Almost daily, the question is asked in various Facebook groups or to us:
"How and where can I buy ADA?" - "And then what do I do?" - "How does staking work?"
Since this question cannot be answered in one sentence, we decided to write our own tutorial on the subject.
The purchase process basically consists of four simple steps:
We will now go into detail about the individual steps.
Set up wallet
If you're unsure which wallet to choose, we've created an in-depth comparison here. To make a long story short: We recommend the Daedalus Wallet.
During the installation process, be sure to write down the 24 words and your "transaction password" in a SECURE location (e.g. encrypted ZIP or RAR file on a USB stick). Make a copy of it and keep it outside your home (parents, safe deposit box) in case of fire or theft.
Nobody knows how valuable your ADA will be in 20 years - and without this data you won't be able to get your coins. ("Be your own Bank")
Buy ADA at an Exchange
After your wallet is set up, the ADAs are now purchased on a so-called crypto exchange. The process is similar to opening an account at a bank. You need to have your ID ready (online video verification) or upload photos of the front and back of your ID - depending on the exchange.
Which Exchange should I choose?
This is one of the most frequently asked questions in Facebook groups.
Of course, the exchange must offer ADA. Here you can find (at the bottom of the page, "Cardano Markets") a list of Exchanges that offer ADA.
Make sure that the exchange has enough liquidity so that you can trade even in stressful times with strong price movements. Small Exchanges tend to go out of business.
WARNING about eToro!
Many newcomers use eToro as an exchange - we can only advise against it for buying ADA!
eToro does not offer the possibility to transfer the purchased ADA to an external wallet (as of February 2021). eToro thereby wants to achieve that the coins are forcibly staked with them. We do not condone this business practice and therefore advise against using eToro as an exchange.
Since the web interfaces of each Exchange change almost daily, we cannot provide a detailed tutorial for buying ADA on all Exchanges here.
But the process is always the same:
- open an account
- Wait for activation (can take several hours to days).
- Transfer EUR/USD via SEPA transfer or credit card to the EUR/USD wallet in the Exchange.
- Wait for the EUR/USD to be credited.
- Then buy the ADA with the stored EUR/USD. (On some exchanges you have to buy BitCoin first and then you can pay the ADA with it. At Binance, for example, you can pay ADA directly with EUR/USD).
Questions about the Exchange? We are happy to help!
If you have specific questions about buying ADA on the Exchange, we are happy to help. The process can be confusing for newcomers.
We are available via (video) chat and email to guide you through the process, best done via video chat and split screen.
We speak German and English.
Please feel free to get in touch, we're really nice!
Transfer ADA to Wallet
If you are now a happy owner of ADA Coins, the next step is to transfer these Coins from the exchange to your wallet set up in step 1.
The process is similar to a simple bank transfer. All you need is your wallet address (similar to an account number, consisting of many letters and numbers), which you will find in your wallet (here the example of the Daedalus wallet):
Copy any of the addresses (all lead to your wallet, can be used multiple times) to the clipboard - because nobody wants to type such an address...
Then you switch to your exchange, go into your wallet/account there and send all ADA to your own wallet.
The process is different from exchange to exchange, we give a guide here using Binance as an example:
Your wallet address from the clipboard will be very helpful. You have to enter this as the destination address in the exchange.
Please use "CARDANO" as "Transfer Network".
The ADA should arrive on your own wallet within a few minutes.
This is a very important step.
Coins off the Exchange - why?
Why is it so important to move the coins away from the exchange?
1. hacking threat.
The major Exchanges are constantly under attack from hackers. Several Exchanges have already been hacked and the losses to investors have been huge. Once the ADA are on your wallet, they are much safer because the hackers always focus on the Exchanges.
2. accumulation of voting power in the Exchanges.
The accumulation of more and more ADA in the Exchanges leads to a now threatening accumulation of voting power there. As a result, the further development of cryptocurrency could be influenced by the Exchanges in their favor.
3. no access to NFTs
Since the Exchanges are not a real wallet with keys, you have no way to buy, view or send NFTs with an Exchange "wallet".
(If you don't know what NFTs are, you can ignore this point).
4. distortion of competition.
The Exchanges now operate the largest staking pools and thus cause smaller community pools to have less chance of verifying blocks as well.
Binance alone operates 64 (!!) staking pools at the time of writing - decentralized looks different.
5. loss of control - the most important point!
If your coins are on an exchange, you have NO KEYS to these coins and therefore the exchange has (instead of you) full control over YOUR coins - and can do what it wants with them.
"Not your keys, not your coins".
5. against decentralization.
Storing a DECENTRAL coin on a CENTRAL exchange is simply the completely wrong way.
So please be careful and don't stake your coins on an exchange, but download your own wallet, transfer your coins there and stake your coins at a community pool - e.g. with us...
"stake" your ADA
Now that your ADA Coins are safely in your own wallet, you'll want to make them work for you a bit - with "staking"!
When staking, you provide your ADA to a community staking pool as a "Stake", this increases the probability in the staking pool to be allowed to verify one of the randomly distributed blocks. If the pool is allowed to verify one or more blocks, the pool rewards you with so-called rewards - similar to an interest payment.
This is distributed over all pools throughout the year at about 5%.
GOOD TO KNOW:
By staking you provide your ADA to the Staking Pool only "virtually". No ADA will be transferred to the pool! The pool also has NO ACCESS to your ADA - or your keys!
Only a delegation certificate is sent to the network, for this a minimal fee is due (2.17 ADA). Many users think they are sending their ADA to the stakepool - this is not true! The pool also has no access to your ADA - or your keys!
Once again, NO ADA is sent to the pool operator, it does NOT leave your wallet!
You still have full access to your ADA and can spend/transfer them at any time. However, these coins removed from the stake will then logically no longer be used to calculate the next reward.
The payment of the rewards always takes place at the end of an epoch (5 days) fully automatically by the Cardano protocol itself, not by the pool operator! The fully automated process on the blockchain cannot be manipulated or stopped by the pool operator - you will definitely get your ADA rewards!
By the way, the rewards are automatically transferred to your stake in the next epoch - you don't need to do anything.
Even if you buy more ADA and send them to your wallet, they will be added to your stake fully automatically.
To stake your ADA, select the desired stake pool in your wallet. To do this, open the staking area in the wallet (here using the example of the Daedalus and the Yoroi wallet).
In the Staking section, search for the "Stake Pools" tab and look for the abbreviation of the pool you want - for example, SPG01 for our pool.
The pool found is displayed at the bottom. Simply click on it and confirm with "Delegate to this pool". After that you have to pay the one-time fee for the delegation certificate of 2.17 ADA - DONE!
NO COINS ARE TRANSFERRED TO US when you punt!
Only a delegation certificate is sent to the network. This costs you 2 ADA and the usual 0.17 ADA transaction fee. Many users seem to think they are transferring their coins to the pool, this is NOT the case.
It remains YOUR Coins, in YOUR Wallet. YOU still have the keys to your coins. A Stakepool has NO ACCESS to your Keys or Coins.
Everything you transfer to your staked wallet is automatically added to the stake. As well as your rewards from the stake. No action is required on your part. You don't even have to open the wallet, it all happens automatically on the blockchain.
We are glad if we helped you with this guide and would be happy to welcome you as a new delegator in our pool SPG01!
WHEN DO I GET MY REWARDS?
You want to know more about it?
We have written a separate article on the subject of rewards.
Short answer: It takes AT LEAST 4-5 EPOCHS (= 20-25 days) until the first rewards occur. Of course, this always depends on whether the pool has actually been randomly assigned a block for processing. It can take several epochs before a pool is randomly assigned blocks.
PLEASE BE PATIENT!