Cardano (ADA) is a blockchain network launched in 2017 and the brainchild of Jeremy Wood and Charles Hoskinson, who is also the co-creator of Ethereum. Cardano's primary objective at launch was to create a native token that facilitates transactions and delivers a better overall experience than the current market leaders like Bitcoin and Ethereum.
The structure of Cardano (ADA) is similar to Ethereum, and it can be used to create smart connect, decentralized applications, and protocols. However, unlike Ethereum, it is based on the newer proof-of-Stake consensus, which uses significantly less power (up to 99%) when compared to previous protocols.
Because Cardano uses the newer protocol instead of the proof-of-work (PoW) consensus used in Bitcoin and Ethereum, Cardano cannot be mined but can be staked, which means keeping your Cardano wallet online.
This article will show you a step-by-step guide on how to stake Cardano and earn passive income from it.
How does Cardano work?
Cardano uses proof-of-stake (PoS), which is different from the proof-of-work (PoW) consensus used by Bitcoin and Ethereum. In the PoW system, there is no need for an intermediary body to supervise each transaction. A miner is responsible for solving complex mathematical problems and adding new blocks to the network.
However, in the PoS system, miners do not need to compete against each other to verify and add a block. Instead, the coin holders are responsible for verifying and generating new blocks on the blockchain network. The coin holders are selected randomly and rewarded with a small fee, accumulating over time and becoming a substantial source of passive income.
How to stake Cardano (ADA) Coin: A Step-By-Step Guide
Step 1: Create a wallet: To stake Cardana, you first have to buy it and store it safely in a wallet. There are several Cardano wallets out there like Exodus or Atomic wallet; you can download the one you like.
Step 2: Join a staking pool: Next, buy Cardano (ADA) from your favorite exchange platform (Binance/Kraken) and join a staking pool; depending on which wallet you choose, you will find an option to stake your Cardano coin for a set period of time and earn rewards in return.
That's it; simply keeping the coins stacked in your crypto wallet is enough to help you earn a passive income. There is no need to invest in expensive hardware and spend a fortune on electric bills. However, when selecting which staking pool to join, consider the minimum payouts and lockup periods and whether the rewards are fixed or variable.
An easier way to stake Cardano
Staking itself is an easy process when compared to mining; however, if you do not want to join any staking pool as you are unwilling to lock up your coins for a fixed period of time, the easiest way to earn passive income from Cardano is using the daedaluswallet.io. You can create an account and hold some Cardano coins, and that is it. You are not required to do anything more, and depending on the amount of coin you hold, you will get a daily interest on your holdings. The entire process is automatic; simply having a coin in your wallet will make you eligible for rewards.
The profitability of Cardano (ADA) will vary if you set up your own mining/staking environment. Then there are other factors as well like electricity bill and the fixed overhead costs. So a much easier alternative can be to join popular staking pools; however, if you want an even easier method, try daedaluswallet.io, which automates the whole process, and all you have to do is have Cardano coins in your account, and that's it.