What is staking

17/03/2021

Unlike the proof of work (Bitcoin) system where the hardware plays a major role to mine the block and receive the prize, there is Proof of Stakes on which Cardano is based (it's more like a lottery). In this lottery, every ada is like a lottery ticket and every participant can win the lottery, but of course those with more tickets (i.e. more ada) have a better chance of winning the lottery and receiving a reward. More specifically, you don't win the block, but the chance to complete the block. Whoever wins the lottery must meet a certain condition - he must be online at this point. 

This is where the concept of delegation comes in. The rate pool is online on your behalf 24 hours a day, 7 days a week, so you don't have to worry about staying online. You can "delegate" your stake (chances of winning the lottery) to the pot (there are over 2,000 such pools in the Cardano network). 

To be clear, posting a stake to the pot doesn't put your ad at risk. You don't send your ad, they aren't blocked in any way, there is no minimum and you can still add or remove ad from your wallet at any time (but then your ad doesn't participate in the draw). The unwanted thing that can happen is that the pot you choose is not working well, make sure to track the performance of your pot from time to time. Incidentally, Cardano's 'Ouroboros' proof of rate protocol is several thousand times more profitable and energy efficient than Bitcoin proof of work, and it is the first proof of rate protocol, which is mathematically safe.

Staking Ada you can earn from 5% to 6% yearly.

Here are some questions to help you choose the best pool to PARTICIPATE in. 

Does the pool have a MISSION? 

Profit and supporting the Cardano network is one thing, and devoting time and money to a positive cause is something additional that may be worth paying attention to. There are dozens of people (pool owners) who see an opportunity to do something positive alongside. 

Does the pool BOOST the Cardano community? 

Maybe they are disseminating valuable information via podcasts, YouTube or Reddit, or otherwise disseminating knowledge about the Cardano network. 

How much is a pledge in a pool? 

The pledge is the ADA amount that the SPO (Stake Pool Operator)  puts into its own pool. The higher the declared ADA amount, the better. Watch out for pools that are low in amount to Active Stake. So if you find a pool you are interested in, but the pledge does not meet your expectations, please contact them. Find out about their history. Make sure the pool is not a scam. Verify the ratio of the total Active Stake stake to the pladge amount (Active Stake / Pledge - the smaller the number, the better). 

Is the pool operator a real person and not an exchange like Binance? 

If possible, contact the owner of the pool, ask questions.

Is the pool below the saturation (saturation point)? 

The saturation point ensures that the pools are not centralized. This is the point where the cheap are lowered (cannot grow any further). If the pot exceeds the saturation point, there is no luck, no rewards, so avoid pools that are close to this limit. Beyond saturation, rewards will decline, encouraging new (and responsive) stakeholders to seek information from other insatiable pools. It is also a great way to help develop smaller pools. 


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