Making money with Cardano (ADA -0.49%) hasn’t been in the cards for many investors so far in 2022. The popular cryptocurrency is down almost 60% since the start of the year.
However, some investors were able to cushion their losses with this digital token. They were able to do this by staking their coins. Here is the surprising amount of passive income you can earn by staking Cardano.
The process for generating passive income with Cardano is simple. You simply put your coins into play. Then you reap the rewards that come with it. And these rewards can be very interesting.
Several cryptocurrency exchanges support the staking of Cardano tokens. The best annual return I have found is on Binance. This stock Exchange popular cryptocurrency offers an estimated annual percentage yield (APY) of 11.23%. To get this APY, you will need to stake your coins for 90 days.
What if you don’t want to freeze your Cardano tokens for so long? No problem. Binance also offers shorter investment periods. For example, the exchange offers an annual return of 8.24% if you lock up your Cardano tokens for 60 days. The yield isn’t much lower – 7.75% – for a 30-day period.
You can get lower rates with other cryptocurrency exchanges. For example, Nexo states that investors can earn up to 8% per year by staking Cardano. Kraken offers annual returns of between 4-6%.
Risks
Almost everything comes with some level of risk. On the same subject : Here’s Why Cryptocurrency Prices Are Falling After Low Meta Results. The Cardano staking is no exception.
The main disadvantage of staking your Cardano tokens is that most exchanges crypto-currencies will require you to freeze your tokens for a specified period. During this period, you will not be able to sell the tokens.
And the time you can’t sell may be longer than you think. Some exchanges may take a few days to “destock” your coins, effectively extending the lock-in period.
There is an obvious potential problem with this limitation. You could easily lose more than you earned by staking returns if Cardano’s price crashes. As an example, the decline in cryptocurrency over the past few weeks has far exceeded the highest amount you could have earned in the whole year by staking your Cardano tokens.
However, you do not necessarily need to lock your tokens. Binance and other exchanges offer flexible staking for cryptocurrency with no lockup period. However, you will have to make a significant compromise with this approach, which offers a much lower return. Binance, for example, only offers an estimated 1% annual return with its no-lockup option.
An interesting alternative – for some
Due to these risks, many investors have an interest in not betting on Cardano. Read also: Price prediction of 3 cryptocurrencies today: Ethereum, Shiba and SafeMoon. Similarly (no pun intended), risk-averse investors will also want to avoid buying Cardano and most cryptocurrencies.
But some investors are not afraid to take the risks associated with investing in cryptocurrencies. If you think Cardano is destined to grow in value over the long term (or even just sustain itself), staking can be an attractive alternative for generating passive income.
There are reasons to be optimistic about Cardano’s long-term prospects. Some particularly bullish investors even think it could become bigger than Ethereum thanks to its impressive scalability and growing number of real-world use cases. Investors who intend to buy and hold Cardano have the opportunity to increase their total return by investing in the token.
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Alm Maye has been a trader and analyst since 2013. He is an expert in equity markets, Forex and cryptocurrencies. He is the creator of Almvest.com and Imveste.com, two sites dedicated to personal finance. He participates in the development of feature articles on specialized sites such as Actions-boursieres.fr, as well as the international network of Finixio.com.