Cardano Staking: Everything You Need to Know

1.What is a stake?

Ada held on the Cardano network represents a stake in the network, with the size of the stake proportional to the amount of ada held. The ability to delegate or pledge a stake is fundamental to how Cardano works.

There are two ways an ada holder can earn rewards: by delegating their stake to a stake pool run by someone else, or running their own stake pool. The amount of stake delegated to a given stake pool is the primary way the Ouroboros protocol chooses who should add the next block to the blockchain, and receive a monetary reward for doing so.

The more stake is delegated to a stake pool (up to a certain point), the more likely it is to make the next block – and the rewards are shared between everyone who delegated their stake to that stake pool.

2.What is stake delegation?

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.

3.What is a Staking pool

Stake pools are run by stake pool operators. These are network participants with the skills to reliably ensure consistent uptime of a node, which is essential in ensuring the success of the Ouroboros protocol and the Cardano network as a whole.

The protocol uses a probabilistic mechanism to select a leader for each slot, who will be expected to create the next block in the chain. The chance of a stake pool node being selected as slot leader increases proportionately to the amount of stake delegated to that node. Each time a stake pool node is selected as a slot leader and successfully creates a block, it receives a reward, which is shared with the pool proportionate to the amount each member has delegated. Stake pool operators can deduct their running costs from the awarded ada, as well as specify a profit margin for providing the service.

4.What is Stake Pool Performance

The performance metric is an indicator of how well a stake pool is performing. Considering that the slot leader election process is private, it is only possible to estimate how often the stake pool should be elected based on the number of actually produced blocks. A pool can be nominated more often than expected based on its stake.. For example, if a pool only produces half the number of blocks that it was nominated for, its performance rating is 50%. This could happen because the pool has a poor network connection, or has been turned off by its operator.

Performance ratings make more sense over a longer period of time. If a pool has not yet been selected to produce a block in the current epoch, its performance rating will be 0%, even if it is likely to produce blocks later in the epoch. Performance ratings of over 100% are possible if a pool creates more blocks than it was nominated to produce.

5.Can I delegate to multiple stake pools

That multiple-pool delegation using a single wallet will not be supported on the mainnet.

6.Can I re-delegate my stake to another pool?

Yes. Delegated stake can be re-delegated to another pool at any time. Re-delegated stake will remain in the current pool until the epoch after next (from the point of re-delegation), after which your delegation preferences will be updated on the chain and your stake moved to the new stake pool. Rewards are distributed from the end of each epoch, so you’ll continue to receive rewards from your original stake pool for two epochs before your new delegation preferences are applied.

7.What makes a good stake pool?

Stake pools are ranked based on their overall performance and other key information. The performance metric is a calculation based on the number of blocks the pool was tasked to create compared with the number of blocks it actually created, and is recorded over time. We recommend that ada holders also do their own independent research when choosing where to delegate their stake.

8.What is stake pool desirability

Desirability measures how desirable a stake pool is to an ada holder seeking to delegate their stake. It is influenced by a number of factors – including a stake pool’s margin, fee, performance, the total reward available in the current epoch, and saturation percentage – and contributes to determining a stake pool’s ranking.

9.Are rewards guaranteed

Rewards for delegation can be earned if you delegate to a stake pool that is sharing rewards. The amount you earn cannot be guaranteed and will ultimately depend on the stake pool, the amount of rewards shared, and its performance. It is worth noting that rewards will only begin to be granted from the end of the epoch in which the associated stake was delegated.

10.Will the ADA rewards I earn be added to my delegated stake?

Rewards earned accrue with your original stake. When rewards are received, the balance of your reward account increases – and, consequently, the delegated stake is increased.

11.How long will it take to receive the first reward

For the account that is pledged for the first time, the time to receive the first income is ≥20 days, for example: You are pledged in the Nth era, N+1 and N+2 have no income, N+3 starts to calculate the income, and N+5 is issued N+3 income, so the first income needs to wait 4 epochs, that is, 20 days. If the entrusted equity pool currently has no income, the time to receive the first reward will be greater than 20 days.

12.When will the rewards be issued?

Rewards will be issued once in each era. The rewards of the Nth era will be distributed in the N+2 era. One era is 5 days. If the entrusted equity pool has no rewards, you will not get rewards.

 

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