Cardano

FAQ's

What is Cardano?

Cardano is a cryptocurrency, to be precise it’s a more than that, it’s a platform and the currency of it is ADA. Cardano is based on a proof of stake technology, with a number of innovative ideas built on top. For example, having this notion of side chains (layers) that allow separating the system. So, for example, if one part does the work no longer good enough, it can be changed without affecting other parts of the system.

Unlike most other currencies, Cardano is built from scratch. The project launched in 2015 and it took two years of research, to get to a point, where they were able to start with programming. This research-first driven approach was unique in the cryptocurrency space. For the first time, they applied the same scientific rigor, known from mission-critical systems, as in space travel, to the field of cryptocurrencies.

Who is the team behind Cardano?

Cardano has been founded by Charles Hoskinson. When he set up the team, he already took care to achieve a distribution of power. Now there are 3 independent entities:

– IOHK, the research and development company. IOHK does the research, develops and maintains the protocol.

– Emurgo, drives adoption, incubates and supports commercial ventures on Cardano.

– Cardano Foundation, a non-profit foundation, based in Switzerland, acts as a supervisory and strengthens the community.

How was Cardano launched? (initial ADA token distribution)

Cardano held a token sale between September 2015 and January 2017. 25,927,070,538 ADA (83.3% of the total) were sold for $63 million USD to over 10,000 people (94.45% Japanese citizens).

The other 16.7% were distributed over IOHK, Emurgo, and the Cardano Foundation.

Another remaining 13,887,515,354 ADA will be minted as block rewards for stakers.

How to stake Cardano (ADA)?

Delegating your stake will be done within your wallet. It will be as easy as selecting a drop-down. You don’t need to trust a pool, the rewards are distributed 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 earnings are subjects 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).

With the launch 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.

What is a Cardano ADA Stake Pool?

A stake pool is a reliable server node that focuses on the maintenance and holds the combined stake of various stakeholders in a single entity. Stake pools are responsible 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 sufficiently good network connectivity at any given time. This is why Ouroboros relies on stake pools, entities committed to run the protocol 24/7, on behalf of the contributing ADA holders.

While Ouroboros is cheaper to run than a proof of work protocol, running Ouroboros still incurs some costs. 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.

Is there any risk or lock-up for staking ADA?

When delegating your funds to a Stake Pool, you keep full 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).

How does Cardano approach core blockchain development?

While most networks use a typical software development model of introducing new features, implemented and voted upon by key members – Ethereum is one – Cardano has chosen the peer-review approach, most commonly seen in academia. Each new feature goes into peer review via IOHK, a company that works in conjunction with several universities on research and development.

What is the Cardano Foundation?

The Cardano Foundation is an independent standards body that oversees and supervises the advancement of Cardano and the Cardano ecosystem. As the legal custodian of the protocol and the owner of the Cardano brand, the Foundation works to drive adoption and partnerships, grow the Cardano community globally, shape legislation and commercial standards, and ensure stakeholder accountability at every level.

The Foundation’s most crucial responsibility is driving platform adoption and supporting the diverse Cardano community – people like you – engaging with and implementing ideas on the Cardano platform. To fulfill this caretaking role to the highest standards, the Cardano Foundation has a governing Council, a professional executive team, and community managers, recruited in many cases directly from the wider Cardano community.

However, their focus is as outward-looking as it is inward. The Foundation is equally committed to working with other key industries within the blockchain realm, contributing to the advancement of the technology and driving adoption with other compatible systems. The Foundation contributes to the conversation and perception of blockchain globally, focusing on legal frameworks, integration with legacy systems and third parties, awareness, and education – to ensure that blockchain technology can be accessed and understood by all.