Do I need to upgrade from Byron to Shelley if I'm not planning to stake or make transactions in the near future

English Community Technical Support
#1

Dear all,

I have been keeping my ADA tokens in Ledger Nano S (using Yoroi extension) since 2019. Needless to say all those ADA tokens are still in Byron era wallet.

I am not very tech savvy. I am not planning to stake ADA or make any transactions in the near future. In fact for more than one year I haven’t touched my Ledger Nano S. I just wanted to keep my ADA tokens for the long term and cash out when the opportunity arises. I will only need to sell those ADA tokens probably in a year, by the end of 2021, depending on the price action of ADA.

My question (and slight worry) is will my ADA tokens remain safe and sound in the Byron era wallet? Is there for example a time window during which all ADA token holders must migrate their tokens to Shelley era wallets and if they don’t do that their ADA tokens will be lost? I am planning to upgrade to Shelley era wallet and transfer my tokens there only when I plan to cash out, which is in a year from now. Until then I don’t want to touch my Ledger Nano S. Is this fine? Or is there some urgency to upgrade from Byron to Shelley regardless of whether I intend to use those ADA tokens in the near future?

I would greatly appreciate your help.

Many thanks

#2

Hello cemil,

Really curious to why one would not want to participate in the current staking and help keep the network secure. There is no risk to leaving your coins in the Byron wallet but to your point you’ll have to upgrade at some point anyway. So why not do it now and stake your coins to a pool? Many small pools out there could use additional delegation to help them mint blocks for the network. There is no risk to your coins by participating in this process at all. The updated Daedalus as well updated Yoroi can help you move these into an updated wallet easily and then you can stake to a pool. You’ll gain rewards which will automatically add to your staking key and continue to help the system while you leave your coins in cold storage for the length of time you want to hold onto everything.

Hope this helps-

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#3

Yes, you should delegate your ADA and support the decentralization of CARDANO. think that you are loosing money if not…

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#4

Hello Ret0n,

Thank you for your reply. Of course, I would love to stake my ADA to support the ecosystem and earn additional rewards. But my hesitation to stake ADA is unfortunately grounded in the tax laws of my country. If an investor sells their cryptocurrency (or some other investment) after a year then they don’t need to pay taxes in profits. However, if in the meantime the investor acquired some rewards through that investment (e.g., dividends) then that tax-free window might be in certain circumstances increased to 10 years!

Although the law is not clear with regards to staking, since the whole crypto industry is new anyway, my fear is that receiving rewards from staking is likely to qualify as a “dividend” for example. I bought my ADA in 2019 and if I sell it some time in 2021 then I won’t need to pay taxes on my profits. But if now I stake that same amount of ADA it might happen that I can sell it tax-free only in 2029!

I will still try to clarify the tax status of staking and if I’m convinced that it won’t change the taxation status of my profits then I can decide to stake. But until then I have to stay away from it unfortunately.

#5

That is unfortunate and does make sense. I believe even here in the US there is confusion on taxable events with respect to staking rewards. You can still update to Shelly wallets and not stake just so you have the latest address now. This will be useful if you ever want to accumulate more as the exchanges are all updated to these addresses.

#6

I bought ADA in 2018 and held through the run up to >$1 USD. i recently opened my wallet to let it sync and I now see the following message, "please update from byron to shelley’ i’m guessing I just create a shelley wallet and transfer my coins? it looks like there are different shelley wallets? i have a nano s, should i just use the ada wallet the nano provides? also, i have no idea what staking is? if it helps the ada community I’m all for it as long as i’m not at risk to lose any of my ada? Thanks.

#7

Hello,

You will need to move your ada from byron wallet to shelley ; for that u need a new shelley wallet.

Delegation is the process by which ada holders delegate the stake associated with their ada to a stake pool. It allows ada holders that do not have the skills or desire to run a node to participate in the network and be rewarded in proportion to the amount of stake delegated.

Delegating your stake to a stake pool is 100% secure.

  1. You should never transfer ADA to a stake pool. If a stake pool asks you to send them funds in a transaction, please DO NOT PROCEED and report that to us.
  2. The delegation mechanism allows you to have full control over your funds. You delegate ONLY your right to participate in the protocol producing blocks. Thus, when you delegate to a stake pool, you only allow them to produce blocks on your behalf, but you NEVER give up control of your funds.
  3. When you delegate, your funds are NEVER locked, you retain full spending power over your funds at any time.

Happy delegation!

I will appreciate if u will support my project

Cheers,