Staking Cardano to gain its staking rewards is a decision that is easy to some but quite difficult to others. The 4-5% APR staking rewards is surely nice to receive but can be less desirable if the underlying asset took a big decline in price. So, the key decision criteria often boiled down to a timeframe that the individual is planning to hold on to the asset and what the price outlook over the same period of time could be. If you are planning to be in it for a long term (3-5 years), the following key points should help you decide your staking strategy and craft out the best plan for the future.
1. Current ADA Price
ADA is currently on a 70%+ discount. The Cardano (ADA) price is trading at around $0.83 today which is down more than 70% from its All-Time High (ATH) at $3.09 just about six months ago. If you are someone who likes to buy an asset at a discount, Cardano should definitely be on your radar. It is , however, very important to note that the price is very subjective and its current low price doesn’t mean it cannot continue to stay that way or trade even lower. In fact, if you look at the previous Bitcoin market cycle (2017-2020), ADA launched in 2017 at the price around $1 and its price continued to trickle down for several years until it bottomed out at less than $0.03 during that multi-year bear market which turned out to be about a 98% drop from the 2017 top. In the end, an excellent project could be a very poor investment if you get in at a wrong price.
2. Staking Percentage
There is more than 68% of ADA being staked on the network. According to the coinmarketcap.com, Cardano is among the top staking cryptocurrencies ranked by market capitalization. The higher the percentage, the better for the future price potential as less coin is being changed hands and hence scarcity increases. This high staking percentage could also translate to a confident level in the future of Cardano as the infrastructure is built and the real-world use cases increase.
3. Adoption
The Cardano Adoption and Popularity are rising to the top. As of today, Cardano achieves the top place among the most active on-chains volume of crypto currency being traded (Source: Messari.io, a popular crypto-currency research firm). It traded on-chain $31.45 Billion USD worth in 24-hour which was by far the highest volume cryptocurrency transacted in the past 24-hour and the number is even greater than the two most popular crypto-currency combined (Bitcoin and Ethereum). If the volume transacted alone is used as an indicator of the mass adoption, Cardano is sure already there as it secured the number one spot.
4. Low Fees
Cardano users pays significantly lower fees despite the amount of the network usages. The on-chain metrics also suggested that Cardano has been able to function on a fraction of the network fees when compared to the top two most popular crypto currencies like Bitcoin and Ethereum. According to the messari.io website, the volume mentioned above on Cardano only cost users a network fees of about $33K USD or 0.0001% of the volume generated. This was not the case for Bitcoin and Ethereum. In short, the fee on Cardano is several magnitude cheaper compared with the two.
5. Future Developments
There are numerous of upcoming projects and sizeable amount of funding in the ecosystem. Cardano has awarded multiple crowdfunding rounds (currently on #8) via Project Catalyst platform in order to support promising projects on the Cardano ecosystem. It is probably fair to say that, in the future, one should be able to expect to see a similar Decentralized Application (Dapp) on Cardano the same way that can be seen on Ethereum but with a significant lower cost to use/participate. As you can see from the picture here, there are already several hundreds of projects rolling out to address the pressing needs: Oracle, Lending/Borrowing, Initial Decentralized Exchange Offering (IDO) Platform, Decentralized Exchange (Automated Market Maker), Non-custodian Wallet, Yield Farming Platform, just to name a few.
In summary, several metrics have been discussed in this article that aim to help you decide on your staking strategy. They are all showing very encouraging sign of network activities, user adoptions, growing ecosystem as well as the potential price recovery, finger-crossed. When you are in the crypto space, it is inevitable to experience unlimited amount of FUDs (Fear-Uncertainties-Doubts) that will shake your confidence. Hopefully, these five key points raised help you stay centered and focused on the best course of action on your Cardano staking.
Last buy not least, if you are someone looking to find a reliable and trustworthy stake pool operator, please consider our “BULPR” stake pool for your staking need. We have been operating since 2019 with more than 2,000 lifetime blocks generated. We have generated more than 1.8M ADA staking rewards to our delegators and our lifetime Return on ADA is at a relatively high rate of ~5% APR.