By market capitalization, Cardano is one of the biggest layer-1 blockchain solutions. Input-Output, which is a company owned by Charles Hoskinson, Emurgo, and the Cardano Foundation are driving the project. Gerolamo Cardano, an Italian mathematician, gave the chain its name, and the ADA token is named after Ada Lovelace, a mathematician from the 1800s.

Cardano uses Ouroboros, a proof-of-stake (PoS) consensus mechanism that lets ADA holders give their funds to stake pools. The total stake gives each pool the power to approve transactions, make blocks, and run the network.

Ouroboros uses cryptography, combinatorics, and mathematical game theory to make sure that the protocol is secure, works well, and lasts a long time. The Ouroboros protocol pays these validators a fixed pool cost and an optional margin. Ouroboros also gives staking rewards to all delegators in a direct way.

Combinatorics is the study of counting and putting things together, while mathematical game theory looks at how rational people make decisions and how they affect each other.

Staking lets ADA holders who don’t know how to run a node or don’t want to do so take part in the network and get rewarded based on how much stake they delegate. Staking pools are a way for people who want to stake their tokens on their blockchains but don’t want to be validators on the network to do so.

This article explains the steps for staking ADA in a self-custodial wallet, as well as the tools and rewards that users can get.

What are self-custody wallets?

Self-custody is a way to store cryptocurrencies or nonfungible token (NFT) assets in a wallet that usually only the user can access and control. The other option is to hold these assets on centralized exchanges, where the users are exposed to counterparty risks if the exchange fails.

Still, most self-custodial wallets still require users to hold on to their private keys. Users need private keys in order to keep control of their crypto assets. Self-custody eliminates counterparty risk, which is present when coins are stored on centralized exchanges. This is why most people think it’s the best choice for Web3 users, especially after several exchanges went down in 2022.

Most layer-1 ecosystems have wallet solutions that are built in. For example, most Ethereum and ERC-20 assets use MetaMask, while a lot of Solana users use Phantom wallets.

When Cardano came out in 2017, IOHK’s Daedalus was able to act as a full wallet. The Yoroi light wallet came out two years after that. Since the Shelley mainnet hard fork in 2020, there have been a lot more wallets in the Cardano ecosystem.

Full-node and light wallets are available for Windows, Linux, and Mac as standalone apps, browser plugins, and mobile apps. Cardano wallet apps can also handle both single-address wallets and wallets with more than one address. Cardano works this way because it is based on UTXOs, like Bitcoin, and not on accounts, like Ethereum.

Cardano also has native tokens. Each user’s wallet can hold not only ADA but also thousands of other tokens and NFTs. Metadata additions as part of transactions are another thing that Cardano can do.

Nami Wallet focuses on non-fungible tokens (NFTs), while Flint Wallet builds connections between different chains and technologies. On the other hand, Typhon and Etrnl wallets are very advanced and have many features, such as the ability to support multiple accounts in a user’s wallet, staking, voting, and the ability to transfer an unlimited number of assets to multiple recipients in a single transaction.

One important thing about custodial wallet staking in Cardano is that the wallet owner never gives their ADA tokens to anyone else. They always have full control over them. Delegation is based on how much ADA was in the wallet at the end of the last epoch (five days).

How do I make a wallet on Cardano that I control myself?

The Yoroi wallet is just one of many ways to store your own Cardano assets. Here’s what you need to do to make a Yoroi wallet.

• The Yoroi wallet can be downloaded as a browser plugin here.
• Once the browser plugin is downloaded and installed, clicking on the plugin opens the Yoroi application page.
• On the application page, clicking the “Add New Wallet” option kickstarts the wallet creation journey.
• The next screen offers three options: Connect to hardware wallet, Create wallet, Restore wallet

• To create the first Cardano wallet, choose the “Create wallet” option.
• Next, users select “Cardano” as the currency, and the subsequent screens will prompt them to provide a name for their wallet and a corresponding password.
• The next step is setting up the recovery phrase, which must be noted down in order and confirmed in the following step.
• The wallet is now ready to accept Cardano assets.
• To add some ADA to the wallet, users can click on the “Receive” tab that gives the wallet address.
• Users can transfer ADA to the wallet from an exchange to kickstart the staking process.

How to stake ADA and what the rewards are for doing so.

As was already said, the staking of ADA by validators and other holders through staking pools is a big part of how the Cardano network validates transactions. In exchange, the network gives these stakeholders stake rewards. ADA holders who can’t run validators “delegate” their ADA to staking pools.

When staking started, pool operators and delegators got 5% of the staked coins as a reward. It has slowly gone down to around 4% over time because the planned gradual use of reserves. Out of the 34.7 billion ADA that are in circulation, almost 24.5 billion ADA, or 69%, are staked. Over 70% of ADA is bet on by people who own ADA. This is done through staking pools.

On the Cardano network, holders can choose from more than 3,000 places to stake their coins. Follow these steps from the interface of the Yoroi wallet or any other Cardano wallet to stake.

• On the wallet page, the “Delegation list” provides a choice of delegates
• Pool operators can also contribute to the pool, reflected by the “Pledge column.” A higher pledge shows higher skin in the game.
• Holders who want to stake can choose a pool by clicking the “Delegate” button.