is crucial, though.
You don't even need to own ADA to run a pool. As long as you fulfil the above criteria, you provide technical services for other users.
What Do You Need to Join a Pool?
Joining a Cardano staking pool is an easy option for staking Cardano. There's no work involved and no technical requirements. You don't even need to be on the internet to stake Cardano in a pool, and, with most pools, there is no minimum requirement.
However, it is preferable to join a reliable, established Cardano pool with low fees and one where you can observe the status of the pool. After you have staked your ADA, there's nothing else to do. You don't have to claim your rewards. As long as you don't withdraw your original stake, your rewards are added to your wallet.
Where Can I Stake my Cardano?
It's essential to find an established, reliable and trusted exchange for your stake.
It can be a minefield trying to find a Cardano staking pool online. Online scammers create glossy websites that look official and reel in unwitting investors.
Here's a list of three trusted and recommended websites where you can stake Cardano:
- eToro – the eToro social platform makes it hassle-free and straightforward to stake Cardano (ADA). eToro is an established, trusted broker. To earn staking rewards, all you have to do is buy Cardano, and eToro does the rest. Staking rewards are paid out in ADA every month, averaging around 5%. To add to the ease of purchase, you can buy Cardano with fiat currency, something not always possible with other brokers
- Kucoin – Kucoin is an established cryptocurrency exchange where you can stake Cardano with an average return of between 1% to 8%
- Binance – a popular cryptocurrency exchange with returns from 5%
Should you Stake for Cardano?
We can't tell you what to do, but staking Cardano seems like a reasonable option.
Currently, Cardano's price is less than $2.3, with a market capitalisation of $75 billion. Ethereum is almost $4,000 with a $491 billion market cap. Cardano may seem a long way off Ethereums figures but their growth so far has been steep.
No one can predict the future. Look at Bitcoin. Who would have thought, in 2009, that Bitcoin price would reach $64k?
Whether Cardano reaches the dizzy heights of Bitcoin or even Ethereum, it doesn't matter. In many respects, Bitcoin is a dinosaur compared to Cardano. Bitcoin still uses proof-of-work (PoW) for mining, which is a massive drain on the environment.
If Cardano continues innovating and learning from the past, the future could be exciting for Cardano stakeholders. Think long-term instead of seeking immediate rewards.
Check Out: What Will Cardano Be Worth In Five Years?
The Risks of Staking
ADA has a fixed monetary policy with a stipulation of not exceeding 45 billion ADA, and then no more will be created.
During the initial release, Cardano sold 25,927,070,538. In theory, demand should rise for Cardano. With 19 billion ADA remaining, they will be released as mining and staking rewards.
Why are we telling you this? Because if you understand supply and demand, then increased demand equals higher prices.
Yes, you may have to tie up your money for a while, a few years maybe, but how much money would you make from the interest in a traditional bank account?
The main risk is to avoid the online scammers crawling out the woodwork to take your money. Only buy or stake Cardano with a trusted broker, such as eToro, or the other exchanges we listed earlier.
A Stake is a Belief
If you want a safe gain on your Cardano, then staking Cardano is a great way to make some extra money.
Novice traders have dabbled in trading cryptocurrencies and quickly discovered how challenging it is. Crypto's are volatile with vast and unexpected price swings. Staking Cardano poses none of these risks and offers consistent rewards.
Cardano has quickly gathered loyal fans, all believing that Cardano (ADA) price will reach the stars. There's no denying that the co-founders of Cardano have hit the mark with scalability and potential encounters with future regulation. They appear to have thought of every eventuality.
Read this article and do further research on Cardano. If you believe in the Cardano project, you will be ready to stake Cardano and make some rewards.
The Key Takeaways of How to Stake Cardano
Cardano is one of a kind, it seems.
There are so many cryptos on the market that don't have a fraction of Cardano's capability and scalability. Most of them jumped on the bandwagon after Bitcoin jettisoned into the public eye, but few of them stand out.
The vast majority of cryptocurrencies have not grown in the years since they launched and would struggle with scalability and future regulation. The costs of complying may prove too much.
But, from the offset, Cardano (ADA) seems to have prepared for every eventually. It is this, we believe, that will set them apart from the thousands of other cryptos.
Cardano is already ahead, having leapt to the top ten listed cryptocurrency by market capitalisation. This achievement is no small feat and cannot be over-emphasised.
Hoskinson and Wood were the masterminds behind Cardano, but they have significant backing from other stakeholders.
- The Cardano Foundation – a nonprofit body that safeguards the entire Cardano project and helps with the marketing and security of the blockchain
- IOHK – the research and development company founded by Hoskinson and Wood in 2015
- Embargo – a large funding entity that financially supports Cardano and assists with the development
Please note that the above information is not providing advice on tax, investment, or financial services. We provide the above information without consideration for risk tolerance and a specific investor's financial circumstances.
Trading or investing in cryptocurrencies may not be suitable for all investors. It does involve risk and the possibility of a loss of capital.
eToro – Best Platform to Buy Cardano
eToro have proven themselves trustworthy within the crypto industry over many years – we recommend you try them out.
Virtual currencies are highly volatile. Your capital is at risk.
Who created Cardano?
Charles Hoskinson was one of the early co-founders of Ethereum, but he realised there was a need for a more standardised, scalable blockchain. Hoskinson has a mathematical background, so he explored scientific ways to build a better blockchain. He made a connection to Jeremy Wood, who was a former co-worker at Ethereum. Wood has similar ideas to Hoskinson, so they began working together to create Cardano
Who is Cardano (ADA) named after?
Cardano (ADA) was named after the Italian polymath and mathematician Gerolamo Cardano. The asset ADA is named after Ada King, An influential British Mathematician
Is Cardano better than Ethereum?
Both want to be world leaders for primary decentralised blockchain platforms.
Remember that Hoskinson and Wood both played vital roles in the development of Ethereum. Hoskinson knew he wanted to create a secure, scalable blockchain.
Ethereum has roughly ten times the size of Cardano in market capitalisation but is currently having issues with scalability. They have recently begun the transition to proof-of-work (PoS), but it won't be complete until 2022.
The minimum requirement for staking ETH is 32 ETH. That's a significant monetary amount by any standards at today's Ethereum prices. Cardano is easier to stake and build rewards.
If you stake Ethereum now, you cannot withdraw rewards until the completion of ETH 2 in 2022. And, neither can you remove your stake until that time.
We have an in-depth article on how to stake Ethereum if you want to know more.
How much Cardano (ADA) do I need to stake?
There is no minimum requirement if you join a Cardano staking pool. With some brokers, such as eToro, you immediately qualify for Cardano rewards simply by buying Cardano on their platform.
If you decide you want to stake Cardano independently, the suggestion is that the minimum is 10 ADA. But, as it's so easy to earn rewards, it makes sense to reduce your potential workload and let your broker do the work and give you the rewards
How much can you earn by staking Cardano?
The average return is around 5%, so it depends on how much Cardano you stake
What's the future of Cardano?
The projected growth for Cardano is high. At every stage of development, Cardano appears to have thought several steps ahead. Innovation and scalability are at the heart of their mission
What is the risk of staking Cardano?
The associated risks are minimal as long as you stake Cardano with a trusted broker or exchange. How do investors usually lose their money? Well, one way is for a company to go bust, and this seems highly unlikely with Cardano's track record
What's the benefit of staking Cardano?
The main benefit is the profits available from staking Cardano
Is Cardano staking profitable?
Yes. Buy or stake Cardano with an established, trustworthy broker, and you will make profits from your stake with rewards
What's the best place to stake Cardano?
Always stake your Cardano with a reliable broker, such as eToro, Kukoin or Binance
Is it worth staking Cardano?
That's a decision only you can make. If you compare interest rates from traditional banks, then staking Cardano appears to be a good option for making regular rewards.