Updated: Mar 10, 2021
Bitcoin and Ethereum 2.0 will continue to steal the crypto spotlight in 2021, and rightfully so. However, there's another cryptocurrency with giant plans for the near future and will grab much of Ethereum's market share: Cardano. Like Ethereum, Cardano will use its blockchain to advance growing niche markets like NFTs and decentralized finance. In addition, they are making great strides in transforming the economies of entire countries with its technology, especially in Africa. We won't be talking about its many ongoing projects. There's plenty of ways to research this online elsewhere. Instead, we're going to concentrate on how to make money staking Cardano in your own online wallet.
What is Cardano?
Cardano is the first peer-reviewed blockchain. The platform was created by Charles Hoskinson, one of the co-founders of Ethereum, and has attracted some of the brightest minds in cryptography. The project will promote financial inclusion through its open-source technology and programming language, so individuals can make their own financial decisions. It is aiming to completely restructure finance in developing countries by allowing anyone access to self-sufficient financial services. To learn more about Cardano's exciting future projects, visit their main website at https://cardano.org/.
What does it Mean to Stake Cardano?
We have a whole section about staking crypto on this blog. I implore you to read the articles listed there. Basically, staking means your coins are being used to help run the blockchain and validate transactions. In other words, your cryptocurrency is working for you instead of doing nothing in an online wallet. It's actually quite similar to earning dividends by simply holding a stock.
There are many ways to earn a return on your Cardano investment, including just waiting for its value to appreciate over time. But did you know you could do that while also staking your holdings?
Ada (the native token of Cardano) held on the Cardano network represents a stake in the network, with the size of the stake proportional to the amount of ada held. The ability to delegate or pledge a stake is fundamental to how Cardano works.
There are two ways an ada holder can earn rewards: by delegating their stake to a stake pool run by someone else or running their own stake pool. The amount of stake delegated to a given stake pool is the primary way the protocol chooses who should add the next block to the blockchain and receive a monetary reward for doing so. The more stake is delegated to a stake pool (up to a certain point), the more likely it is to make the next block – and the rewards are shared between everyone who delegated their stake to that stake pool.
How do you Stake Cardano?
Staking for passive income is a simple process. It doesn't require any major investment, either. There's no minimum amount you need to get started. You just need to download the desktop wallet. There's two wallets to choose from: Daedalus or Yoroi. Daedalus takes up more space on your computer, since it allows you to maintain multiple wallets. Plus, you have a direct connection to the Cardano network. On the other hand, Yoroi is small enough to use on your mobile phone. Read more at the official site here.
You simply download these official Cardano wallets from your platform (Windows, Mac or Linux), backup your wallet seed phrase and unlock it. Then you can create an address to receive staking rewards at the "Receive" page then click on "Generate New Address". Remember, your Ada must be in the "Available" area before you can stake them. Their website has a graphic illustrating how to do this here: https://www.cardanohub.org/en/home/staking-reward-distribution-calculation/.
Here's more specific instructions:
Step 1: Download and install Daedalus from Daedalus-wallet-official at https://daedaluswallet.io/.
Step 2: Create an account by choosing a username, password, and security phrase.
Step 3: Enter the name and password for the Rewards Wallet. Click ‘Create a wallet’. Confirm that nobody can see or record your screen. Click ‘Continue’.
Step 4: Transfer your ADA to your Daedalus wallet by sending them from whatever exchange you bought them from to the public address you just generated above.
Step 5: Next step is writing down your Recovery Phrase. This is a list of 24 words unique to your wallet. Make sure you WRITE THEM DOWN in order and keep it safe. Anyone who discovers the phrase can steal your ADA, so it must be kept safe like the combination to a safe containing cash. Click ‘Yes, I have written it down’. Click each word in the correct order to verify your recovery phrase. Read the text carefully and tick the 3 boxes. Click ‘Confirm’.
Step 6: The new wallet will be listed on the top left corner. Follow the instructions to transfer the Ada in your exchange wallet (I use Binance.us) to the wallet address you just created in your Daedalus wallet.
Step 7: To start staking, click on the second icon from the top that reads ‘Delegate center’. Then click 'Delegate'. Follow the steps, then choose the wallet with funds that you'd like to use for delegation → Click on ‘Continue’.
Step 8: Select a stake pool. The pools highlighted in green are the best and most profitable. I currently use BLOOM, which has been consistent since I started using it several months ago.
Step 9: Enter the spending password → Click on ‘Confirm’. Congrats, you're staking Cardano!
Please be patient, it may take a month or so before you start seeing the rewards get automatically added to your wallet.
How Much Money Can I Make Staking Cardano?
Expect to make on average 5% interest per year staking your Ada. This does not include the additional gains you can make by compounding this interest (which the wallet will do automatically). Nor does it include the impressive appreciation in Cardano's price nearly every expert predicts for 2021. To buy ADA for your wallet, Binance.us is your best option.
We hope this guide has helped make sense of the process and provided you new ideas for various ways of earning income with ADA in your official wallet. Meanwhile, keep up to date with all the latest news from the Cardano Foundation at: https://www.cardanohub.org/en/home/.