The question is asked almost daily in various Facebook groups or to us:
"How and where can I buy ADA?" - "And what do I do then?" - "How does staking work?"
As this question cannot be answered in one sentence, we have decided to write our own tutorial on the subject.
The purchase process basically consists of four simple steps:
Step 1:
Set up wallet
Step 2:
Buy ADA from an exchange
Step 3:
Send ADA from the exchange to the wallet
Step 4:
ADA "staken"
We will now go into the individual steps in detail.
Step 1:
Set up wallet
We recommend either the Daedalus Wallet or the Yoroi Wallet for the secure storage of your ADA - both are easy to use and uncomplicated to set up.
If you're unsure which wallet to choose, we've put together a detailed comparison here. To make a long story short: We recommend the Daedalus wallet.
During the installation process, make a note of the 24 words and your "transaction password" in a SAFE place (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' time - and without this data, you won't be able to access your coins. ("Be your own bank")
Step 2:
Buy ADA from an exchange
Once your wallet has been set up, the ADAs are purchased on a crypto exchange. The process is similar to opening an account at a bank. You will 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 also offer ADA. Here you will find (at the bottom of the page, "Cardano Markets") a list of exchanges that offer ADA.
Make sure that the exchange has sufficient liquidity so that you can still trade even in stressful times with strong price movements. Small exchanges tend to run out of liquidity.
We recommend Coinbase, Binance, Crypto.com or KuCoin.
WARNING about eToro!
Many newcomers use eToro as an exchange - we can only advise against using it to buy ADA!
eToro does not offer the option of transferring the purchased ADA to an external wallet (as of February 2021). eToro wants to ensure that the coins are forcibly staked with them. We cannot endorse this business practice and therefore advise against using eToro as an exchange.
As the web interfaces of the individual exchanges change almost daily, we cannot provide a detailed tutorial on how to buy ADA on all exchanges.
However, the process is always the same:
- Open an account
- Wait for activation (can take several hours to days).
- Transfer EUR/USD by 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 deposited EUR/USD. (On some exchanges you have to buy BitCoin first and can then use it to pay for the ADA. On Binance, for example, you can pay for ADA directly with EUR/USD)
Questions about the Exchange? We are happy to help!
If you have specific questions about purchasing 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, the best way to do this is via video chat and split screen.
We speak German and English.
Please don't hesitate to get in touch, we are really nice!
Step 3:
Transfer ADA to the wallet
If you are now the happy owner of ADA Coins, the next step is to transfer these coins from the exchange to the wallet you 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 can find in your wallet (here using the Daedalus wallet as an example):
Copy any of the addresses (all lead to your wallet, can also be used multiple times) to the clipboard - because nobody wants to type in an address like that...
Then switch to your exchange, go to your wallet/account there and send all ADA to your own wallet.
The process differs from exchange to exchange, we give instructions here using Binance as an example:
Your wallet address from the clipboard will be very helpful here. You must enter this as the target address in the Exchange.
Please use "CARDANO" as the "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 get the coins from the exchange?
1. risk of hacking.
The major exchanges are constantly under attack from hackers. Several exchanges have already been hacked and the losses suffered by investors were enormous. Once the ADA are on your wallet, they are much safer because the hackers always focus on the exchanges.
2. accumulation of voting rights in the exchanges.
The accumulation of more and more ADA in the exchanges is leading to a now threatening accumulation of voting power. This could influence the further development of the cryptocurrency by the exchanges in their favor.
3. no access to NFTs
Since the exchanges are not a real wallet with keys, you have no possibility 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.
Exchanges now operate the largest staking pools, thus reducing the chances of small community pools to also verify blocks.
Binance alone operates 64 (!!) staking pools at the time this article was written - 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 (instead of you) has full control over YOUR coins - and can do whatever it wants with them.
"Not your keys, not your coins".
5. against decentralization.
Storing a DECENTRAL coin on a CENTRAL exchange is simply the wrong way to go.
So be careful and don't stake your coins on an exchange, but download your own wallet, transfer your coins there and stake your coins in a community pool - e.g. with us...
Step 4:
ADA "staken"
Now that your ADA coins are safely stored in your own wallet, you'll want to make them work for you a little - with staking!
When staking, you make your ADA available to a community staking pool as a "stake", which increases the probability of being allowed to verify one of the randomly distributed blocks in the staking pool. If the pool is allowed to verify one or more blocks, the pool will reward you with so-called rewards - similar to an interest rate.
This is around 5% across all pools throughout the system over the year.
GOOD TO KNOW:
By staking, you make your ADA available to the staking pool only "virtually". No ADA is 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 which a minimal fee is due (2.17 ADA). Many users think they are sending their ADA to the stake pool - this is not true! The pool also has no access to your ADA - or your keys!
Once again: NO ADA will be sent to the pool operator, they will NOT leave your wallet!
You still have full access to your ADA at all times and can also 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 rewards are always paid out fully automatically at the end of an epoch (5 days) by the Cardano protocol itself, not by the pool operator! The fully automatic process on the blockchain cannot be manipulated or stopped by the pool operator - you will receive your ADA rewards in any case!
The rewards are also automatically transferred to your stake in the next epoch - you don't need to do anything.
Even if you buy more ADA and send it to your wallet, it 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 Daedalus and Yoroi wallet as an example)
Search for the tab "Stake Pools" in the staking area and search for the abbreviation of the desired pool - 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". You must then pay the one-off fee for the delegation certificate of 2.17 ADA - DONE!
NO COINS WILL BE TRANSFERRED TO US when staking!
Only a delegation certificate is sent to the network. This will cost you 2 ADA and the usual 0.17 ADA transaction fee. Many users seem to think that they are transferring their coins to the pool, which IS NOT the case.
They remain 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. Likewise 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 pleased if we have helped you with this guide and would be delighted to welcome you as a new delegator in our pool SPG01!
WHEN WILL I RECEIVE MY REWARDS?
Want to know more about it?
We have written our own article on the subject of rewards.
Short answer: It takes AT LEAST 4-5 EPOCHES (= 20-25 days) for the first rewards to appear. Of course, this always depends on whether a block has actually been randomly assigned to the pool for processing. It can take several epochs before a pool is randomly assigned blocks.
PLEASE BE PATIENT!