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Our educational resources provide a step by step introduction to Cardano staking.
Cardano is an open-source, Proof-of-Stake (PoS) blockchain. It is the first blockchain to be founded on peer-reviewed
research and development through evidence-based methods.
Cardano combines pioneering technologies to provide unparalleled security and sustainability to decentralised
applications, systems, and societies.
On Cardano, people can send and receive ADA, participate in staking and delegation to earn rewards, create multi-purposed assets (native tokens) and non-fungible tokens (NFTs).
Ultimately, Cardano aims to be a new Global Financial Operating System that is trusted, secure, decentralised and sustainable.
In Proof-of-Stake (PoS) blockchains, such as Cardano, stake pool operators validate network activities. Operators (or slot leaders) are elected based on their holdings (stake) in the associated cryptocurrency (ADA). This process consumes little energy, unlike Proof-of-Work (PoW) blockchains.
A blockchain, also known as a distributed ledger, is a digital ‘book’ of records.
Unlike traditional financial systems, blockchains are decentralised and are not regulated by any central authority.
In a blockchain, nodes (people's computers) agree on the validity of any given transaction using what is called a consensus mechanism.
Transactions are grouped together and stored in blocks that are added to the chain in set periods of time called slots.
These transactions are visible to everyone, and once validated, records cannot be altered. This immutability guarantees transparency and trust between users.
Cardano's blockchain code is guaranteed to run exactly as designed for mission-critical infrastructure servicing financial markets, governments and enterprises.
Cardano is a fully decentralised blockchain. This means that thousands of people’s computers (nodes) cooperate to agree if a transaction is valid. This process is enabled by Cardano's Ouroboros Protocol. The first provably secure Proof-of-Stake (PoS) consensus protocol.
ADA is Cardano’s native token.
Blockchain tokens can be designed for many different purposes - ADA is a token that is designed to be used as a digital cryptocurrency coin.
In 2017, ADA became the first cryptocurrency to run on Cardano.
A Lovelace is the smallest unit of ADA. One ADA equals 1,000,000 Lovelaces. Lovelace is to ADA what a Satoshi is to Bitcoin.
A fee is the amount of ADA charged for processing a transaction on Cardano. Fees contribute to the network's financial health and development, and prevent economic attacks. Cardano’s deterministic nature ensures that fees are stable, predictable, and low in comparison to Proof-of-Work (PoW) blockchains.
Staking is what secures the Cardano network, so the more ADA staked the better.
Every ADA holder owns a stake in Cardano based on the amount of ADA they hold.
Rather than every ADA holder having to run a computer system (node) to take part in the staking process, resources are shared in stake pools. On Cardano, stake pool operators earn rewards for producing blocks, and share the rewards with ADA holders staking to their stake pool.
Essentially, staking means an ADA holder committing their ADA to support a stake pool operator secure the Cardano network and produce blocks.
Note: With Cardano staking there are no lock-in periods and no ADA leaves your wallet. You can spend or transfer your ADA at any time.
Staking is a way to put your ADA to work and earn passive income (rewards). Similar to depositing money into a bank account and earning interest, the amount of interest earned depends on the bank account terms (stake pool) and how much money (staked ADA) is deposited into the account (wallet).
ADA holders who do not delegate their ADA to a stake pool are missing out on rewards.
In short, you delegate your wallet to a specific stake pool, and any ADA in your wallet is staked with that pool. The terms ‘delegating’ and ‘staking’ are often used interchangeably.
Cardano uses ‘non-custodial’ wallets, this means that your ADA never leaves your wallet and
you remain in full control of your private keys, even while its staked with a stake pool.
Scam Warning: Always be on the look out for scams that ask you to send ADA or ask for your private keys. Orcada Stake Pool will NEVER ask you to send ADA, your password or your private keys.
~2.17 ADA is taken when delegating a wallet for the first time. 2 ADA is taken as a deposit
for registering your stake address on the blockchain. ~0.17 ADA is taken for the transaction
fee. Any remaining ADA in your wallet will be staked with the stake pool operator.
Any additional ADA sent to your wallet will be automatically staked.
No, Cardano’s delegation mechanism is based on a liquid democracy. This means that staked
funds are never locked and your ADA can be spent or transferred at any time.
Other platforms use a third-party protocol to make staked tokens liquid, which has the potential to introduce security problems.
Remaining rewards will still come to the existing wallet because the balance for the active stake has been snapshotted
in previous epochs.
Remember to leave a small amount of ADA in the old wallet to cover the transaction fees to withdraw those rewards.
Staking on an exchange means your ADA is kept in a wallet owned and controlled by the
exchange. This opens up several potential security risks. Exchanges tend to charge large
margins (5%-15% in some cases) that will earn you less rewards compared to most
independent stake pool operators. Given that exchanges already own a large amount of ADA
this poses a centralisation issue.
For Cardano to be a fully decentralised blockchain network it is important for ADA holders to stake with independent stake pool operators to maintain a healthy distribution of ADA across many stake pool operators.
The best way is to choose a stake pool that best meets the goals and values that a person supports and shares.
We do not recommended to store ADA or any cryptocurrency on an exchange due to these potential security risks, including the risk of loss. There are multiple safe and secure wallets for holding your ADA privately that will enable you to delegate your ADA to an independent stake pool. This will help decentralise the Cardano network and in most cases will earn you higher rewards.
Each epoch, all transaction fees and 0.3% of the remaining ADA reserves are put into a
20% of the reward pot is reserved for the Cardano Treasury to support Cardano ecosystem development through the Project Catalyst voting process.
80% of the reward pot becomes staking rewards.
Rewards are transferred to delegators automatically as part of the Cardano protocol itself, they are not transferred by the stake pool operator.
On average, approximately 4%-5% of your ADA holdings per year. Note, earnings are subject to network-wide parameters such as the number of coins participating in staking, and the configuration of the stake pool, and therefore may vary over time.
Return on Stake (ROS), Return on Investment (ROI), Return on ADA (ROA) are commonly used terms that relate to the additional amount of ADA (rewards/interest) you will receive from staking your ADA holdings each year.
Rewards are distributed at the end of each 5-day epoch.
The first time you delegate ADA to a pool, your rewards will be received around 20 days later. If you delegate your ADA during the first epoch, the stake pool that you delegate to can produce blocks two epochs later. Two epochs after that, you will begin receiving rewards.
You are free to withdraw your rewards whenever you want. However, you are not required to
do so unless you wish to send your full balance to another wallet or exchange.
All your rewards are automatically transferred to your wallet and re-staked to the stake pool as part of your delegation. You are not required to withdraw and re-stake your rewards.
No. After you have delegated your stake to a stake pool, the rewards you earn are
automatically re-staked to the stake pool. Any additional ADA sent to your wallet will be
automatically staked with the stake pool.
Any wallet balance change is automatically captured as part of the snapshot and will incur updated rewards around 20 days later.
If you delegate to a different pool, you will not lose any rewards. The delegation process to the new stake pool will take effect after the current and next epoch. You will continue to receive rewards from your old stake pool until the delegation process is completed to the new stake pool.
A stake pool is a virtual 'pot' that holds the combined stake of multiple ADA holders. The
Cardano network is run by over 3,000 stake pools.
Stake pools are managed by stake pool operators. These are Individuals or organisations with the requisite technical expertise, time and financial resources to run a Cardano network node (computer system). Nodes power the network by validating transactions and minting (producing) blocks on the the blockchain.
ADA holders delegate their stake to a stake pool and in return receive a share of the rewards it earns for minting blocks on the network.
Orcada Stake Pool is a public stake pool for delegators to receive their share of distributed rewards.
In return for managing the infrastructure on which Cardano runs, stake pools charge a small fee from the block rewards before distributing rewards to delegators. For example, the Orcada Stake Pool currently passes 99% of all block rewards to delegators and claims a 1% rewards fee (margin).
Stake pools do not have access to your ADA or charge you ADA for staking with them. Income is derived from block rewards only.
Cardano has non-custodial staking. This means that there are no lock-in periods. ADA holders can spend or transfer their staked funds at any time.
Establishing and managing a stake pool requires the operator to set up server infrastructure, maintain and update Cardano node software and continually monitor the node to target ~100% uptime.
Cardano’s Proof-of-Stake (PoS) consensus mechanism divides the blockchain into five day units of time (epochs) that align with the rewards cycle. A five-day epoch consists of 432,000 slots with each slot lasting for one second.
A block stores new cryptographic transaction information and encrypted information from
previous blocks on the blockchain.
Blocks are linked to the previous and next block creating an immutable chain of records.
The genesis block is the first block of a blockchain. All subsequent blocks can trace their lineage back to the genesis block.
Cardano's Ouroboros Proof-of-Stake (PoS) Protocol randomly elects a slot leader from active stake pools to create a block within a slot. A slot is the primary unit of time used by the Ouroboros algorithm.
At the beginning of each epoch, a slot leader election occurs (based on the stake snapshot
taken in the previous epoch).
During the election process, each pool is randomly elected for the chance to mint blocks on the Cardano blockchain by way of slots, which are specific times within the epoch when the pool has the opportunity to mint a block.
The more stake a pool controls, the greater the chance it has of being elected as a slot leader to produce a new block.
When validating a transaction, a slot leader needs to ensure that the sender has included enough funds to pay for that transaction and must also ensure that the transaction’s parameters are met.
If the transaction meets all these requirements, the slot leader will record it as a part of a new block, which will then be added to the blockchain.
A pledge is the amount of ADA the stake pool operator has committed to permanently
contribute to its stake pool.
Orcada has committed 100,000 ADA to its stake pool pledge.
Pledging is an important mechanism that encourages the growth of a healthy ecosystem within the Cardano blockchain.
When registering a stake pool, the operator can choose to pledge ADA to the pool to make it more attractive to people that want to delegate.
A set fee of 340 ADA per epoch is given to Stake Pool Operator’s to cover the costs of running and maintaining a stake pool. Note, Stake Pool Operators have the ability to charge a higher fixed fee.
A margin is the percentage share of the ADA rewards that the stake pool operator receives
before distributing rewards to stake pool delegators.
the Cardano blockchain.
Orcada has set a very competitive 1% rewards margin for running its stake pool. This means that 99% of all block rewards are passed on to Orcada's delegators.
A private stake pool has a profit margin of 100%. This means that all ADA rewards are retained by the stake pool operator and no rewards are shared with delegators.
For example, if a stake pool operator earned 10,000 ADA rewards in the past epoch.
Cardano's Ouroborous Protocol automatically deducts 340 ADA from the 10,000 ADA as a fixed
fee and sends it to the stake pool operator's wallet. 10,000 ADA - 340 ADA = 9,660 ADA
Then, the variable fee is calculated and deducted from the 9,660 ADA based on the percentage set by the stake pool operator. If the stake pool operator's fee is 1% a fee of 96.6 ADA will be deducted. 9,660 ADA x 1% = 96.6 ADA. 9,660 ADA - 96.6 ADA = 9,563.4 ADA
9,563.4 ADA would be distributed to the stake pool operator's delegators in proportion to the amount of stake each delegator is contributing to the pool.
The fixed fee and variable fee support stake pool operators with their operating and management costs. These include hardware, utilities (electricity and internet), and labour (time).
Saturation is a term used to indicate that a particular stake pool has more stake delegated
to it than is ideal for the network.
Saturation is displayed as a percentage. Once a stake pool reaches 100% saturation it offers diminishing rewards.
The saturation mechanism has been designed by Cardano to prevent centralisation. Diminishing rewards encourage delegators to move their stake to another stake pool.