How to invest in Cardano — ADA Staking
How to invest in Cardano
Cardano is a blockchain technology and ADA is the cryptocurrency associated with it. ADA is generated and distributed by the Cardano blockchain. The simplest way to invest in Cardano is to buy ADA. An advantage of buying your own ADA is that you can earn more ADA by holding it — this is through a process known as staking.
What is staking?
The Cardano blockchain is maintained by entities known as Stakepools. Stakepools produce blocks for the Cardano blockchain and are rewarded for this service with ADA. The more blocks produced by a Stakepool, the more ADA they get. A Stakepool may only produce blocks assigned to it by the Cardano network. The network assigns blocks to a Stakepool based on the amount of ADA a Stakepool has. The amount of ADA a Stakepool has is known as the Stakepool’s Stake.
How to benefit from staking
Stakepool’s can increase their Stake by having holders of ADA delegate their ADA to the Stakepool. Stakepool rewards are distributed to delegates of the pool minus fees to cover the Stakepool operator’s costs. This is beneficial for holders of ADA as:
- The process of delegating to a Stakepool is very simple — you do not need technical expertise to do it
- Holders are always in control of their ADA — they can switch to another Stakepool, move or sell their ADA whenever they want. You should never send your ADA directly to anyone for Staking — the process is designed for delegates to maintain control of their funds.
- There are no heavy costs for delegating — there is only an initial cost of around 2 ADA the first time an individual delegates.
How to delegate to a Stakepool
These are the basic steps to investing in ADA and Staking your ADA to a pool:
1. Download a wallet
Firstly you need a wallet capable of delegating. We recommend the Yoroi wallet available on android, apple store and as a chrome extension. You can create a new wallet or link to a hardware wallet. Simply go to the Yoroi Wallet website and select the download you require:
Once downloaded follow the setup instructions. Make sure to keep your seed phrase safe!
2. Purchase ADA
You can buy ADA from all major exchanges, for example Binance, Kraken and soon Coinbase. You will need to set up an account with an exchange (this can take some time as you may need to provide proof of identity).
Once you are setup on an exchange you should be able to deposit funds into your exchange account. You can then use this to purchase ADA on the exchange — most exchanges will offer guidance on how to do this.
3. Withdraw ADA to wallet
You will need ADA available in your wallet account to be able to stake. You can withdraw funds from an exchange directly in to the wallet you setup in Step 1. These are instructions for withdrawing in Kraken -
- Select Funding:
2. Find Cardano in the list of Account Balances and click Withdraw:
3. Add an address:
4. Find the wallet address to withdraw to, this can be found in Yoroi wallet:
5. Save the address and approve it from the link in your email:
6. Now withdraw to the newly added address:
4. Delegate your ADA
Once you have funds in a compatible wallet you should be able to delegate them to a Stakepool. We will go through the steps to do this using Yoroi wallet.
There are many Stakepools to choose from and a lot of factors to consider when choosing a pool to delegate to. For the purposes of this article we will demonstrate using our Stakepool — LambdaHoneypot.
In the Yoroi wallet find the delegation list:
Search for LambdaHoneypot in the filter box:
And click delegate! It’s that simple
For more information on Cardano and ADA staking please visit our website! https://www.lambda-honeypot.com/