How to Stake Cardano ADA for Passive Income - YouTube

How to stake Cardano ADA step-by-step.

So I've watched a few tutorials on this

and I've noticed many of them skip steps

and make it a little bit confusing.

So I want to do my part here for the Cardano

ArmADA, I just made that up [Laughs]

[Laughs] Patent pending.

I wanted to show exactly how

this is done, so you can start making passive income

with your ADA holding.

So we're going to first cover what Staking is

and the risks of Staking.

Then we're going to cover some commonly asked

questions about Staking.

Then we'll get into the step-by-step, so you can just

follow along and do exactly what I'm showing here.

And then finally I'm gonna cover an alternative to Staking.

That may be a better choice for you.

So you may want to watch through the whole thing

if you're not totally familiar with Staking.

Also, small channel update.

You guys keep on selling out my Patreon,

and I've been getting tons of messages

asking when I'm going to open it again.

Well, I've opened 20 more spots,

so if you've been waiting to get one,

now is the time to grab one.

Now let's get into the video.

What is Staking?

It's not quite my nightly rib eye,

and it's not the same as Lending.

Staking is- [Laughs]

Dumb jokes.

Staking is the way of earning rewards

for holding certain cryptocurrencies.

Specifically, proof-of-stake cryptos like ADA,

not proof-of-work cryptos like Bitcoin.

With proof-of-stake, you're literally

putting your currency to work for you,

and it's making you money.

It's pretty fascinating.

So let's back up a second here

and break down the difference between

proof-of-stake and proof-of-work.

Most cryptocurrencies are decentralized,

at least they should be, which means

there's no central authority.

But, you still need a system

to ensure that there's no fraud,

no mistakes, and no funny business

on the ecosystem.

With proof-of-work like Bitcoin,

miners do this.

Miners use specialized computers to solve

complicated hash puzzles,

and the first miner to solve a specific

hash problem, then earns the right

to add the latest "block" of transactions

to the blockchain,

and they're paid in Bitcoin

for facilitating this transaction.

Now, with proof-of-stake,

with a system like Cardano and ADA,

transactions are verified,

and all the funny business is prevented

by people who are invested in the blockchain.

by holding the crypto and staking it.

This is what I meant by your

currency is actually working you.

So basically what happens with most proof-of-stake systems,

is you stake your crypto,

and there's a kind of lottery

where you are randomly chosen to complete

a block of transactions.

And that reward is proportional

to how much crypto you have staked.

This means someone staking 100 ADA

will receive 10X more staking rewards

than someone who's staking 10 ADA.

It's all proportional.

To increase your odds of

reliable rewards and passive income here,

you then delegate your ADA to a staking pool,

which is a large number of other

ADA holders coming together to

process transactions, create blocks

and get paid rewards.

So that is Staking.

Now, what is the risk?

With ADA, there really aren't risks

because the crypto never actually

leaves your wallet, which is awesome.

You're not actually trusting it elsewhere,

so there's not a risk of losing it

unless you lose your own password or

you know, send it to someone you shouldn't.

The worst case scenario in staking ADA is if

you're in a staking pool

that simply doesn't create any new blocks

over a five-day period.

Basically, the lottery didn't choose you.

However, this can be mitigated by just choosing

the right pool

choosing a good staking pool,

and I'll show you how to choose a good one

later on in this video.

Now let's cover the other top questions about Staking ADA.

First off, how long does it take to start

seeing staking rewards?

And in the first time it can actually take 15 to 20 days

and then it should be every five days after that.

Is there a minimum amount you need to stake?

And yes, you have to have 10 ADA.

Can you remove your ADA at

any time from the staking pool?

Yes, you can, which is awesome

for the Cardano system because some other systems

you have to have it locked up for quite a while.

What is the rate of return on ADA?

It should be about 5.5% returns annual,

but that can vary a little bit depending on the

staking pool that you're in.

Then finally, what is pool saturation?

Now, this happens when a particular pool has

more ADA delegated to it

than is ideal for the network security.

So basically Cardano doesn't want

any one pool to have too much

power over the network, so it can't hurt the network.

You want to avoid a pool that's oversaturated

because it can offer diminishing returns.

Now let's get into how to stake.

The best and most secure way to stake ADA

is by using the Daedalus Wallet.

Now let's go over the computer here.

This is the site for the Daedalus Wallet.

This wallet was actually developed by

IOHK, the research company that built

Cardano ADA, so you can't really get

any better to stake ADA.

So you want to visit their site.

You want to click Download here.

And just to note, this is a desktop application.

If you don't have a computer, you can still do this on your

phone with the Yoroi wallet.

And I'll have this linked down in the description

for your reference.

But we're going to be doing the Daedalus Wallet

here for this presentation.

So download the Daedalus Wallet.

Then you're going to open the application.

You'll have to create a password

and then they're going to give you a

give you a 24-word recovery phrase.

Write down that phrase

and keep that somewhere safe.

Don't tell anyone where that is

and preferably keep it offline

where it can't be hacked.

But you want that to be safe.

Make sure it's absolutely safe.

Now, once you're in the wallet,

Daedalus is going to have to do a ton of

processing as it updates itself to the current ledger.

This took a few hours for me, so it's

best just to let it run on your computer in the

background and then go back to it later.

Now that we're in, it's going to look something like this

and we need to transfer in some ADA because you

can't actually buy ADA on this application.

I'll be transferring it in from Kucoin.

Here I am on Kucoin where I initially

purchased the ADA.

I need to get that over to the Daedalus wallet.

This will work the same no matter where you

purchased your ADA initially,

but you need to transfer that over.

So I'm on the withdraw tab here.

The wallet address, you get this from Daedalus.

So you go to the Daedalus app,

and then you click this little wallet icon up here.

You click Receive,

and then you need to copy one of these

receiving addresses, so you click on it.

You can just click copy.

It copies.

You paste in the address,

here on Kucoin, you need to click the Network,

the amount that you wanna transfer

for this we're gonna do real small 10.

You don't need a remark.

In this case, the fee is 1 ADA.

And then you just click Confirm.

High security here.

All right, the transfer is initiated, but

like all good things, you need to be a little bit patient

because it can take up to half hour

for it to land in your Daedalus wallet.

Now that our ADA is transferred in,

it's time to stake it and start

earning those juicy staking rewards.

So you wanna click this tab here

and then you just go to Stake pools.

Now, this is all the different choices with stake pools.

The slider bar here allows you to

change the amount of ADA that you're trying to stake,

and it will tell you the best staking pools for you.

So we can see with this first one.

This one is actually over saturated,

so we're going to avoid that.

I'm just going to click a random one here.

ADAvault, saturation looks okay.

It's ranked number six.

Now, if you want even more information

on a specific pool, you can do so.

So the ticker symbol for this one is ADV.

If we go back to the Internet

and we go to adapools.org

We can type in the ticker symbol here, ADV.

Search it.

And this gives you even more information

on the specific pool and the expected return.

So the return on ADA over the lifetime

is just over 5% and the

expected return is 4.4% for this pool.

And that's fairly common.

If you'd like, you can go back and forth

and choose one that you like.

However, those staking rewards can change a little bit,

depending on the randomness of the system.

So we're going to go back to the Daedalus wallet.

We're just going to choose this one

and we're going to delegate to it.

Delegate to this pool.

It's very simple.

You literally just hit continue.

You select your wallet.

We're just going to do the full 10 ADA.

Hit continue here.

This allows you to

change or add pools.

It's a little bit confusing because it has the

search function here, but we're gonna just click continue.

You enter in your spending password,

and you'll just click confirm.

And also you'll notice the deposit here of 2 ADA.

You actually receive that back

when you pull your money out of the staking pool

and we just click confirm.

And it's delegated.

We are now staking,

and we are now earning passive income

on our ADA.

Now, I do want to show you one other method

for earning income on your ADA.

If you don't really want to download this

program, you don't want to transfer your money,

I want to show you something else and that is

lending out your ADA.

So if we go back to Kucoin,

we can actually lend out our ADA directly

and you don't have to get a separate system.

Now, if you don't have Kucoin, you can lend

this out in other apps.

But I think Kucoin has the best system for lending,

and oftentimes the rates are the best as well.

So we are on the ADA tab here

and this is what you wanna do.

You want to click Auto-Lend.

Basically, what this does is when people

return the amount that you're lending out to them,

it just puts it back on the market and lends it again.

So that way you don't have to constantly be monitoring the app.

I always leave this on seven days.

The reason for this is people can return the money early,

and most people do.

So clicking seven days gives you a little bit more liquidity.

and you're really not losing any money

by doing the shorter term.

In my opinion, it's better just to always leave it

on seven days.

And then the reserve amount is

how much you wanna actually keep in your account.

So in this case, we're going to keep pretty much

everything in the account.

And I'm just gonna reserve all but like

30,020 and then your daily interest rate.

What I like to choose here

is I like to look at what's the

next big transaction.

So for that, it's the 7.3% annualized rate.

So I'm going to do that because these ones will

will get taken up fairly quickly.

So I'm just going to do this 0.02%.

And then enable Auto-Lend.

Confirm.

And it starts lending, it's that simple.

So, with this you actually earn a slightly

higher return as of right now.

But there is a little bit of risk.

So, when you're lending out,

of course, there is always a risk of someone not paying it back.

With Kucoin, they have an insurance fund.

Basically, the profits from lending, 15% get taken out.

10% of that goes to an insurance fund,

5% goes to Kucoin.

Now, I've lent out a ton of money here,

and I've never lost anything.

I've never even had to have the insurance fund be used.

So the system's very good in returning money

before there's any issues, but of course

there's always some risk with lending.

Where with staking, there's basically no risk.

But there's a slightly higher return here

and this is maybe something that you wanna consider

for a slightly higher return.

I'll have Kucoin linked in the description.

If you use that link, you actually

save money on trading fees.

So feel free to use that link if you want.

And that's gonna do it.

I hope you found this helpful.

I'm just really excited about the Cardano ADA project,

and if you're gonna earn passive income with it,

if you plan on holding long term,

it's really a no-brainer to make some extra

passive income with it.

So, I would just like to thank you for watching.

Make sure you join the Patreon,

if you've been thinking about doing it, now's probably the time to do it.

Sign up for Kucoin if you want.

And I hope you have a profitable day.