Guide to Staking

Frequently Asked Questions

Staking is 100% safe

Your ADA never leaves your wallet nor does anybody other than you have access to your funds. Not the stake pool, Charles Hoskinson or Satoshi Nakamoto. Therefore, you stay in control of your funds, no matter what. Even if the pool is down or hijacked by an adversary. There is also no such thing as getting penalized for pool downtime (I am looking at you Eth2.0…!). 

You only have to haul in these sweet ₳ rewards 😉 read below for a detailed step-by-step instructions.

To prevent all ₳ holders from staking to one pool, there is a soft pool limit after which the rewards start to decrease. This is called saturation and is controlled by the so called k-parameter, which is at set to k=500 at the moment and basically means that the optimal number of pools is 500 and in turn the saturation limit is about 64M ₳. This will propably halve to 32M₳ in the future with k set to 1000.

You loose possible rewards from an epoch, not more, not less. Just have a look at the pool stats every other epoch and if you happen to be in a saturated pool just re-delegate.

  • I recently got asked by a delegate wether they would have to pay me the fee and margin from their own funds? The answer is absolutely not! Fees and margin are paid to the stake pool operator but come from the rewards for minting blocks.

To prevent institutional pool operators with deep pockets to drive out small pools there is a minimum fee of 340 ₳.  Therefore, the minimum costs for running a stake pool should be covered. The pool margin is adjustable and typically ranges from 0 to 3%.

Let’s look at an example.

Example:

Imagin a pool with:

  1. The minimum fee of 340 ₳ and 2% margin set.
  2. 10 delegates, each staked 10k ₳ (pledge ignored for the sake of simplicity).
  3. The Pool was very lucky and minted 2 Blocks which equals to approx 2.5k ₳ as rewards.

First, the fees (340 ₳) are substracted from the rewards and are paid to the pool operator:

2500 - 340  = 2160 ₳

After subtracting the margin, in this example 2%, we have remaining:

2160 x (1 - 0.02) = 2116 ₳

These rewards are distributed to the delegators, proportional to their delegated funds. In this example equally, which leaves the delegators with:

211.6 ₳ / each

Not bad for, right :-)?

Epochs and slots are the details of how the Cardano protocol, called Ouroboros, works. All you need to now is that a Epoch is 5 days and rewards will be paid out after each epoch with one epoch delay. For the detailed staking cycle refer to below.

The only price to pay is the a transaction fee of approximately 0.17 ₳.

There is also 2 ₳ deposit for the stake address registration, which will be refunded. So, if you stake for the first you will likely be prompted a transaction cost of about 2.17 ₳ from which you will be refunded 2 ₳.

Don’t know where to register, deposit or transfer? No worries all of the things described above happen automatically when you stake with Daedalus or the Yoroi wallet. Just refer to the staking guide.

There many pools out there with millions of  staked and pledged ₳. And you are absolutely right, these pools will produce more regular rewards income. But here is the twist: The average return will be the same for a big or a small pool and that is round about 5%-6% per year. Therefore, if you are in for the long run (which you should!), for your rewards it doesn’t really matter if the pool is big, small or in between.

But there is another important aspect of your choice: DECENTRALISATION! With your decision to stake with small and single pool operators you secure the network and prevent single entities from becoming too powerfull. Further down I will go into more details if you like.

Plain and simple, around 5%-6% per year in average.

Easy: Exchanges are selfish! Very selfish, as of writing this paragraph, Binance operates 20+ pools , all nearly saturated. I don’t know about you but I don’t want one player to control so much of the network.

Beyond that you are simply stripped from your choice of supporting pools with charitable missions, stake pool operators who contribute to the community or simply to choose a pool with lower fees and margin.

And since Cardanos proof of stake concept is so awesome and secure you can be pretty sure that those exchanges will stake your ₳ even if you didn’t ask the to. They’ll just sack in those rewards for themself.

YES! At any given time, to whoever you want to. No strings attached.

Full Node - Full Control

Staking with the Daedalus desktop wallet

The company developing the Cardano ecosystem is Input-Output Hong Kong – IOHK. And IOHK also develops the Daedalus wallet as open source project. Daedalus lives up to the highest security standards and is continously improved.

Daedalus is tailored fo the Cardano ecosystem and will manage your fund and delegations and since recently you can also see your tokens, which are handled natively by the Cardano multi-asset ledger.

1. Create A Wallet

After you downloaded the Daedalus wallet here, installed and synced it, you should add a wallet by clicking on the create tile (left picture). You will be asked for a name and spending password. In the next step you will have to write down your recovery phrase. Write (!!!) it down, on a piece of paper (!!!), engrave it on a metal plate and keep it safe. No honest person will you ever ask you for your phrase. I can’t stress this enough.

2. Transfer Your Funds

Afterwards you can pick a address from the Receice tab. By clicking on it you can copy it to the clipboard or display the address as QR code (right picture). Fund the address with ADA from your favourite exchange. As soon as your exchange wired the transaction you should see the funds within minutes in your wallet.

3. Find [AERO] Space Pool

Open the delegation section on the left side bar of Daedalus. Switch to the stake pools tab and type in [AERO]. Now Your favourite stake pool will pop 🙂 up and you can click on the tile. 

From here the Delegate to this pool button will guide you through the process.

The Delegation Cycle

Industry Focused Products!

Roller Chain Drives

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Inductive / Capacitive Sensors

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Motors & Gear Motors

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Conveyor Chains

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