Delegating in Cardano/ADA - Where to Start for Beginners
Updated: Sep 4, 2020
New to cryptocurrencies and Cardano? No problem! Delegating your ADA on the Cardano blockchain is a risk free way to earn interest on your investment of ADA. To clarify, ADA is the name of the cryptocurrency that runs on the Cardano blockchain (which is the underlying technology). If at anytime you are unsure of any terminology used check out the glossary at the end of this article.
The process to delegate your ADA to a staking pool does not take much effort and once it is done you will earn rewards just for having ownership of a wallet containing ADA (this is because Cardano is a proof-of-stake blockchain). The concept is similar to having your money in a savings account where as long as you keep your money there you will earn interest. Unlike the < 1% return in a savings account, the estimated annual return for delegating your ADA is roughly between 4%-6%. If you already own ADA or are thinking about buying some, it is a NO BRAINER to delegate and earn rewards (paid out in ADA). As the value of ADA goes up these rewards will be worth even more.
Castle Cardano is a low fee, reliable staking pool that has been here since the beginning of the Cardano mainnet. Read more about us here.
Depending on your situation there may be different steps to begin delegating. Generally, the entire process looks like this:
Navigate to the post that best describes your situation:
I don't own ADA but I want some!
Follow our guide on buying ADA on an exchange (Coming Soon...)
I own ADA in an exchange but I want to delegate and earn rewards!
I own ADA in my own wallet and I want to delegate and earn rewards!
ADA - The abbreviation for the cryptocurrency that lives on the Cardano blockchain. This can be bought or sold on cryptocurrency exchanges.
Daedalus - An officially supported wallet software used to store ADA (like a bank that has accounts). Unlike Yoroi, it is a full-node wallet meaning installing it requires an entire copy of the blockchain (made up of GB's of transactional records).
Yoroi - An officially supported wallet software used to store ADA (like a bank that has accounts). Unlike Daedalus, it is a light-weight wallet that is supported on desktops, mobile, and hardware wallets. It also relies on trusted, external entities instead of keeping a copy of the entire blockchain like Daedalus.
Exchange - A website that allows you to buy, sell, or trade cryptocurrencies. This is similar to something like the New York Stock exchange in traditional finance. There are many exchanges all over the world that offer different services for different fees.
Wallet - You can think of a wallet like a bank account. It holds all of your ADA. Just like how you can have different bank accounts at different banks, you wallets can be created from different software applications such as Daedalus or Yoroi.
Hardware Wallet - Unlike a software wallet, a hardware wallet stores the private keys for your wallet on a physical device similar to USB drive. The private keys are used to restore your wallet so you can send or retrieve your ADA. It is considered the most secure way to store your wallet. Ledger Nano and Trezor are two popular hardware wallets
Stake Pool - A dedicated server that supports the decentralization and security of the blockchain. Owned and operated by individuals of the Cardano community, it earns rewards for its contributions and those rewards are then distributed amongst the pool owners and its delegates.
Delegate - A delegate is someone who has "delegated" their ADA to a staking pool. Delegating your ADA to a staking pool allows you to earn a portion of rewards that staking pools get for contributing to the operation of the Cardano blockchain.
Stake - The amount of ADA that has been delegated to a staking pool. The staking pool "stakes" this ADA on the Cardano blockchain which contributes to the operation of the blockchain and earns rewards for all of its delegates.