What Is Staking

Staking Introduction

Staking is a way for ADA holders to earn rewards for holding on to their ADA, much like how you earn interest from a bank. While many other cryptos operate this way, the beauty of Cardano's Ouroboros protocol is that it allows delegators to still be in complete control of their ADA whilst staking. There's no holding period, no wait times between unstaking, and you are always in complete control of your ADA.

Delegation

Cardano, being a Proof of Stake (PoS) system, provides your ADA with an added functionality besides basic transactions. Owning ADA also grants you the right to take part in the consensus protocol and create blocks!

ADA holders can then delegate these rights to stake pools to help create these blocks on their behalf.

Stake Pool

At the heart of Cardano’s Proof of Stake (PoS) consensus protocol are stake pools. While all ADA holders may take part in the protocol, not everyone is committed to running a node 24/7 or has the technical knowledge.

This is where stake pools come in! Stake pools are server nodes that provide an avenue for everyone to take part in the PoS protocol, regardless of their technical experience or availability. These stake pools hold the combined stake of ADA stakeholders in a single entity and create these blocks on behalf of its delegators.

Are My Funds Safe When Staking

When you delegate your stake to a pool, you’re not delegating your ADA but your participation rights. Imagine a sticker on each of your ADA. This sticker allows you to take part in creating a block. By delegating to a pool, you’re effectively just passing on this sticker to the pool operator, allowing them to participate in creating the block on your behalf! Hence, you are always in total control of your ADA, and you can freely spend or transfer your funds however you want to, even when staking!

How Much Can I Get From Staking

Many varying factors could affect your returns, such as pool saturation or margin fees (Raffle Pool has 0% fees). On average, staking your ADA would net you around 4% APY

How Long Before I Get My Rewards

It will take 15 - 20 Days after your first delegation to a pool before receiving your first rewards. Your subsequent rewards after that will be every 5 Days (At the start of each EPOCH).

Is There Any Risk To Staking

No! As your ADA never leaves your wallet, there is no risk to staking.

Choosing a Stake Pool

You can check out https://adapools.org/ or https://pooltool.io/ for a list of pools and their performance.

You might be bombarded by all the metrics shown when heading to those sites. I would recommend not looking at the ROA / Lifetime or the Luck columns, as all pools would tend to the same value over time (A Pool may show 5% APY, but in the long run, it will decrease back down to around 4%). The metrics that you monitor instead are:

Fees

The fees column consists of 2 fees. The “Fixed fee” and “Variable / Margin fee”. Stake pools deduct these fees from the rewards received from creating a block.

The fixed fee is the fee that is predefined by Cardano’s Ouroboros protocol and can’t be lower than 340 ₳. The Variable / Margin fee (%) on the other hand, is set by a stake pool, and would determine the cut a pool operator takes before distributing the rewards.

Higher fees eat into your rewards, which means lower returns.

Stake (Saturation)

This is the total amount of stake in a pool. Rewards received are tied to the size of a pool. Still, these rewards stop increasing after a pool crosses a saturation limit, which means lower returns. I would recommend not joining a pool close to or at 100%!

Decide on a pool

So which pool should you choose? Well, there's no right answer as it depends on you. Are you looking to delegate to a pool fighting for a cause, or are you looking for a pool to maximize your profits? After deciding on that and looking at the pool's metrics, your choices would have been narrowed, and you can just pick any!

If you've not decided on a pool or want to join a new one, you could always consider Raffle Pool | [RAF]. You know you're maximising your returns with 0% Fees. Additionally, we host raffles for you to stand a chance to win more ADA on top of your staking rewards!