gimbal (ADA -1.87%) is a smart contracts platform powered by the ADA digital coin, and it is one of the most compelling projects in the blockchain industry. The developer team has moved very methodically in building the ecosystem, frequently publishing research in academic journals. In fact, the Cardano blockchain is secured by the premier peer-reviewed consensus protocol, Ouroboros.
The scientific rigor demonstrated by the team of developers caught the attention of investors. There are over 3.4 million wallets registered on the Cardano blockchain, and ADA ranks as the seventh most valuable cryptocurrency. Even better, smart contract functionality went live last year, which means developers can now build decentralized software and services on the platform. This could translate into significant price appreciation in the years to come.
In the meantime, Cardano bulls can earn passive income with ADA. Here’s how.
Earn passive income with ADA
Ouroboros is a proof-of-stake consensus protocol. This means that you can bet on ADA to participate in the network and generate passive income. In fact, there are two ways to earn rewards on the Cardano blockchain. You can either create your own betting pool or delegate to a betting pool managed by someone else.
The first option pays more, but you need the time and technical know-how to operate and maintain a reliable server. This means buying hardware, installing software, and keeping the system connected to the network at all times. Fortunately, delegating your ADA to an existing stake pool is less complicated.
Cardano wallets like Daedalus or Yoroi allow users to delegate ADA, as do some crypto exchanges. If you choose to delegate through a portfolio, you will need to do some research. There are over 3,000 active betting pools, and it’s important to choose one that will give you the best value. This means you need to compare metrics like total stake in the pool, blocks produced by the pool, and stake pool operator contribution. These variables impact the passive income you earn, although the payout is typically between 3% and 6% per year.
Still too complicated? While most Cardano enthusiasts prefer to support smaller stake pools – thus keeping the network as decentralized as possible – delegation via a crypto exchange is undoubtedly the easiest way to stake ADA.
Implement ADA via Coinbase
In March, Coinbase Global (PIECE OF MONEY -1.88%) added support for ADA staking, and it only takes a few seconds to get started. Once you have ADA in your Coinbase account, tap the menu icon in the top left corner of the mobile app, then select “earn interest”. Coinbase also offers staking services for other cryptocurrencies, so you will need to choose Cardano and then sign up for the staking service. That’s it.
ADA rewards will now appear in your account every five to seven days, after an initial holding period of up to 25 days. The current payment is an annual percentage rate (APR) of 2.6%. That’s less than you’d earn with a wallet, but it’s an order of magnitude more than the average savings account earns. Of course, cryptocurrencies like ADA are more volatile than fiat currencies, which means your US dollars are unlikely to lose significant value while sitting in a savings account.
However, if you’re bullish on Cardano – and there are plenty of reasons to be bullish – staking ADA through Coinbase is an incredibly easy way to earn passive income.