Cardano Staking Guide 2024
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Daedalus is our top pick for Cardano staking, offering high security as a full node wallet and complete control over ADA staking choices.
Cardano staking works by locking ADA tokens in a staking pool to participate in the network's consensus mechanism, earning rewards distributed at the end of each epoch.
How to stake Cardano
Staking Cardano involves locking up your ADA tokens to participate in the network's consensus mechanism and earning rewards in return. First, you need ADA tokens and a compatible wallet, or choose a staking platform. Staking can be done directly through wallets like Daedalus or Yoroi or via exchanges that offer staking services.
The process usually involves selecting a staking pool, delegating your ADA tokens, and then waiting for the rewards to accumulate. Rewards are typically distributed at the end of each epoch, which lasts about five days. To maximize your returns, it's important to research and choose a reputable staking pool with a good track record and reasonable fees.
Where to stake Cardano
Staking Cardano can be done through various platforms, each offering different features and benefits. Wallets like Daedalus and Yoroi provide direct control over your staking choices, allowing you to select from a range of staking pools. Hardware wallets such as Ledger and Trezor offer enhanced security for your staked ADA, making them ideal for long-term staking.
On the other hand, exchanges like Binance provide a convenient option for those who prefer an all-in-one platform for trading and staking. It's important to evaluate the security, convenience, and potential rewards of each platform to find the best fit for your staking needs.
When choosing where to stake Cardano, consider the platform's reputation, user interface, and compatibility with your investment strategy. For those seeking the highest security, hardware wallets are a top choice, while users looking for ease of use may prefer staking through a mobile or web wallet.
Exchanges offer a straightforward staking experience but may come with higher risks and lower rewards. Ultimately, the right platform for you will depend on your priorities and how actively you wish to manage your staking investments.
Top Cardano staking platforms
Here are our experts’ picks of the best Cardano staking platforms available today, with pros and cons to help you identify the right option for you.
Binance and Binance.US offer staking services for ADA, providing a convenient option for users who already trade on the platform. It's a good choice for those who prefer the simplicity of staking through an exchange.
Pros
Convenient for users already trading on Binance.
Easy to use with a user-friendly interface.
Cons
Lower rewards compared to dedicated staking platforms.
Regulatory risks associated with staking on exchanges.
For those who prefer the simplicity of staking through an exchange, Binance provides a straightforward option, offering a hassle-free way to earn staking rewards.
Daedalus is a desktop wallet that allows users to stake ADA through various pools, typically yielding around 5% rewards. It's a full node wallet, meaning it downloads the entire Cardano blockchain, providing high security and privacy.
Pros
High security as it's a full node wallet.
Complete control over your staking choices.
Cons
Requires significant storage space.
Can be complex for beginners.
Daedalus offers a secure and comprehensive staking experience, ideal for those prioritizing security and control over their investments.
Exodus Wallet is a multi-currency wallet that supports staking for ADA and other cryptocurrencies. It's known for its user-friendly interface and wide range of supported assets.
Pros
Supports a vast range of cryptocurrencies.
Friendly user interface.
Cons
Hot wallet, not as secure as a hardware wallet.
Fewer staking options relative to dedicated staking wallets.
Exodus Wallet is ideal for users looking for a convenient way to manage and stake multiple cryptocurrencies in one place, offering a good balance between ease of use and functionality.
Ledger is a hardware wallet that offers top-notch security for your ADA tokens. It can be paired with wallets like Yoroi or AdaLite for staking, providing a secure cold storage option.
Pros
Highly secure cold storage.
Supports multiple cryptocurrencies.
Cons
Requires additional wallet application for staking.
Less convenient for frequent transactions.
For those prioritizing security above all, Ledger's robust cold storage solutions provide peace of mind, making it an excellent choice for long-term staking.
Trezor stands out as a premier hardware wallet for securely staking Cardano (ADA). As a hardware wallet, Trezor keeps your ADA assets offline, away from potential online threats. Its strong security measures, including PIN protection and passphrase encryption, provide peace of mind for your investment.
Pros
Exceptional security through cold storage, safeguarding your ADA from online vulnerabilities.
Supports an extensive array of cryptocurrencies, making it versatile for diverse portfolios.
User-friendly interface ensures an easy setup process, even for beginners.
Compatible with well-known wallet software, offering flexibility in managing your assets.
Cons
Requires the purchase of the hardware wallet device, which may be an additional expense.
The initial cost might be a barrier for some users, especially those new to cryptocurrency.
When staking Cardano with Trezor, you combine the security of a hardware wallet with the earning potential of staking, providing a balanced approach to growing your ADA holdings while keeping them secure.
Yoroi is a lightweight wallet designed for mobile and web. It's convenient for staking ADA on the go, user-friendly, and allows for quick staking setup.
Pros
Convenient for mobile and web users.
User-friendly interface.
Cons
Limited features compared to full node wallets.
Dependent on third-party servers for blockchain information.
Yoroi provides a balance between convenience and functionality, making it ideal for users who want to stake ADA without the complexity of a full node wallet.
What is ADA?
ADA is the native cryptocurrency of the Cardano blockchain, named after Ada Lovelace, a 19th-century mathematician recognized as the first computer programmer. It is used for transactions, smart contracts, and as a means for users to participate in the network's governance through staking. ADA is also used to reward validators and stakers for their contribution to the network's security and operation.
Cardano's proof-of-stake (PoS) blockchain, founded by Ethereum co-founder Charles Hoskinson, distinguishes itself from proof-of-work (PoW) blockchains like Bitcoin by using staking rather than mining to validate transactions and produce blocks. This approach is more energy-efficient and allows ADA holders to earn rewards by staking their tokens in a staking pool or running their own pool.
Finding the right Cardano staking pool
The choice of a staking pool is a critical decision for Cardano stakers. A good staking pool has a reliable performance record, reasonable fees, and a strong reputation within the community. It's also important to consider the pool's size, as too large a pool might mean diminishing returns due to saturation, while too small a pool might not win enough blocks to provide consistent rewards.
Researching and comparing different pools' performance and fee structures is crucial. Many stakers use online tools and community forums to gather information and make informed decisions. Additionally, diversifying your stake across multiple pools can reduce risk and increase rewards.
Risks of staking Cardano
Staking Cardano comes with risks. Market volatility can affect the value of your staked ADA, and there's always the risk of cyber attacks on the staking platform or pool. Additionally, staking funds are locked for a period, which means you won't be able to access your ADA immediately if you need to liquidate your assets.
It's important to only stake with reputable platforms and pools, use secure wallets, and keep your recovery phrases safe. Educating yourself about the staking process and staying updated with Cardano's developments can also help mitigate risks.
Taxes when staking Cardano
Staking rewards from Cardano are typically subject to crypto staking taxes, much like other forms of income or investment gains. The exact tax treatment varies depending on your jurisdiction and the local tax laws. In many countries, including the US, staking rewards are considered taxable income and must be reported on your tax return. Keeping detailed records of your staking transactions and rewards is crucial to ensure accurate tax reporting.
Navigating the tax implications of staking Cardano can be complex, especially as regulations continue to evolve. Consulting with a crypto tax professional is advisable to ensure compliance and optimize your tax strategy. Additionally, using a specialized crypto tax platform like ours at TokenTax can help simplify the process by acting as your Cardano staking tax calculator. Staying proactive about your tax obligations can help you avoid any potential issues and make the most of your staking rewards.
Is staking taxed in ADA?
Yes, staking rewards are typically considered taxable income in many jurisdictions. The tax treatment can vary depending on the country's tax laws, so it's important to consult with a tax professional to understand your specific obligations.
In some cases, the rewards may be taxed as income when received, while in others, they may be subject to capital gains tax when the staked ADA is sold. Keeping detailed records of your staking activities and rewards is crucial for accurate tax reporting. Our platform at TokenTax can assist you with all your crypto tax issues, and act as your Cardano staking tax calculator.
Cardano staking FAQs
Here are answers to frequently asked questions about Cardano staking, the best Cardano wallet, and where to stake Cardano.
Why can’t I stake Cardano using a crypto exchange?
Some exchanges may not offer Cardano staking due to regulatory concerns or technical limitations. It's essential to check the availability of staking services on your preferred exchange. Additionally, staking directly through a wallet or a dedicated staking platform can provide more control and potentially higher rewards.
Is it worth staking Cardano?
Staking Cardano can be worth it if you're looking for a way to earn passive income and are comfortable with the associated risks. The rewards can provide a steady return on your investment, but it's important to consider the volatility of the cryptocurrency market and the potential impact on the value of your staked ADA.
Can I lose ADA by staking?
While staking itself is generally safe, there's a risk of losing ADA due to market volatility or security issues with the staking platform or pool. It's crucial to use reputable staking services and follow best security practices, such as keeping your wallet and private keys secure.
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