How to Stake Cardano in 2023

Aleksandar Hrubenja
Aleksandar Hrubenja
12th May 2023

Staking ADA is an excellent way for its holders to participate in the network’s consensus and earn rewards. By staking this cryptocurrency, you take part in the future of blockchain technology, and gain the opportunity to earn more ADA yourself.

Below we will cover exactly what Cardano staking entails, and the ways you can stake ADA, as well as the best platforms you can use to do so.

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Top Cardano Staking Platforms

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What is Cardano Staking?

Crypto staking is a process in which an individual pledges some (or all) of a specific cryptocurrency they own onto its blockchain. By doing so, you “lock” the amount of currency you staked for a specific period of time (depending on the blockchain and the manner in which you staked). The more coins you stake, the greater the odds that you will become a validator (or slot leader in Cardano terms). This, then, increases your chances of generating a block and getting staking rewards.

This locking helps verify transactions within the blockchain, making it more secure and stable by creating new blocks. Every time a block is added, new cryptocurrency coins are distributed.

The main incentive behind staking is earning a reward. Rewards can be approached as a kind of passive income, or a type of interest or dividends, you receive through your staking. They take the form of the cryptocurrency you staked.

Cardano Staking - Useful Terminology

  • Block - A bundle of transactions that are joined together into a single unit, which is added to previous blocks to form the blockchain.

  • Consensus mechanism - Determines how agreements are reached among participants in a specific blockchain network. Cardano is governed by the Proof of Stake consensus mechanism.

  • Stakeholder - A person who holds ADA and participates in the staking process, but is not necessarily a validator.

  • Validator/Slot Leader - Individuals who are selected to validate transactions and add blocks to the blockchain. Within ADA/Cardano staking, slot leaders are interchangeable with validators.

  • Staking pool - A group of stakeholders who combine their ADA holdings, and who, in this way, increase their chances of becoming validators.

  • Unstaking - The withdrawal of a crypto from staking. Requirements for unstaking depend on the blockchain, and the manner in which staking is being performed.

  • APY/Yield - Annual percentage yield, expressed as a percentage, refers to the rate of return stakeholders can expect on their staked ADA.

  • Slashing - A penalty mechanism within blockchain networks, used to punish malicious behavior on the blockchain. Can take multiple forms, including the reduction or confiscations of a staker’s tokens.

Proof of Stake (PoS) and Ouroboros
Cardano Epochs

How to Stake Cardano

There are several ways you can stake Cardano. These differ in the amount of time and effort required. Here's a breakdown of the different methods.

Staking Cardano on a centralized exchange - Easy

This is the easiest and most straightforward way you can stake your ADA. By staking your crypto through a centralized exchange platform, you get all of the technical aspects of the process handled for you. Everything, from the staking infrastructure to the distribution and acceptance of rewards will be performed by the exchange.

The entire process is as simple as setting up an account and choosing the coin you want to stake. It's easily the best for beginners, or simply those who want a hassle-free staking experience.

Benefits of staking ADA on a CEX

The main drawback of staking on a CEX is that you are essentially trusting a third party to manage your tokens, which is why it is paramount to select a reliable and secure platform. You may also be charged a small fee for using their staking service.

The exact process of how to stake ADA through an exchange is covered in the article below.

Joining a Cardano staking pool - Intermediate

A staking pool involves a group of individuals who pool their ADA in one place, in order to maximize their chances of being chosen as a validator. This, in turn, increases their odds of gaining a reward, which is distributed evenly.

For Cardano, there are two terms you need to keep in mind. There are:

  • Stake pool operators - Individuals who set up the stake pool, and maintain and operate it. This involves owning or renting a server and the responsibility of running and monitoring the Cardano node.

  • Stake pool owners - Also referred to as delegators, these are individuals who pledge their ADA to a stake pool.

How to join a Cardano staking pool

Joining a staking pool gives you the freedom to choose your own validator based on their credentials, expected returns, and fees they charge. This differs from staking through a CEX as the CEX will choose what they deem to be the best pool on your behalf.

Running your own Cardano staking pool - Hard

You can create a private pool, which gives you all of the rewards you might get from staking. However, if you set up a public pool, more people will join up, increasing your odds of generating blocks.

The main advantage of operating your own node is the amount of freedom and control you have over your stake. Furthermore, you stand to gain the largest amount of rewards.

However, the main drawback is the amount of work and technical knowledge you need, as well as accompanying hardware and software investment.

Requirements for running a Cardano staking pool

As far as the set-up process is concerned, this is far outside the scope of this article. The best course of action is going directly to the official Cardano site, and check out their guide on setting up your own node.

Cardano staking options compared

CEXAn account with a platformStaking rewards, minus a feeTrusting a third-party service
Joining a staking poolA private wallet, some technical knowledgeStaking rewards, minus a feeLosing your private keys, trusting a third-party (pool operator)
Running a staking poolSignificant technical knowledge; Hardware and software investmentHighest staking rewardsMistakes in setup lead to downtime; penalties for downtime if you run a public pool

Where to stake Cardano

We've thoroughly researched all the platforms that support Cardano staking, and here are our top picks.

1. Coinbase - Overall Best Platform For Staking Cardano

Coinbase is one of the most popular cryptocurrency exchanges in the world, and this is due to its useful features, strong security, and how easy it is to use. Its educational resources and intuitive interface make it a favorite for newer crypto investors.

The staking service is incredibly easy to use - just head to the Earn tab and you can stake ADA in a couple of clicks. This tab will also show your earnings over time, and a breakdown of your staked coins and your rewards for each.

Downsides of Coinbase are that it takes a 25% commission on staking rewards, and it only supports staking for five cryptocurrencies, which is fewer than competitors. However, if you're looking for an easy way to stake on a platform that's regulated and insured, then you'll struggle to find anywhere better than Coinbase.

How to stake Cardano on Coinbase

Before you can stake ADA, you'll need to create an account on the official Coinbase website and buy some ADA or transfer it from another wallet.

Step 1 Go to the assets tab
Step 2 Read the disclaimer
Step 3 Enter how much you want to stake
Step 4 Confirm stake
Visit Coinbase

2. Binance.us - Best For Choice of Cryptocurrencies

Binance is a leading cryptocurrency exchange that supports staking of several coins, including Cardano. It has some of the lowest fees in the industry, and hosts a number of real-time charting tools, as well as a mobile and desktop app, and its own website.

Being one of the oldest platforms around, Binance.us has over 150 cryptocurrencies on its exchange, and provides support for many fiat currencies.

As far as staking is concerned, Binance.us offers competitive rates, and offers a large number of staking options.

How to stake Cardano on Binance

Before you begin staking, you need to set up an account on Binance.us, and transfer or acquire some ADA.

Step 1 Go to the Staking page
Step 2 Understand the risks
Step 3 Enter an amount
Step 4 Confirm
Visit Binance

3. Crypto.com - Highest rewards (if you stake CRO along with ADA)

Crypto.com is a versatile cryptocurrency platform that supports over 250 currencies. The platform's extensive range of supported currencies makes it an attractive choice for traders looking to diversify their portfolios.

One of Crypto.com's standout features is its ecosystem of cryptocurrency products. These include trading, staking, and swapping services. They also provide a proprietary credit card, crypto wallet, and NFT marketplace

Crypto.com’s staking is a bit complicated. Its rewards greatly depend on the length of your stake lockup, as well as the USD fiat value of CRO (Crypto.com’s cryptocurrency) you stake along with it. Taking these two factors into account, the reward rate can vary widely.

How to stake ADA on Crypto.com

The first thing before staking ADA on crypto.com is to download the app and create an account.

Step 1 Open Crypto.com Earn
Step 2 Select ADA
Step 3 Enter the term length and amount
Step 4 Confirm
Visit Crypto.com

Cardano Staking Platforms Compared

🏆 Reward rate2%0.80%0.1% - 4.4%
⌛ Payout frequencyEvery 5 daysWeeklyWeekly
⚠️ Staking limitsMinimum of $10.01 to 4,400,00025 - 240,00
💰 Staking commision25%Small commissionNo information
#️⃣ No. of coins that can be staked5+26+22+

How much can you make staking ADA?

As far as how much you can earn by staking Cardano, it really depends on the manner through which you stake it, as well as the amount you stake and market conditions. With that being said, there are some things you should keep in mind.

First of all, expected APYs vary based on your staking approach, especially on the staking pools and the exchange platforms you choose. You can expect up to 5% APY, with your rewards most likely floating around 3.2% for most staking pools, but again, this depends on the pool and the CEX.

The biggest thing you can do to influence the size of your rewards, besides choosing the manner of staking, is the amount of ADA you stake. The more you commit, the greater your rewards.

Finally, as with any cryptocurrency, converting ADA into fiat currencies depends on the state of the market, and the crypto’s value. While the rewards you can get from staking on, say, a CEX, are pretty much the same, the “conversion rate” can vary significantly.

Is there a downside to staking Cardano?

Staking can serve as a (relatively) easy way to earn passive income. However, there are, as with anything, downsides to staking Cardano.

  • Lock-up periods - A big part of staking is not being able to withdraw them until certain conditions are met, most often waiting for a certain time frame to expire. Note that this is not an issue for Cardano’s staking pools, as you can withdraw or relocate your ADA whenever you want. However, Coinbase has a two-day unstaking period, and if you opt for a fixed term on Crypto.com, you may be unable to touch your ADA for one or three months.

  • Price volatility - The cryptocurrency market, including Cardano, can experience significant price volatility. The value of ADA can fluctuate, potentially impacting the overall profitability of staking. It's important to be prepared for price fluctuations and understand the potential risks involved.

  • Changes - Cardano's staking ecosystem is still evolving, and there may be occasional technical or operational challenges. These could include issues related to network upgrades, changes in staking parameters, or the performance and reliability of staking pool operators. It should be noted, though, that Cardano takes great pains to stay as scalable, secure, and efficient as possible.

Note that slashing is a common issue for many staking enterprises. Cardano, however, does not implement any kind of slashing.

Should I stake Cardano?

The final decision on whether you should stake ADA or not always comes down to you. In order to reach a decision, you need to consider several things, such as:

  • Level of experience - You need to be aware of how much experience and knowledge you have surrounding the cryptosphere. There is a certain level of awareness regarding trends, movements, and price fluctuations, as well as the know-how needed to gain said awareness, that is necessary to make the most out of your ADA staking.

  • Risk tolerance - Any investment and trading endeavor comes with a certain level of risk. You need to be aware of your risk tolerance - i.e. how much money and time are you willing to risk (and lose) without it hindering your financial situation and emotional well-being.

  • HODL or trade - Every once in a while you need to re-make the decision on whether you want to trade and sell your ADA, or whether you want to continue holding on to it for dear life. If you want to be able to sell your ADA at a moment's notice, then a fixed-term staking contract isn't very convenient.

  • Taxes - Be very aware of the taxes and financial obligations surrounding crypto and crypto trading in your region. In the US, for example, staking returns are generally subject to Income Tax, while Capital Gains Tax will apply whenever you sell crypto.

  • Take volatility into account - Cryptocurrency markets are known for their volatility, and Cardano is no different. You need to be aware that there is always a risk when it comes to crypto trading and staking.

Final Thoughts

Staking Cardano is an excellent approach to gaining more crypto, and gaining a deeper involvement in the decentralization and development of the cryptosphere. By staking ADA, you are helping to secure the blockchain and in return, you receive rewards.

If you're looking for somewhere to stake your ADA, Coinbase is our top pick due to its ease of use, strong security, and other useful features like Learning Rewards.

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Author Bio
Aleksandar Hrubenja
Aleksandar Hrubenja
With a BA in English literature and linguistics, training provided by veteran licensed court interpreters, and direct content management experience, Aleksandar Hrubenja knows what good content looks like. He’s tackled any topic thrown his way, spending the last six years writing articles on finance, cryptocurrency, and digital marketing — just to name a few.