How to stake Cardano (ADA)?
What is a Cardano ADA Stake Pool?
A stake pool is a reliable server node that concentrates on the maintenance and holds the combined stake of different stakeholders in a single entity. Stake pools are accountable for processing transactions and producing new blocks and are at the core of Ouroboros, the Cardano proof-of-stake protocol.
To be secure, Ouroboros requires a good number of ADA holders to be online and maintaining adequately good network connectivity at any given time. This is why Ouroboros relies on stake pools, entities committed to run the protocol 24/7, to support the contributing ADA holders.
While Ouroboros is cheaper to run than a proof of work protocol, running Ouroboros still acquires some expenses. Therefore, stake pool operators are rewarded for running the protocol in the form of incentives that come from the transaction fees and from inflation of the circulating supply of ADA.
How to stake Cardano (ADA)?
Delegating your stake will be done within your wallet. It will be as simple as selecting a drop-down. You don’t need to trust a pool, the rewards are allocated by the protocol, not by the pool. You can stake your ADA with hardware wallets and even with paper wallets.
Wallets will help you to select your staking pool, sorting the pools by a new metric called “desirability”. Desirability is composed of reliability (online when needed?), the pledge (pool’s stake), saturation (is it full?), pool costs, and margin.
Confirm the delegation with your spending password, a very small fee has to be paid – Again, no ADA will leave your wallet for staking.
How much can I earn staking Cardano ADA?
Your income is subject to a few network-wide parameters such as the number of tokens participating in staking and the individual configurations of your Staking Provider (ADA Stake Pool).
At the start of Staking in July 2020, there are ~13.8 billion ADA reserved as stake incentives for participants. Each epoch (5 days) the protocol distributes 0.3% of this total reserve pool between all active stakers. Therefore rewards are being distributed every 5 days and compound automatically.
Use the Cardano Staking Calculator to play with these metrics and predict your earnings under certain network conditions.
Is there any risk or lock-up for staking ADA?
When delegating your funds to a Stake Pool, you have complete control of the coins and they are never locked. When spending your staked coins, they are automatically withdrawn from the Stake Pool. There is no risk of losing your funds while delegating (no slashing).
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