5 Steps To Staking ADA On The Cardano Blockchain

Cardano is one of the top blockchains by market cap. ADA is the currency of the Cardano blockchain. Cardano is an up-and-coming proof-of-stake blockchain that is being adopted by individuals, companies, and entire countries.

One of the benefits of holding ADA is the ability to stake it as a network participant and earn additional ADA as a reward for doing so. I’m going to walk you through the 5 steps to staking your ADA.

How you stake ADA on the Cardano blockchain:

  1. Create an ADA wallet

  2. Purchase ADA on an exchange

  3. Transfer ADA from exchange to ADA wallet for staking

  4. Choose a staking pool and delegate ADA

  5. Wait for 3 epochs

How to stake ADA

  1. Create an ADA wallet

    In order to stake ADA, you must do so within an exchange or wallet that supports ADA staking. The Cardano community is adamant that you stake in either the Yoroi Wallet or Daedalus Wallet rather than on exchanges in an effort to keep the blockchain decentralized.

    I downloaded both wallets and prefer to use the Yoroi Wallet on my mobile device. The Daedalus wallet runs slow on my computer and I like buying my ADA on Coinbase then transferring it to my Yoroi Wallet.

    Daedalus Wallet

    Daedalus is Cardano's main wallet developed by Input Output. It is a full-node wallet which means it needs to synchronize with the whole Cardano Blockchain, which may take some time at first use. It took me half a day for mine to sync. You can download the Daedalus Wallet here.

    Yoroi Wallet

    Yoroi is a Cardano Wallet developed by Emurgo, one of the founding entities of Cardano. It is a light wallet, which means it doesn't have to synchronize with the blockchain as Daedalus does. Yoroi can be downloaded on mobile or can be used on a desktop as a browser extension.

  2. Purchase ADA on an exchange

    In order to add ADA to the secure wallet of your choice, you must first purchase ADA. I use Coinbase as it’s one of the largest, most trusted cryptocurrency exchanges and is now regulated by the SEC as a publically traded company.

    Purchasing ADA on Coinbase is as simple as linking a bank account, bank card, or PayPal, purchasing an amount of ADA, and watching it populate into your ADA wallet within Coinbase. Coinbase doesn’t support staking ADA at this time, so we must transfer the ADA to the secure wallet of our choice.

  3. Transfer ADA from exchange to ADA wallet for staking

    When you log into your secure wallet (Yoroi or Daedalus), you will see a tab called “Receive.” This will provide you with an address to your wallet that will act as a mailbox for your incoming ADA.

    Copy this receiving address by long pressing on mobile or right-clicking on PC. You then want to go to your exchange wallet that is currently holding your ADA and choose to “send ADA.”

    When prompted, paste the Yoroi or Daedalus receiving address. At this point, you can send any amount of your ADA from your exchange wallet to your secure ADA wallet for staking.

    Note: On the first transfer after setting up a new wallet, I like to transfer just a couple of ADA to ensure it’s going to arrive safely and to understand the process. After that, I freely transfer ADA as needed.

  4. Choose a staking pool and delegate ADA

    Now that your ADA is safely in your Yoroi or Daedalus Wallet, you must choose a stake pool to delegate your ADA too. I’m going to walk through the process of the Yoroi Wallet. If you need instructions on staking with the Daedalus Wallet, please go here.

    Within the Yoroi Wallet, you will see a tab called “Delegate.” This tab will lead you to the staking center within the wallet. You can now search for a staking pool to delegate your ADA.

    These staking pools are run by individuals or groups who have pledged to faithfully support the network and maintain system uptime. It’s important to note, staking your ADA is not sending it out of your wallet nor is it “locked.” The ADA is always within your control and you’re free to do with it as you wish.

    Staking pool terms to know

    Epoch Fee / Fixed Fee: It's a constant value of ADA that the Stake Pool Operator will earn at the end of every epoch for maintaining the pool, but the pool must produce a block in that epoch.

    Margin / Variable Fee: The cut the Pool Operator takes from the rewards before distributing them among its delegators.

    Saturation: Pool saturation is the limit to the pool size, after which the pool rewards will be capped. The saturation limit of a pool is about 63.6 million ADA as of now. When the limit is reached, the pool will no longer be getting higher rewards for more delegations. This keeps any one staking pool from gaining too much influence on the system.

    Pledge: The amount of ADA the pool operator has staked in their own pool.

    ROA: Return on ADA is the expected annualized return in the current epoch (typically around 5%)

  5. Wait for 3 epochs for ADA rewards

    It typically takes 3 epochs (15 days) to start receiving your ADA rewards in each subsequent Epoch. Many people get tripped up at this step thinking they must have done something wrong. If you’ve had your ADA staked for 3 full epochs and you’re not seeing any rewards upon the completion of the next epoch, your stake pool may not have been selected to generate the new block. I would wait for a few more epochs before potentially staking with another stake pool.

ADA Staking FAQ’s

What is Proof-of-Stake?

Proof-of-stake answers the performance and energy-use challenges of proof-of-work and arrives at a more sustainable solution. Instead of relying on 'miners' to solve computationally complex equations to create new blocks (and rewarding the first to do so) proof of stake selects participants or stake pools to create new blocks based on the stake they control in the network.

Simply put, instead of mining cryptocurrency with high-end computers, you can “mine” crypto by staking your currency to strengthen the network and in return earn a portion of the newly created blocks. You can learn more about Cardano here.

Why stake ADA?

ADA is the cryptocurrency associated with the Cardano proof-of-stake blockchain. By staking your ADA, you’re committing it to a stake pool or a group of others also committing to staking their ADA. Staking on the Cardano blockchain is simply participating in transaction validation.

The more ADA holders who stake their ADA, the more decentralized and secure the Cardano blockchain becomes. The reward for staking your ADA is that you can earn a % APY on the ADA that you hold (typically around 5% APY).

Do I have to stake new deposits to my ADA wallet?

Once you’ve staked your ADA in a staking pool, and new ADA transferred to that wallet will automatically be staked.

Am I sending ADA when I stake it to a stake pool?

No! You are always in control of your ADA even when it’s staked. Transferring ADA out of your wallet will simply reduce the staking rewards you get in the next epoch.

What’s an Epoch?

Each Cardano epoch consists of a number of slots, where each slot lasts for one second. A Cardano epoch currently includes 432,000 slots (5 days). In any slot, zero or more block-producing nodes might be nominated to be the slot leader.

Can I redelegate my ADA to a new stake pool?

To redelegate your stake, open your wallet and head to the delegation center. In the list of wallets you own, find the wallet you wish to redelegate. On the right-hand side, there will be an option to ‘redelegate’ your ADA. This process will take two epochs to update your staking preferences, and another two epochs before you begin receiving rewards—so think carefully about how and when you redelegate.

How do I select a staking pool?

  • Don't delegate to over-saturated pools or you risk getting reduced rewards if your pool is selected to generate a block. Join pools below 60M in pool size.

  • The pool you want to choose should have above 1M Active Stake to be able to produce blocks.

  • Check for the pool reliability - Stake pools need to maintain 24/7 uptime to be able to validate blocks.

  • Check your staking pool periodically to ensure they stay below 60M pool size or move to a new staking pool.