What is the point of buying ada and staking in Cardano
Humans are motivated and driven by self-interest, so Cardano was built to recognize and align with this fact. The Cardano network rewards participants and decentralizes power. This is achieved through the function of its digital currency, ADA, and a process called “Staking”. The result is a system that is both sturdy and egalitarian.
The Cardano “Network” is just that: a network of connected computer nodes. Each node is maintained by a stake pool operator. When there are transactions on the network, a random pool is selected to scoop up a bunch of these transactions, validate them, put them in a block, then update their copy of the global blockchain database. Next, every other computer on the network processes and confirms and download the update. Sharing responsibilities removes the need to trust a central bank or government.
Since every node has a its own copy of the blockchain, it’s impossible for one node to add records that everyone didn’t agree to. No one can claim money they are not entitled to; fraudulent transactions are rejected by the rest of the network forcing the random chosen pool to play by the rules.
Cardano achieves trustless shared security and responsibility by encouraging a robust network of participants. Why would a pool operator want to do the work of maintaining a pool in the network? Because there’s money in it, of course! About every five days, pools that perform their job for the blockchain, receive a certain amount of ADA as a reward.
Not everyone who wants to participate in the Cardano ecosystem can run and maintain a computer server. This is where staking comes in: you can delegate your ADA to a pool. Then, when that pool gets rewarded, you get paid too, proportional to the amount of your stake. This is like interest earned in a traditional bank savings account. While the bank holds your money, they are putting it to work by loaning it out to others, and collecting interest. So you earn a (teeny tiny!) cut of that return in the form of interest on your savings. With staking, you are letting your investment work for you. Unlike traditional banking, everyone decides the rules of the ecosystem, not a few. So, the returns are more inspiring and fair than what you would get at the bank.
While the national average interest rate on a savings account in the U.S. is at .04%, staked Cardano earns about 5.5% annually in rewards.
If you invest in Cardano and choose not to stake, it’s a bit like hiding your savings under the mattress. In fact it is worse! The exchange where your ADA resides is actually staking it for you – and keeping 100% of the rewards. Nor should you stake on an exchange. In these cases, the exchange is still the big winner. They control the choice of available pools, and the fees they collect are higher.
Choose a pool you believe in to maximize your returns and support the network
Staking is no-risk and all reward.
You can spend, trade, or use your ADA whenever you want to. While your ADA is staked, you are eligible to earn rewards. Also, your investment facilitates processing on the network. Through this clever arrangement, Cardano has created a system that maintains high security and fairness, by aligning human self-interest with network rules.
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Lido Nation: Origin Story
The Lido Nation staking pool launched on the Cardano mainnet in December 2020. From there, a couple of dreamers started to talk about what our little corner of the network should look like. As a pair of curious birds, who get excited about learning and sharing knowledge, we noticed that there wasn’t enough of the kind of material we wanted to read about blockchain, and Cardano.So we started to write it!
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