The 3 Best Places to Stake Cardano (ADA)

On the heels of Ethereum and other smart contract platforms, Cardano has often been called an Ethereum-killer. Although it has yet to implement smart contracts fully, this makes it all the more likely for Cardano’s native cryptocurrency ADA to skyrocket in price.

In the likelihood of such possible gains, here is all you need to know about Cardano’s prospects and staking ADA tokens across different platforms.

Why Cardano Instead of Ethereum?

If we look at the market share of blockchain platforms that have smart contract capability, we immediately see that Ethereum is way ahead of the game. As of September 25, 2021, it holds $76.73 billion worth of crypto assets locked inside its smart contracts.

Ethereum vs. other blockchains

Image Credit: The Block

To briefly recap the importance of smart contracts, they are a revolutionary financial innovation because they replicate all the banking services—borrowing, lending, exchange—but without both governments and banks being involved. It is no wonder that within the span of a year, since the summer of 2020, decentralized finance (DeFi) has amassed over $120 billion worth of crypto assets across all smart contract blockchains.

The question then is, where is Cardano in this highly profitable picture? If we compare the prices of Ethereum (ETH) with Cardano (ADA), we see a surprising outcome over the last six months (April-September 2021). ADA has outperformed ETH by 23 percent.

Price performance of Cardano (ADA) and Ethereum (ETH) over the last 6 months

Image Credit: TradingView

However, those who have been following blockchain space closely know why that is the case. Ethereum has followed a different development approach to Cardano. Instead of upgrading from Proof-of-Work (PoW) to Proof-of-Stake (PoS) first and then implementing smart contracts, Ethereum did it the other way around—still on its transition toward ETH 2.0.

On the other hand, Cardano does not need such a massive upgrade because it deployed the energy-efficient PoS from the get-go. Building on this foundation, Cardano is now ready to deploy smart contracts. In the words of Cardano’s creator, Charles Hoskinson:

We need governance, we need certification, we need insurance, we need regulation on these things, metadata identity… at the same time, you need to decentralize. The way we constructed Cardano was for that second wave.

Considering that smart contracts increased ETH prices by seven times over one year, there is a high likelihood ADA will experience the same explosive growth. Moreover, the global economic network of networks, the World Economic Forum, lists Cardano in its cryptocurrency guide. One only has to stake ADA cryptocurrency in advance to reap from the golden rule of trading: buying low and selling high.

Where to Stake Cardano (ADA)?

When it comes to decentralized finance (DeFi), staking is the key term to understand. In traditional finance, if you were to deposit your money into a bank, you would technically stake those funds. The bank would use your money to issue loans and make other investments. In turn, you would receive a small interest rate percentage for placing your trust in the bank.

Staking in blockchain finance follows the same principle but is more direct and yields much higher rewards. Specifically, by staking ADA tokens, you become a part of the Cardano blockchain network. Your tokens are used for validating new blocks (transactions) on the network, contributing to its governance and security.

After all, this is the core feature of blockchain finance—decentralization. And the key tool to make it happen is the use of tokens. While a PoW blockchain like Bitcoin uses the term “mining,” this is called staking in a PoS blockchain like Cardano. In return for your service of securing Cardano by staking ADA tokens, you receive a staking reward.

Here are the platforms where you can stake Cardano (ADA) and start this form of passive income.

1. Daedalus

Daedalus wallet

Deadalus is the official desktop crypto wallet developed by the Cardano team itself. By downloading and installing the Daedalus wallet, you will gain access to the entire copy of the Cardano blockchain. In technical terms, it is a full node wallet.

This means that you can even run your own Cardano node. When you stake your ADA coins in the Daedalus staking pool, you give the network your voting power. But do not worry, as you will still have full control over your ADA coins. The staking reward is 5 percent annually, 83 times higher than the national average interest rate for savings accounts at 0.05 percent.

Because it is a full node wallet, Daedalus requires a lot of storage space, which is required for Cardano’s entire blockchain history of all transactions, past and future. However, as an official wallet of IOHK (Cardano’s developers), this is the most secure and advanced option to stake your ADA cryptocurrency.

2. Yoroi

Yoroi Wallet

Yoroi wallet is a step-down from Daedalus in terms of storage footprint. As a lightweight wallet, it is a more intuitive wallet to stake ADA tokens. Its lightness and user-friendliness extend so much that you can even download it as a browser extension for all major platforms.

To make it easier to sift through your potential staking rewards, you can filter staking pools by RoI (return on Investment), staking cost, and pool size. The staking reward is similar to Daedalus, at around 5 percent APY (annual percentage yield).

3. Binance

Binance locked staking

Binance is the world’s largest exchange, which also serves as a web wallet. You can access it with any device capable of connecting to the internet. However, the price for that convenience is a custodial wallet, meaning Binance holds your private key, effectively controlling your funds instead of you.

Nonetheless, Binance offers the highest staking reward. If you lock your ADA tokens for at least 30 days, you receive 5.09 percent APY.

You can also choose the lock-in periods of 60 or 90 days. Alternatively, the flexible option allows you to withdraw ADA coins at any time, but then your staking reward would only be up to 0.5 percent. Thankfully, the price of entry is just 1 ADA, which at press time is $2.26.

Cardano (ADA): Smart Contracts and Staking Returns

During 2020-21, people sought alternatives to Ethereum due to its high ETH gas fees needed to use the smart contract blockchain. Binance Smart Chain, Solana, and Polkadot have benefited from it. However, Cardano has been long-held as the most comprehensively developed PoS blockchain with hack-resistant smart contracts.

Correspondingly, it is just the right time to begin staking ADA ahead of Cardano’s further network upgrades. It is nothing less than staking in the infrastructure of an alternative dApp ecosystem. Who knows if it will become the dominant one in a few years, resulting in ADA’s exponential value growth.

Picture of Cardano
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