Cardano, ADA, and Stake in a nutshell
What is Cardano?
Cardano is a proof-of-stake blockchain platform: the first to be founded on peer-reviewed research and developed through evidence-based methods. It combines pioneering technologies to provide unparalleled security and sustainability to decentralized applications, systems, and societies.
What is ADA?
ADA is a digital currency. Any user, located anywhere in the world, can use ADA as a secure exchange of value – without requiring a third party to mediate the exchange. Every transaction is permanently, securely, and transparently recorded on the Cardano blockchain.
What is Stake?
ADA held on the Cardano network represents a stake in the network, with the size of the stake proportional to the amount of ADA held. The ability to delegate or pledge a stake is fundamental to how Cardano works.
There are two ways an ADA holder can earn rewards: by delegating their stake to a stake pool run by someone else, or running their own stake pool. The amount of stake delegated to a given stake pool is the primary way the Ouroboros protocol chooses who should add the next block to the blockchain, and receive a monetary reward for doing so.
The more stake is delegated to a stake pool (up to a certain point), the more likely it is to make the next block – and the rewards are shared between everyone who delegated their stake to that stake pool.
Why should you stake ADA?
Staking ADA is a great way to earn passive ADA income. Staking ADA provides ADA holders with rewards – in addition to the potential market price gains. The more ADA you stake, the more rewards you can earn. You can view it as earning interest on your crypto holdings. With some assets, staking means you agree to lock up your tokens for a certain period of time, during which they are unspendable. However, this is not the case with Cardano.
By staking your ADA, you actively support the Cardano network by allocating resources to it and contribute to the stability of the network. In return for your support, you earn ADA tokens as a reward.
How to choose a stake pool?
Let’s see what the following performance indicators mean and how to interpret them to help you make the best decision about your stake delegation.
- Saturation : Measures the stake in the pool and indicates the point at which rewards stop increasing with increases in stake. This capping mechanism encourages decentralization by discouraging users from delegating to oversaturated pools.
- Rank: A hierarchical ranking based on the potential rewards you will earn if you delegate the intended amount of stake to this pool, assuming it reaches saturation.
- Live Stake: Percentage of the total stake in the system controlled by the pool. The stake pledged by the pool (stake delegated by the pool owners to their own pool) plus the stake currently delegated to the pool, versus the total stake in the system.
- Pool margin: The share that the stake pool takes from the rewards before distributing them among its delegators.
- Pledge: This is the amount that the stake pool owners commit to delegate to their stake pool. One can expect that operators with higher balances delegated to their own pool have more incentives to perform well.
- Cost per epoch: The fixed fee per epoch that the stake pool charges to cover its operating costs.
- Produced blocks: The total number of blocks that the stake pool has produced up to date.
The above are the key performance indicators. However, there are tools created by community members such as ADApools that display other useful information: ROI, number of delegators, active epochs, current reported height, involvement in adversarial forks, and their performance. It is a good idea to consider these other indicators when selecting a stake pool to delegate your stake.
How to stake with AzureADA
There are two wallets for ADA, one is called YOROI and the other one is called DAEDALUS. There are different features between the wallets but basically, YOROI is easier and faster.
After downloading the wallet, please set it up and send your ADA to the wallet.
Once you have your ADA in YOROI,
Since AZUR is getting close to the saturation point, you may want to consider delegating to AZUR2. AZUR2 offers the same top-performing infrastructure design, running on its own server for decentralization. The pledge is higher to boost returns and ensure the same great performance.
Thank you for taking the time to read this.