Staking Cardano (ADA)

Decentralization in progress! Where ADA is staked around the world (epoch 237). Image source: https://www.reddit.com/r/cardano/comments/kkncpd/where_ada_is_staked_around_the_world_as_of_epoch/

If you have Cardano (ADA) you ought to stake it with an independent Stake Pool Operator (SPO). You can stake your ADA using either Daedalus (a desktop downloadable wallet) or Yoroi (a light wallet available as an app or browser extension). There are other ways to stake (ie. Binance, Atomic wallet), but Daedalus and Yoroi are purpose-built for ADA staking.

Staking ADA has two inbuilt benefits:

  1. It supports the Cardano network, helping to keep it decentralized;
  2. It pays around 5% APY. This yield is rewarded every 5 days (an “epoch”) and is automatically staked alongside your initial stake.

Staking your ADA does not lock it up. You can access your ADA at any time.

If you are NEW to Cardano (ADA) here are two links to get you started:

How to start with Cardano staking for newbies
— a handy PDF starter guide by adapools.org

Ultimate Cardano Staking Reward Guide
— a visual guide via Reddit

How to stake with Yoroi (in a nutshell)

The easiest way to stake ADA is with the Yoroi wallet.

Here is a quick How To

1) Get Yoroi, a light wallet available as an app or as a browser extension

2) Withdraw ADA from where you have it now to your Yoroi wallet (Shelley). If you don’t have ADA, buy some on an exchange and then withdraw it to your Yoroi wallet.

3) Go to Staking Centre [Delegate] and pick a Stakepool to delegate your ADA. You can search by Stakepool ID or by Name.

4) Choose a stakepool with less than 32M ADA. It’s best to go with an independent Stake Pool Operator (SPO) that you know a bit about. You can research Stake Pool Operators on sites like adapools.org and pooltool.io

NOTE: It will take 3–4 epochs to receive your 1st ADA staking rewards. I staked during epoch 237 and I received my first rewards at the start of epoch 241.

The k-parameter and saturation

In order to maintain a decentralized network, the optimum amount of ADA is influenced by what is called the k-parameter. Without going into too much maths or specifics, the current k-parameter (k = 500) makes the saturation point for ADA staking pools to be about 64 million ADA. What does this mean? Well, any ADA staking pools with over 64 million ADA has no advantage whatsoever in terms of rewards. None. Optimum rewards are achieved by those who stake with unsaturated staking pools. As of 6 December 2020 it has been best to delegate to an ADA staking pool that has under 64 million ADA.

The k-parameter will double to 1000 around March 2021. This will halve the saturation point to 32 million ADA. What should you do if you are already delegated to an ADA staking pool with over 32 million ADA? You should re-delegate it to a pool that has less than 32 million ADA. Do consider a smaller pool that has room to grow. Your ADA can grow with it.

I stake my ADA with an independent Stake Pool Operator (SPO) that currently has just over a 3 million ADA live stake. I intend to grow with this pool, which — come March 2021 — will still be under the new 32 million ADA saturation point, and probably will remain under that saturation point for a decent amount of time.

Which ADA staking pool?

When I acquired ADA, I knew I needed to delegate it to an ADA staking pool. I decided to go with the[DAVID] David Likes Crypto ADA Stakepool because I valued the content over at the David Likes Crypto YouTube channel. However, when I learned about the k-parameter changing soon (from 500 to 1000) — thus halving the saturation points of staking pools from 64 million ADA to 32 million ADA — I re-delegated my ADA to the[ZEIT] Zeitgeist Cardano Pool. The reason I did this was down to the live stakes of both those ADA staking pools.

[DAVID] David Likes Crypto — over 33 million ADA
[ZEIT] Zeitgeist Cardano Pool — just over 3 million ADA

[DAVID] David Likes Crypto ADA Stakepool is a great pool, but as I intend to grow my ADA wallet with a fresh staking pool (under 32 million ADA), I re-delegated my ADA to the smaller [ZEIT] Zeitgeist Cardano Pool as this stake pool’s rewards will not be affected by the change of the k-parameter in March 2021.

In terms of choosing a staking pool, here are a few basic tips –

1) Choose an independent SPO (Stake Pool Operator) over a large stake pool

2) Pick a staking pool that is NOT saturated
(currently: < 64M ADA; from March 2021: < 32M ADA)

3) Pick a staking pool that know what they are doing. Most stake pools have a website or an active online group that can reveal such information. A secure staking pool will have backup servers/relays to ensure 100% up-time.

You can re-delegate at any time. Review the stake pool you are delegated to regularly, and re-delegate as required.

Fees

There is a very small fee when you 1) first delegate; and, 2) re-delegate.

On 23rd December 2020, I delegated my wallet to [DAVID] David Likes Crypto ADA Stakepool. A small fee of 0.174433 ADA was paid from my Shelley Wallet on Yoroi.

On 20th January 2020, I re-delegated my wallet to [ZEIT] Zeitgeist Cardano Pool. A small fee of 0.172937 ADA was paid from my Shelley Wallet on Yoroi.

Note: When you completely unstake your Cardano (as in ‘deregister’ the staking key, etc) and withdraw it, the staking fee you initially paid will be returned to you.

Extra Reading:

“Parameters and decentralization the way ahead”
https://iohk.io/en/blog/posts/2020/11/05/parameters-and-decentralization-the-way-ahead/

“Small Cardano Stake Pool Operators Raise Concerns Parameter Increase”
https://www.newsbtc.com/news/cardano/small-cardano-stake-pool-operators-raise-concerns-parameter-increase/

Other Cardano posts —
Cardano Around The World (ADA stake pools across the continents)

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