Stake ADA

Once you have delegated your ADA, there are things you need to consider going forward:

• Firstly, you can re-delegated your stake to another pool at any time. Re-delegated stake will remain in the current pool until the epoch after next (from the point of re-delegation), while 1 epoch takes ~5 days.
• Secondly, In Yoroi, it is possible to delegate to multiple pools using a single wallet, but not in Daedalus. To delegate to multiple pools in Daedalus, you will need to create separate wallets.
• Thirdly, rewards earned accrue with your original stake. When rewards are received, the balance of your reward account increases – and, consequently, the delegated stake will increase.
• Lastly, as a participant in the Cardano Ecosystem, you hold a stake in the network as a token holder and you can vote on proposals to develop or upgrade the blockchain and ecosystem.

It is essential for users to stake their PoS tokens with dependable and highly performant validators, which is why we have rolled out our Staking Rewards Verified Staking Provider (VSP) Program in June 2022. Through this program, we thoroughly scrutinize potential validators, evaluating factors such as security measures, their on-chain reliability, their provider setup, and value-added services for the whole ecosystem.

Our VSP documentation contains further details about the program, Staking Providers that are part of the VSP will have a blue checkmark displayed next to their names here.

There are many metrics to consider when selecting a validator to delegate to:

Commission Rates: The commission rate a validator charges is the % of your reward that the validator keeps for themselves. A high commission rate means your rewards will be lower whilst a low commission rate could mean that the validator is not profitable and could cause issues for them in the future. Keep in mind that validators can adjust their commission rates up or down over time.  Also, note that the minimum fixed ADA staking fee across each Cardano Stake Pool is 340 ADA which will be shared among the delegators of the pool. This means by choosing a pool with a higher stake, your slice of 340 ADA fees will go lower. This fee level is set by the protocol of the blockchain.

Number of Users: A high number of delegators could indicate positive sentiment towards a validator. 

Validators Self-Staked balance: A provider that has a high amount of staked tokens likely has more incentive to continue operating their services as they have more to lose than those with low self-staked balances. This metric has some limitations as validators can choose to delegate to their own validator from another wallet, which is done to increase the security of their funds. 

Current Status: You can see whether the validator is currently active or not by checking the validator list shown on this page. Validators that are active have a green dot under them.

Network Share: You typically don’t want to choose a validator with the highest network share {the term may vary} or a validator with a low network share. Delegating to the most popular validators increases centralisation risks within the network as those validators will have more say in governance and a larger share of the blocks. A validator with a low network share, might not be profitable and hence increases the risk of them discontinuing their services.

Performance: Make sure you pick a validator with the highest possible uptime performance by viewing the validator information on the Validator Dashboard. Our recommendation is to only pick those with a >=99% Luck rate.

Value Add to the Ecosystem: Some providers offer extra services to their delegators, such as tax reporting tools, explorers, etc. This can be another great way to filter for validators that are thinking long-term. 

Native staking rewards for ADA are composed of:

Block Rewards: Each epoch ((currently ~5 days per epoch), a fixed 0.22% of the reserve balance (the difference between the maximum supply and the circulating supply) is used for block rewards and the treasury . Of the token emissions, 20% go to the treasury. It’s important to note that the balance will be smaller in each subsequent epoch, so the total block rewards will decrease over time.

Transaction Fees: The set of transactions in a block that was minted during a specific epoch are used to determine the distribution of fee rewards. Of these rewards, 20% will go to the treasury and the remaining 80% will be distributed to stake pools. In the beginning, the main source of rewards will be monetary expansion, but as the reserves are depleted and the number of transactions on the network increases, the plan is to transition to solely relying on charging transaction fees as the source of rewards.

Please note that the total annual rewards are divided by all active stake pools; hence, as the amount of staked tokens goes up, the reward rate goes down. 

You are welcome to play around with our Staking Calculator to get a better feel of how these metrics can influence your rewards.

Whilst we want to ensure staking is as safe and transparent as possible, there are still things to consider regarding whether a specific staking option is right for you.

• • Slashing risk:There is no slashing risk when you delegate your ADA to a valdiator.
  • Unbonding risk: There is no unbonding risk as you can withdraw your ADA any time.

• Protocol security risks: There is an inherent risk that the protocol could contain unknown bugs. This not only applies to staking but your ADA investment in general.

Please note that this is not an exhaustive list of all the risks related to staking.

ADA is the native token of the Cardano network that is used to carry out the key functions of the platform as detailed below:

Token Utilities

• Staking: Cardano allows ADA holders to participate in the protocol’s security and earn rewards by either operating a stake pool or delegating their tokens to a stake pool. The stake pool uses the staked tokens to verify transactions and maintain the protocol’s security in exchange for rewards.
• Gas token: Each transaction processed by the network requires the payment of a small fee to the validator.
• Governance: In Cardano, every token holder has a stake in the network and is entitled to vote on proposals related to the development and upgrading of the blockchain and ecosystem. Funding Proposals are voted on through a dedicated voting app, while Cardano Improvement Proposals are voted on through the CIP GitHub repository.

Cardano’s consensus mechanism is called Ouroboros, a proof-of-stake algorithm that uses a game-theoretic approach to achieve distributed consensus without energy-intensive mining. The Ouroboros protocol has slot leaders, randomly chosen from the pool of stakeholders, who create new blocks and validate transactions based on the size of their stake. This encourages stakeholders to hold onto their Cardano tokens for longer. The slot leader also collects transaction fees from the block they create. There is no limit to the number of stake pools on Cardano, but stake pool operators have a responsibility to both their ADA delegators and the health of the network, requiring a stable and reliable infrastructure and expertise in system operation, server administration, development, and operations.

The total supply of ADA is capped at 45 billion. The token inflation schedule will release the remaining ADA tokens at a rate of 0.22% of the remaining balance per epoch (approximately 5 days) until all tokens have been released. Of the token emission, 20% will go to the treasury and the remaining 80% will be allocated to stake pool operators and delegators.

Initial Distribution Breakdown 

The Genesis Block Distribution included an amount of 5,185,414,108 ADA, which is equal to 20% of the ADA vouchers sold during the Sale period. These ADA were distributed to three groups in the Cardano ecosystem: the Cardano Foundation, Switzerland (648,176,761 ADA), EMURGO (2,074,165,644 ADA), and IOHK (2,463,071,701 ADA). These groups are part of the Technical and Business Development Pool. 

The public sales distribution included 25,927,070,538 ADA. 

The total amount of ADA available at launch was 31,112,484,646 ADA.

Any tokens that have been minted are free to be used and staked.