How to Stake Cardano (ADA)

What is staking?

Staking ADA refers to delegating your ADA to a stake pool. When the stakepool is chosen to produce a block, the rewards are distributed to the delegators. Pool fees are used to fund the stake pool operations. The Return on Investment (ROI) for the delegator is also called Return on Stake (ROS) or Return on ADA (ROA). The rewards are distributed every 5 days (1 epoch) and can vary from epoch to epoch, depending on how many blocks a stake pool produces. The amount of blocks produced is based on an algorithm, which causes all pools, both large and small, to have an ROI of around 5-6% annually. While large pools tend to produce more blocks, the rewards are diluted heavily amongst more delegators. On the contrary, smaller pools produce less blocks, but the rewards are distributed in higher proportions to delegators.

How does the delegation cycle work?

To help you understand the delegation cycle, we have created a visual below.

When you delegate to a stake pool, we will call the immediate epoch, Epoch N. You can delegate at anytime during Day 1 to Day 5 of Epoch N. At the end of Epoch N, a snapshot takes place, in which the protocol captures the balance of your stake key and registers your delegation. At the end of Epoch N+1, another snapshot takes place that confirms the registration and allows slot leaders to be elected for Epoch N+2. During Epoch N+2, the delegated stake is now active and will help with producing blocks. At the end of Epoch N+2,  a new snapshot registers the rewards collected. At the end of Epoch N+3, the protocol distributes the rewards to all stake keys, which show up in your wallet in Epoch N+4. Overall, it will take about 4 epochs, 20 days on average, to receive your rewards.

How to choose a stake pool operator?

There are various factors to consider when choosing stake pool, here are the most important ones:

• Experienced operator: The stake pool operator should have experience in IT and be committed to supporting and maintaining the stake pool, so that there is no down time. When the stake pool servers are down, this could result in missing a block and reduce the amount of rewards for it’s delegators.
• Fees: Stake pool fees typically range from 1% to 5% and are used to help pay for the stake pool operations. The lower the fees, the higher the margin that goes towards the delegators. However, if the fees are too low, then the stake pool operators may not have any incentive to do a good job and you may have a pool that produces lower rewards. That being said, NODO’s fees are currently zero (0%), since we are new pool and we want to attract more delegators. This also allows ADA holders to enjoy staking coins with a higher return.
• Pledge: The pledge amount refers to how much ADA the stake pool owners have dedicated to the pool. The larger the amount the more committed the stake pool operator will be to producing good results. Any pool with 50,000 ADA and above is a reasonable amount based on ADA’s current price.
• ROA: Return on ADA (ROA), is the annualized return of ADA from the stake pool. Typically, this ranges from 5-6% for all healthy pools, regardless of the size. This is based on an algorithm that promotes decentralization.
• Community Pools: To promote decentralization of the Cardano Network, it is best practice to delegate to community pools and NOT exchanges, as exchanges centralize the network. Moreover, you do not have full control of your private keys and exchanges are vulnerable to hacks. Supporting smaller community pools generally provides higher returns and it is better than giving control and influence to the big whales, which reduces decentralization.

BONUS:

• Pool height: When browsing pools on pooltool.io, you’ll notice that there’s a column named height. It shows the node’s current block and let’s the delegators know that the node is running and up to date. If it is running properly, you will see the pool’s height in green and it will be updated on pooltool.io as you refresh.

• pool.vet: If you go on pool.vet and type in the ticker, it should show a green PASS on all critera, to show that the stake pool is healthy and running properly. Important aspects shown here include stake pool registration, metadata and relay node networking.

Why choose Cardanodo (NODO)?

Although Cardanodo (NODO) is a small community pool, we have experienced operators and are committed to it’s success. we provide ultra low fees (1%), so that more rewards will go towards our delegators. Cardanodo will be here for the long run, so you will not have to worry about your pool disappearing down the road. Cardanodo meets and exceeds all the recommended requirements in operating a stake pool, whether it be hardware or security. We are also very passionate about Cardano and would love to help strengthen and build the Cardano Community.

Recommended Cardano Wallets

How to stake with Daedalus

Open the Daedalus desktop application.

Click on the 2nd tab on the left vertical bar.

Click on Stake Pools

Choose your stake pool by typing in the ticker (e.g. NODO)

Click on the pool

Click on “Delegate to this pool”

Follow the commands for 1 ) Wallet Selection, 2) Stake pool selection, 3) Delegation confirmation

Done!

Wallet Recommendations: 

ETERNL/NAMI: If you prefer the convenience of having an online browser wallet, giving you access anywhere, Eternl/Nami are both great. There is also Smart Contract support, which allows you to interact with Dapps and NFT marketplaces, such as jpg.store. Both wallets also render NFT's and tokens, which are great if you are a collector. An advantage of the Eternl wallet is that you can see a bar graph of staking rewards for each epoch, although both Nami and Daedalus show staking rewards accumulated too. Nevertheless, one limitation of Eternl/Yami, is that your private keys are saved online; however, pair the Eternl/Nami wallet with a hardware wallet and you have both the convenience and full security at your finger tips.

DAEDALUS: If you do not have a hardware wallet, Daedalus provides more security, since you have full control of your private keys on your desktop. However, the limitations are that you must install Daedalus on to a desktop computer, which may be disadvantage if you value convenience. Daedalus also recommended hardware requirements, such as 64-bit dual core processors, 16GB RAM, 100-200 GB free drive space (continuously growing), and Broadband Internet connection. Lastly, Daedalus provides the ability to use your ADA to vote in Catalyst Funding Rounds.

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