Cryptocurrency Staking
Staking Cardano: FAQs
How to start earning crypto rewards with proof-of-stake
Staking has become incredibly popular in the crypto space. Many blockchain networks rely on proof-of-stake to enforce security in their protocol, enabling their users to earn money by contributing with their funds.
That said, many crypto users don’t fully understand proof-of-stake. So, we put together this short guide to answer the most frequent questions about staking. Here, you’ll find:
- What is proof-of-stake and how does it work?
- What is the difference between proof-of-stake and staking?
- How does staking gives you rewards?
- What is an epoch?
- How can I stake Cardano?
- What are stake pools?
- What are delegators?
- How much can you earn from staking Cardano?
- What risks are involved in staking?
- Which stake pool should I choose?
- When will I get my first rewards?
FAQs about Cardano staking
What is proof-of-stake and how does it work?
Proof-of-stake is a consensus mechanism that Cardano and other blockchain networks use to ensure security and define rules of participation. It consists of validator nodes locking their assets for a set period of time to participate in the protocol’s block validation.
The protocol’s algorithm randomly selects a validator. The more assets staked, the bigger the chances to be picked by the algorithm. When selected, validators get to create and record the next block on the chain, earning the block rewards as a consequence.
What is the difference between proof-of-stake and staking?
Proof-of-stake is the name of the consensus mechanism implemented to enforce security on a blockchain network, while staking refers to the concrete action of locking your crypto assets to participate in the block validation process.
How does staking Cardano gives you rewards?
When you stake your assets, you’re actively competing with other stakers to validate the next block on the chain. In Cardano, should you win the block, you will earn ADA from two components:
- The fees from all the transactions included in that block.
- The result of the monetary expansion in that staking epoch, which is a variable number depending on the state of the network.
What is an epoch?
Epochs are a time unit used by Cardano’s Ouroboros Praos protocol. Each epoch consists of a number of slots, where each slot lasts for one second. A Cardano epoch currently includes 432,000 slots (5 days).
How can I stake Cardano?
Participating in the staking process is extremely easy and you can do it directly from your wallet in 3 simple steps. Click here to access the tutorial.
What are stake pools?
Stake pools refer to a group of users that combine their staked assets to maximize their chances to be selected as a block validator. If they succeed, they distribute the earned rewards among all the pool participants, called “delegators.”
Generally, a stake pool will deduct a small fee from the delegators rewards for their operating and management services.
What are delegators?
Delegators are Cardano users that stake their ADA with a stake pool to increase their chances of earning staking rewards, instead of doing it by themselves.
How much can you earn from staking Cardano?
Depends on several factors such as the number of active staking pools, total ADA staked, and luck, among others. Currently, staking Cardano yields between 3–6% for delegators, and 12–16% for stake pool operators.
What risks are involved in staking?
There are no additional risks involved in Cardano staking besides the default risks of holding cryptocurrency.
Which stake pool should I choose?
There are several stake pools to choose from, each with different terms, fees, and thresholds. Ideally, you’d want to find a pool with low fees to maximize your staking rewards.
Innovatio Pool offers 0% fees for new delegators. You can stake with Innovatio Pool following this guide.
When will I get my first rewards?
After you delegate, your stake has to undergo a process before it starts earning rewards. The process is as follows:
- Epoch 1: Delegation is broadcasted to the network.
- Epoch 2: Delegation becomes active.
- Epoch 3: Rewards are calculated.
- Epoch 4: Rewards are distributed.
- Epoch 5: Cycle restarts from the second step (delegation becomes active).
Since each Cardano epoch lasts 5 days, this process takes about 20 to 25 days to complete. As a result, you won’t receive your first rewards for 20–25 days. After that, you’ll receive your staking rewards every 5 days.
Need additional help? Want us to guide you through the staking process? Follow Innovatio Pool on Twitter and send us a DM. We’ll be glad to help you!
If you have any questions or doubts, or need further guidance, don’t hesitate to contact Innovatio on any of our social channels.