As is evident from recent posts, Cardano (ADA) is one of the most promising cryptocurrencies in the crypto space today. It has a strong and active developer team behind it, and has so far stuck to its distribution schedule tightly.
It broke through the all-important $ 1 barrier in February, and went as high as $ 1.48 before the current correction. Despite the steep drop, it has remained above $ 1 so far, and it looks like it’s gearing up for the next bull run. It is therefore something worth keeping at least for the next few months.
One difficulty some of us face is securing our holdings, both in terms of protection from theft, and resisting the temptation to make a profit or abandon it for a more profitable (aka risky) currency. For this reason, I have decided to withdraw my holdings from my exchange account, and stake them.
Cardano and Proof of Stake
What exactly is staking? Cryptocurrencies like Bitcoin and Ethereum use Proof of Work (PoW) to verify transactions on their respective blockchains. This involves complex mathematical calculations, which consume huge amounts of electricity and generate tons of heat, resulting in carbon emissions that are larger than many countries.
Proof of Stake (PoS), on the other hand, is a consensus mechanism that validates transactions based on how much currency the validator owns and for how long. The validator is rewarded for it, in the same way that a Bitcoin miner would be rewarded for discovering a block. However, this results in a much smaller carbon footprint, along with many other benefits.
Cardano is currently the poster child for Proof of Stake and is designed in a way that makes it much more difficult for the few rich people to reap the greatest benefits or influence the network. In other words, it is much more egalitarian and democratic.
Problems with the Daedalus Wallet app
Currently, the two preferred options for ADA retention and staking are:
My first choice was to use the Daedalus app, as it makes you an independent node on the blockchain, with full control over all functions. However, these are the problems I faced:
- Daedalus was easy to install and run, but couldn’t connect to the network for many hours
- After restarting the node and restarting my router several times, it eventually connected
- Then he attempted to download the blockchain which is currently around 6-7GB but failed to go beyond 0%
- After more reboots it started to sync but continued to cause some weird problems
- My Mac kept restarting after crashing (all crash reports indicated a certain “cardano-node” process)
- Synchronization crashed every now and then, and I had to constantly restart the node and my router to get it started again
- I then turned off all the other applications and let it run. No crashes this time, and it started syncing smoothly.
- It reached 100% synchronization, and I created a wallet.
- But then the synchronization started again from 10 or 11%.
- After I started opening other applications again, crashes and random restarts reappeared
At this point, I decided that Daedalus was too unstable and risky to trust him with my funds, and I decided to give Yoroi a try, which turned out to be relatively much simpler.
10 simple steps to staking Cardano using Yoroi
- Install Yoroi
Go to the Yoroi website and click on Download. Then select your browser (this manual assumes you chose Google Chrome). A new tab will take you to the Google Chrome web store. Click Add to Chrome and then click Add extension. The notification “Yoroi has been added to Chrome” will appear. By clicking on the extension icon, Yoroi will appear in the list.
- Open Yoroi
- Set the complexity level and payment URLs
Select the level of complexity (I have tried both and found no difference between the two). Choose whether to allow Cardano payment URLs (I chose Allow) and then click Allow in the Chrome popup, then press Finish
- Create your wallet
You can now connect to a hardware wallet, create a new wallet or restore a wallet. I created a new wallet. Choose the currency (Cardano) and click on Create wallet. Next, enter a name for the wallet and your spending password (minimum 10 characters), then click on Create Personal Wallet
- Recovery passphrase
Next, you need to write down your recovery phrase. Make sure no one else can see your screen, then tick the checkbox and click Continue. Write the recovery sentence on a piece of paper and click on Yes, I’ve written it down. Repeat the recovery phrase in the next window by clicking the words in the correct order. Then check the checkboxes and click Confirm
- Yoroi dashboard
You will now find yourself in the Yoroi Dashboard, which shows a summary of your account.
- Receive funds
Click on the Receiving tab, copy the address of your wallet and use it to send the funds
- Confirm the transfer of funds
Once the funds have been transferred (mine took a couple of minutes to appear), you should see them in the account summary.
- Find a staking pool
For staking, go to the Delegation List tab and scroll through the list of available pools. Choose the one you like best and click on Delegate
- Confirm staking
A confirmation screen will appear asking you for the amount and your spending password. Enter the data and click on Delegate
Screenshots of the steps are here:
That’s all. Your ADAs are now staked. Once staking rewards start rolling in, you should see them appear in your dashboard.
I have yet to receive my first reward, but you can use the staking rewards calculator to get an estimate of how much you will receive.
Staking any cryptocurrency is an interesting project and there are multiple reasons why you might want to do so. First, it is a good way to protect your funds, both from others and from yourself. Secondly, the returns aren’t incredible, but if you’re going to keep something for a long time, there’s nothing wrong with adding a few percentage points. Ultimately, there are altruistic reasons to help make a project like Cardano more democratic.
Some exchanges allow you to easily staking coins without transferring your funds externally. However, doing it yourself is easier than it sounds, and gives you more options and control. Give it a try and share your thoughts below.
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