Cardano and Staking Pool Basics
The Cardano blockchain platform is public, open-source, and decentralized. Transactions are verified through proof of stake consensus method and ADA cryptocurrency facilitates peer to peer transactions within the network.
Cardano was created by Ethereum cofounder Charles Hoskinson and recently became the third-largest cryptocurrency by total value, behind bitcoin and Ethereum.
A Cardano stake pool is a server or node on the Cardano network that acts on behalf of stakeholders. It can be set up and run by an individual or entity with technical skills, however, individuals without the time or technical skills required may choose to delegate their stakes to a third party in return for rewards.
A block on the Cardano Network is a group or bundle of transactions that are verified and recorded onto the shared ledger by stake pools. Every epoch, slot leaders (pools assigned to create blocks) are randomly selected using staked ADA.
Staking on Cardano has many advantages over other assets. Foremost, there is no lockup period; you can stake or withdraw at any point, for any duration. There is no minimum value required to be able to stake, minus being able to pay the fees to do so (about 2.17 ADA), though we recommend at least 10 ADA. You own your keys, therefore you own your asset. You never have to give custody to any one else, not even the Stake Pool Operator, they are your coins, you control them 100%. Lastly, there is NO RISK! You can’t have your ADA slashed, or taken from you by staking, since you own the keys, you own your ADA.
Delegating is when an ADA holder will allocate their funds to a particular pool for competition on the Ouroboros Consensus Protocol, which enables them to produce blocks and earn rewards. Delegators never give up control over their funds, but just pick a pool to join. You can switch pools at any point, you only pay a tx fee to the network (about .17ADA). You earn rewards, typically 4-6%, by delegating to a productive pool.
This list may change as new wallets are created:
Daedalus, Yoroi (browser & mobile app), AdaLite, Nami, CC Wallet. All of these include the ability to delegate your ADA to a pool of your choice. While there are a few other wallets that allow staking, they will not let you move from their own staking pools.
The amount of reward you can earn is not fixed or guaranteed, and it varies based on a variety of factors including the amount of ADA staked, performance of the stake pool, and fees charged by the stake pool. Typically rewards are 4-6% yearly, paid every 5 days.
Interest is what you earn for loaning an asset to someone else.
Staking Rewards are payments to you for putting your Cardano soldiers to work, securing the network. These rewards are like getting a sweet treat for helping the old lady across the street in the direction you were already going, and you get there quicker on the back of her motorized wheelchair.
Well first you keep your ADA in your wallet, under your control, delegate to Fat Matt Stake pool, and earn 4-6% per year, paid out every 5 days. Can you say compound interest? Does your bank do this? Absolutely not. The bank likes to use your money to make them money, not you.