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Cryptocurrencies can be mined not only with the help of expensive equipment. An alternative method called staking makes it possible to receive coins on the algorithm proof of Stake (PoS). It allows everyone to count on profit – of course, if there is sufficient initial capital.
Cardano (ADA) operates on such an algorithm that maintains the stability of the network. How to start staking Cardano and what is required for this? Read about it in our material.
What is Cardano?
The project was launched in 2014 thanks to former Ethereum developer Charles Hoskinson. After leaving the team of creators of the air, he decided to establish a new company – IOHK. His partner was Jeremy Wood.
The token was issued through an ICO, as the young company needed to raise funds for the development of technological solutions. For the period from 2015 to 2017, about $80 million was poured into the project.
After the completion of the ICO, three companies involved in the development of new technologies entered into a partnership agreement. The IOHK team, the Emurgo organization, and the Cardano foundation became allies, and the project became decentralized. The speed of its development has increased significantly.
Cardano looked like an innovative product from the very beginning. Its creators saw the need to provide banking services to a population that did not have access to classic financial institutions. The system included features such as personal identification and access to accounts. An additional option was the creation of a list of violators of the rules.
The interaction of Cardano with decentralized applications is provided through smart contracts. To do this, use the product Project Catalyst.
How does ADA staking work?
The basis for the production of new coins is staking cardano – in fact, this is the storage of virtual currencies in the wallet. Since ADA operates on a PoS consensus algorithm, each member of the network can join the development of the network, helping to perform various operations in the Cardano ecosystem. For this, users are rewarded. The more coins on the account, the higher the probability of carrying out the operation and receiving deductions.
Here are the rules for ADA staking:
- there must be at least 5 ADA in the wallet, sometimes 10 coins are required;
- there is a fee for registering an address: it is returned after the end of staking;
- it is impossible to provide only part of the funds from one address, so one wallet will be fully used exclusively for staking.
Which wallets are suitable for ADA staking?
Cardano developers recommend using only Daedalus branded desktop wallet for staking coins. It can be downloaded from the official website.
Dedalus wallet. Source – Coindoo
But there are other electronic “wallets”. For example, you can use AdaLite for staking. This is a non-custodial online wallet that allows you to stake cardano. What does that require? Fund your account and enter the address of the staking provider. It was developed by Vacuumlabs.
Wallet AdaLite. Source – adalite
It should be understood that the security guarantees from the Cardano developers do not apply to unofficial wallets. That is why, before choosing a staking software, you need to pay attention to such factors:
- convenience and accessibility of the interface;
- high level of security – two-factor authentication, backups and self-storage of keys;
- support for the necessary currencies and, first of all, Cardano;
- efficiency of technical support.
How does Cardano staking work?
In fact, ADA staking can be done in two ways. The simplest is delegation. In this case, the user transfers the right to process transactions – their capacities – to another participant. To do this, you need to find a reliable pool and connect to it. When working with the Daedalus wallet, the process looks like this:
- Go to the official Daedalus Mainnet website and download the wallet to your device.
- Confirm the date and date, sync. This process may take about two hours.
- Create a wallet if you don’t already have one. To do this, enter the “Add Wallet” menu and click the “Create” button. A recovery phrase will be generated – it should be saved in any reliable way, or better – in several different ways. Then enter a unique wallet name and create a complex password for it.
- Deposit at least 10 ADA coins into your account.
- Then, in the crypto wallet menu, find the “Delegation Center” item. Immediately decide on the address that will participate in staking.
- Next, select the appropriate pool from the list that opens. Confirm the delegation intent, provide a password.
After completing all the above actions, the coins will be reserved on the general account of the pool. As long as they are there, they cannot be used. Profits will be credited to the account every five days. This way staking Cardano brings a little less earnings, but it is much clearer for a beginner. It does not need to be controlled – unlike the second method of mining ADA.
The second option involves joining the network as a node and gaining the status of a validator. In this case, the availability of uninterrupted access to the Internet is 100% necessary. The more failures, the lower the income and user confidence. To set up, the validator must have various technical skills. According to the developers, for this you will need:
- understanding the mechanics of the process of launching and maintaining Cardano nodes;
- skills in working with the system and server maintenance;
- experience in the development and operation of such systems.
The process of creating a pool and all the necessary technical specifications are described in detail on the Cardano official website. It should be noted that the owner of the pool may not hold coins in the account at all, but only provide others with the technical possibilities of staking.
Pricing Chart Cardano. Source – CoinMarketCap
To date staking Cardano ADA it’s hard to match anything else with a comparable level of comfort and ease of use. The project has already achieved high reliability indicators, so it deservedly ranks 8th in the CoinMarketCap rating with a capitalization of almost $15 billion.
Learn more about how to mine Cardano here.
Disclaimer. Investing in any financial asset carries the risk of losing capital. Nothing in this text can be considered an investment recommendation or an offer to buy/sell any financial instruments. For all their actions in the stock market, each investor bears full responsibility independently.
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