How works Cardano mining? Well, Cardano is a cryptocurrency that you can’t actually mine. As this cryptocurrency gains popularity from 2017, more and more crypto enthusiasts have tried to contribute to the network. And we often hear the question of how Cardano mining functions. However, Cardano is not based on mining, but on staking. So if you are with your ADA Coins a passive income want to build, then you should Cardano staking operate.
Fortunately, it’s relatively easy to earn ADA. Most scalable blockchains use technology that allows ordinary users to become part of the network. Users receive rewards for their contribution to the development of the network and the blockchain benefits from a secure environment. In this article you will learn how Cardano Staking works and how you can build passive income with ADA Staking.
In this article about Cardano Mining / ADA Staking, you can expect:
What is Cardano?
Cardano is a blockchain network founded in 2017 by Charles Hoskinson (the co-founder of Ethereum) and Jeremy Wood. The parent company Input Output Hong Kong (IOHK) is behind Cardano. The network’s native token, ADA, aims to make transactions easier and promises a better overall experience compared to Bitcoin and Ethereum. ADA has a total supply of 45 billion coins.
The structure of Cardno is quite similar to that of Ethereum. The project underscores its future plans to revolutionize finance and the world of cryptocurrencies. It is for this reason that the Cardano network uses the proof-of-stake consensus mechanism.
ADA Mining: How does Cardano work?
Cardano uses the PoS (Proof-of-Stake), a key differentiator from the Bitcoin and Ethereum networks that use the PoW (Proof-of-Work) system. The PoW rewards miners for solving difficult math problems in order to mine a new block on the blockchain. In contrast, the coin holders in the PoS system verify and generate new blocks on the blockchain.
Proof-of-stake is a greener alternative for blockchain networks in general, as it doesn’t require brute coin hashing (the mining process). By using the PoS system, the development of the blockchain is not dependent on hardware. The backbone of a PoS blockchain are staking pools, which consist of users who come together and use their coins to validate blocks on the network. In return, users are rewarded with the native asset of this blockchain. The process of staking cryptocurrency is simple and does not put users at risk.
In addition to using the PoS system, Cardano ensures that the network is easily scalable due to the design of the blockchain. The network has two layers – Cardano Settlement Layer (CSL) and Cardano Computational Layer (CCL) – in contrast to most other networks that only work on one layer. The CSL layer conducts and records transactions on the blockchain, while the CCL layer is the smart contract layer that performs automatic transactions.
By design, the Cardano blockchain can perform faster transactions and has lower fees. In today’s marketplace, most cryptocurrencies aim to strike the right balance between speed, security, and decentralization. But few successfully address all of these problems. But Cardano seems to be successful and the platform is constantly evolving.
How does Cardano mining work?
Cardano is currently preparing to become part of the decentralized financial world. But can you mine Cardano? No, because the Cardano blockchain uses the proof-of-stake system to validate blockchain transactions. So you can stake Cardano. All that remains is to clarify how can you stake Cardano?
Cardano staking, or ADA staking, is pretty straightforward. You simply have to keep your ADA Coins in a Cardano-supported wallet. By holding your ADA coins in a crypto wallet or exchange, you are stalking them with a certain percentage. The proof-of-stake process uses the pre-existing ADA to confirm Cardano transactions – instead of mining using hardware to generate the assets.
The ADA staking is very simple. And the more ADA Coins you have, the higher the return. There are two ways to stake Cardano. You can stake ADA with an on-chain wallet or stake on a crypto exchange.
Cardano staking with a crypto wallet
You can implement ADA staking with a desktop wallet, a browser extension wallet or a hardware wallet.
Yoroi and Daedalus wallets are the two most commonly used crypto wallets for ADA staking. Create a name and an issue password for your wallet when you set it up. Giving names to your wallets will help you differentiate them. Pretty handy when you have multiple wallets at the same time. The issue password authorizes ADA transactions and delegation to one Cardano stake pool. Use a strong, long password that includes both uppercase and lowercase letters, numbers, and symbols. Most importantly, keep it in a safe place!
Oh, you also need to create a recovery phrase. With this you can make yours Cardano wallet restore if you lose your device connected to the wallet. For example, the recovery phase for the Yoroi wallet is a random 15-word password (for other wallets it can be 12 to 24 words). You can use this seed phrase to get back to your ADA coins to get. And, don’t forget, you should also keep the seed phrase in a safe place. Because without this seed phrase, the funds may be lost forever.
ADA staking with the Yoroi wallet
Yoroi is a crypto wallet that can act as a browser extension for Chrome, Firefox, and other commonly used desktop browsers. After you have installed and set up the wallet in your browser, you have to transfer ADA to it. This process is similar to setting up a metamask wallet.
- Click on Receive
- Use the displayed wallet address to send ADA from another wallet or crypto exchange
- When entering, make sure that it is the correct address – otherwise your coins will be lost forever
- As soon as the ADA coins have arrived in your Yoroi wallet, you can start with Cardano staking
- Note that the Cardano staking pools have different transfer fees
- To do this, look for staking pools via in the Yoroi wallet Delegates
Then you add your ADA Coins to the pool and ADA staking begins.
Cardano staking with the Daedalus wallet
Daedalus is a full node wallet. The Daedalus Wallet will download the entire Cardano blockchain to your computer, which is a secure way to stay away from third-party network problems.
After you’ve downloaded Daedalus and installed it on your computer, create a new wallet if you don’t already have one. And the same applies here: Choose a secure password and keep your password and seed passphrase in a super safe place! Once you’ve done that, ADA staking can continue:
- Open the Daedalus Wallet and open it Delegation Center
- Then you look for the registration card Stake pools around
- There you choose the best staking pool for you, with a click on the pools you can find out more about them – Pro tip: Choose a less frequented pool in order to generate the maximum return
- Now you delegate the desired amount to ADA
Rewards are calculated according to the following epoch.
ADA staking on a crypto exchange
You can also implement ADA staking on some crypto exchanges. Especially if you have no experience with crypto wallets, it can be quite convenient to rely on the service of an exchange.
Although rates can vary, finding a staking pool with a higher Annual Percentage Yield (APY) is important. As ADA’s price moves over time, the rewards generated by staking can add up to a significant amount. Many exchanges make it really easy for you and you can stake ADA there directly via your crypto wallet – such as on Binance or Kraken.
ADA staking on Binance
Staking Cardano (ADA) on Binance is pretty straightforward. After you’ve created an account, you’ll need to purchase ADA or transfer your account.
- Then, to stake ADA, go to the rubric Binance staking
- Then choose how long you want to stake ADA: 30, 60 or 90 days?
- Then you click on Stake Now
- Now you can choose how much ADA you want to stake – the minimum amount is 1 ADA, and you get interest every day
- Now you click on confirm and off you go
The service launched in February 2021 with an APY of 21.79% but has since dropped to around 5%. The main advantage of staking ADA on Binance is easy access to all of the services offered by the platform without having to transfer your ADA coins to an external wallet.
Cardano staking on Kraken
Kraken has an intuitive platform for cryptocurrency owners to trade their assets. As part of its core services, the exchange offers its users the staking of cryptocurrencies in order to generate passive income from their Kraken wallet.
- After purchasing or transferring ADA to Kraken, you can begin ADA staking
- There are no fixed staking periods or terms, you can withdraw your coins at any time
- On Kraken, the APY is around 4-6%
Kraken is one of the best cryptocurrency exchanges when it comes to flexible Cardano staking.
What are you waiting for?
Now you know how and where to stake Cardano. And you also know that you can’t mine Cardano. However, that doesn’t matter, because ADA staking is extremely lucrative. Furthermore, you are part of a larger vision here: The founders and the company IOHK have made it their goal to make Cardano a fundamental network for the decentralized future.
Disclaimer of liability
All information contained on our website is published to the best of our knowledge and belief and only for general information purposes. Any action taken by the reader in relation to the information contained on our website is entirely at your own risk. In terms of the learning area, our priority is to provide high quality information. We take time to identify, research, and create educational content that is useful to our readers. To maintain this standard and continue to create great content, our partners can reward us with a commission for placements on our articles. However, these commissions do not affect our processes for creating unbiased, honest, and helpful content.