What Are The Risks of Staking on Cardano?

As with any investment, there are always risks associated with putting any form of value into an investment, crypto or otherwise. But, there is minimal risk in the process of staking ADA on Cardano. What we describe below are risks that are crypto-related. Here’s what you need to look out for: - Loss of token value - The most apparent risk associated with staking on Cardano, or any crypto asset for that matter, is that the token will lose value. - Centralized exchanges - We always recommend that crypto holders hold on to their own tokens, but sometimes you might feel more comfortable using a third party. If you prefer using an exchange to hold your ADA, firstly, we recommend using larger exchanges that also provide staking rewards, such as Coinbase, Kraken, and Binance. However, exchanges generally keep a larger share of your staking rewards and might subject you to lock-up periods that you might be accustomed to at traditional banks. - Scams - Common sense can protect you here. Known scams to be aware of are when you may get an email or request on channels such as Discord to send your wallet passphrase, seed, or ADA to someone to become part of a staking pool. This is a scam. Also, no ADA coins should ever leave your wallet when you stake; you will simply get a delegation certificate. Overall though, Cardano staking is secure as your ADA stays safely tucked away in your wallet, barring you don’t stake on a centralized exchange. You don’t even need to trust a pool or operators with your APY rewards, as the rewards are distributed automatically by the protocol, not by the pool. Plus, if you stake using your wallet and not on an exchange, you can withdraw your ADA at any point in time.