Why you need to HODL ADA: receive ADA stake rewards, earn yield with Cardano DeFi Liqwid Finance (LQ) tokens.

By CryptoBible00789 | Understanding global trends | 13 Mar 2021

Hi, since digging in deep into Cardano my research led me to decide to write an article, specifically to explain why hodling ADA makes just as much if not more sense as hodling Ethereum. And yes, you're still early, Cardano projects will launch this summer!

But first: what is a hodler?

Hodl is Bitcoin's 'translation' of hold and refers to the fact that most Bitcoin buyers don't trade their Bitcoins, yet choose to Hodl them, knowing that Bitcoin's deflationary characteristics will inevitably push its value higher, much higher. In fact, you can compare Bitcoin hodlers to the Central Banks who hold their real money, gold, in secure vaults. Since Bitcoin functions as digital gold, this hodling evolution surprised only few.

Bitcoin Proof of Work vs Cardano Proof of Stake.

Bitcoin uses a Proof of Work system that rewards those computers who solve a complex mathematics problem with new Bitcoin.

Cardano on the other hand uses a Proof of Stake system. Cardano's PoS functions like a lottery: the more tickets you have the more chance to win the lottery. When you win the lottery you receive a price: the opportunity to validate a block and add it to the blockchain. However, there's a catch: you need to be online when winning or the opportunity falls in another person's lap. When you decide to run a full node and be online 24/7, feel free to download the Daedalus wallet and go for it. But you can also sit back and decide to delegate your stake to a pool that's always online.

Why would you hodl ADA?

1. You're a Cardano bull.

Essentially, you need to be bullish and believe in the Cardano project, which will come with a lot of new features in 2021, one of which is DeFi. Besides, if anything at all, Ethereum's success shows how big the Cardano ecosystem can become.

Anyone who therefor decides to invest in Cardano can make the wrong choice of becoming another failed daytrader or can choose wisely and become an active Cardano community member, earning rewards by staking or delegating ADA to a staking pool.

First you need to download a wallet:

Always be sure to download from the correct websites, as scammers are everywhere.

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2. You want a passive income.

Once you have made the tough decision, you can expect to receive a 4% to 6% reward which is paid out every epoch or 5 days. One of Cardano's most appreciated staking properties is that your ADA never leaves your wallet when you stake or delegate stake. Nor is it locked!

Another interesting feature is that your ADA stakes are delivered directly into your wallet, they never go to the stakepool!

There is a 340 ADA fee to start a stakepool, which is paid by all the people within the pool. So, in a pool with 170 people, each person pays 2 ADA, required by Cardano.

3. What does an ADA stakepool look like?

When visiting pool.pm, you can look at the Cardano SMAUG stakepool in realtime. The SMAUG stakepool has 215 delegations or members, who deposited 17,638,848 ADA. The pool has lots of room left as it is only 27.3% saturated. You also notice the fixed cost of 340 ADA, which is required by Cardano. There are 4 days left in Epoch 253.

Be noticed not to join any pool with over 32,000,000 ADA, as the maximum pool supply will be reduced from 64,000,000 to 32,000,000 by the Cardano foundation. You will only receive the maximum reward when your pool isn't saturated. This does mean you need to keep an eye on your pool's data by for example looking into the pools stats.

Earn Liqwid Finance (LQ) tokens.

What is Liqwid?

Currently still in development and expected to launch in June 2021, coinciding with the Alonzo hard fork, Liqwid Finance will be the first DeFi (Decentralized Finance) project on the Cardano blockchain.

Liqwid is an open source liquidity protocol with a lending use-case. People will be able to receive a loan in USD by offering their ADA as collateral. It is a competitor to Ethereum's Aave, Compound, Yearn Finance, and others.

LQ will be the platform's governance token, with utility use-cases such as platfrom improvements and parameter changes by its community.

Staking AND yield farming simultaneously?

Similar to Kolibri on Tezos, Liqwid Finance aims to combine ADA staking and yield farming on Liqwid Finance, since Cardano staking doesn't require you to lock your ADA. In other words: users can supply tokens to a market to earn interest without giving custody to a central party.

This means that you can still stake the unborrowed ADA, whereas the borrowed ADA is no longer viable for a stake. This idea is still in its feasibility stage and can be subject to changes.