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What Is The Cardano Blockchain & How Do You Stake Its Cryptocurrency ADA: A Walkthrough for Newcomers

Updated: Jan 5

Cardano, often hailed as the "Ethereum killer," has gained significant traction in the crypto space since its launch in 2017. Created by Ethereum co-founder Charles Hoskinson, Cardano represents a third-generation blockchain protocol that seeks to address scalability, sustainability, and security. In this comprehensive guide, we'll explore a brief history of Cardano, the unique proof-of-stake mechanism it offers and a step-by-step walkthrough for newcomers on staking its native cryptocurrency ADA.


Digital Gold Token, Bitcoin and Cardano Art

These articles are for pure entertainment. THIS IS NOT FINANICAL ADVICE. Please do your own research!


Understanding Cardano:


Cardano's inception in 2015 led to its establishment as a robust alternative to Ethereum. Both networks share the goal of creating a decentralized system for various applications, including smart contracts. Cardano goes beyond this by offering financial services to the unbanked worldwide.


Proof-of-Stake Mechanism:


One of Cardano's standout features is its unique proof-of-stake mechanism. This mechanism not only ensures reduced transaction times but also lowers energy consumption compared to Bitcoin and Ethereum. The process involves the following:


1. Transfer ADA to Your Wallet:

  • Users need a wallet that supports staking.

  • ADA can be transferred from exchanges to the wallet.


2. Choose a Staking Pool:

  • Users select from a list of staking pools on the Cardano website.

  • Factors like pool size, uptime, and past performance are considered.


3. Delegate Your ADA Tokens:

  • Users delegate their ADA to the chosen staking pool.

  • A snapshot after each epoch determines reward distribution.



Staking ADA - Step by Step:


1. Staking via an Exchange:

  • Find a reputable exchange supporting ADA staking.

  • Deposit ADA into the exchange wallet.

  • Select staking options, including duration and amount.

  • Research and choose a staking pool.

  • Delegate ADA to the chosen pool.


2. Staking with Staking Pool Operators (SPOs):

  • Obtain an ADA wallet (Daedalus or Yoroi).

  • Transfer ADA to the wallet.

  • Research and choose an SPO.

  • Delegate ADA to the selected pool.


Popular Platforms for Staking Cardano:


1. Coinbase:

  • Offers 3.75% APY.

  • ADA remains in the account at all times.


2. Binance:

  • Provides up to 6.1% APY.

  • Offers weekly staking rewards.


3. eToro / Robinhood (not recommended):

  • Automatically stakes ADA.

  • Rewards vary based on membership status.


4. Yoroi / Eternal / Nami / Geo Wallets (plus others):

  • Many offers up to 4.62% APY.

  • A noncustodial wallets for Cardano.


Risks of Staking Cardano:


While staking ADA offers passive income, factors like staked ADA amount, pool performance, and pool fees impact potential earnings. Additionally, market price fluctuations should be taken into account.


Conclusion:


Cardano's proof-of-stake mechanism provides an opportunity for ADA holders to earn rewards and actively participate in securing the network. Whether staking via an exchange or with independent staking pool operators, users can navigate the process by following these steps. Cardano's commitment to sustainability and decentralization positions it as a promising investment for those looking to diversify their crypto portfolios.


Disclaimer: Cryptocurrency investments involve risks, and individuals should conduct thorough research before participating in staking or other crypto-related activities.

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