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.
Delegation is the process by which ada holders delegate the stake associated with their ada to a stake pool. It allows ada holders that do not have the skills or desire to run a node to participate in the network and be rewarded in proportion to the amount of stake delegated.
Incentives are used to ensure the longevity and health of the Cardano network and ecosystem. The incentive mechanism is underpinned by scientific research that combines mathematics, economic theory, and game theory.
Stake pools are run by stake pool operators. These are network participants with the skills to reliably ensure consistent uptime of a node, which is essential in ensuring the success of the Ouroboros protocol and the Cardano network as a whole.
The protocol uses a probabilistic mechanism to select a leader for each slot, who will be expected to create the next block in the chain. The chance of a stake pool node being selected as slot leader increases proportionately to the amount of stake delegated to that node. Each time a stake pool node is selected as a slot leader and successfully creates a block, it receives a reward, which is shared with the pool proportionate to the amount each member has delegated. Stake pool operators can deduct their running costs from the awarded ada, as well as specify a profit margin for providing the service.
Yes. Delegated stake can be re-delegated to another pool at any time. Re-delegated stake will remain in the current pool until the epoch after next (from the point of re-delegation), after which your delegation preferences will be updated on the chain and your stake moved to the new stake pool. Rewards are distributed from the end of each epoch, so you’ll continue to receive rewards from your original stake pool for two epochs before your new delegation preferences are applied.
In Yoroi, it is possible to delegate to multiple pools using a single wallet, but not in Daedalus. To delegate to multiple pools in Daedalus, you will need to create separate wallets. The stake associated with each wallet can then be delegated to a specific stake pool.
It is worth noting that multiple-pool delegation using a single wallet will not be supported on the mainnet.
The performance metric is an indicator of how well a stake pool is performing. Considering that the slot leader election process is private, it is only possible to estimate how often the stake pool should be elected based on the number of actually produced blocks. A pool can be nominated more often than expected based on its stake.. For example, if a pool only produces half the number of blocks that it was nominated for, its performance rating is 50%. This could happen because the pool has a poor network connection, or has been turned off by its operator.
Performance ratings make more sense over a longer period of time. If a pool has not yet been selected to produce a block in the current epoch, its performance rating will be 0%, even if it is likely to produce blocks later in the epoch. Performance ratings of over 100% are possible if a pool creates more blocks than it was nominated to produce.
In Daedalus and Yoroi, performance contributes to a stake pool’s ranking.
Saturation is a term used to indicate that a particular stake pool has more stake delegated to it than is ideal for the network, and once a pool reaches the point of saturation it will offer diminishing rewards. The saturation mechanism was designed to prevent centralization by encouraging delegators to delegate to different stake pools, and operators to set up alternative pools so that they can continue earning maximum rewards. Saturation, therefore, exists to preserve the interests of both ada holders delegating their stake and stake pool operators.
The goal is to avoid any single pool becoming too large – thereby disincentivizing delegation to other pools – and receiving a disproportionate amount of the rewards. The health of the network is partly determined by having a high number of active stake pools with a balanced amount of stake delegated to them. The more numerous and geographically diverse the network’s pools, the better. Each stake pool’s saturation percentage is shown within the Daedalus stake pool selection menu.
Desirability measures how desirable a stake pool is to an ada holder seeking to delegate their stake. It is influenced by a number of factors – including a stake pool’s margin, fee, performance, the total reward available in the current epoch, and saturation percentage – and contributes to determining a stake pool’s ranking.
Stake pools are ranked mainly through a combination of their desirability and performance, in addition to other factors.
What is Ada?
Ada Is The Native Token Of Cardano
It is named after Ada Lovelace: a 19th-century mathematician who is recognized as the first computer programmer, and is the daughter of the poet Lord Byron.
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.
Every ada holder also holds a stake in the Cardano network. Ada stored in a wallet can be delegated to a stake pool to earn rewards – to participate in the successful running of the network – or pledged to a stake pool to increase the pool’s likelihood of receiving rewards. In time, ada will also be usable for a variety of applications and services on the Cardano platform.
You can buy or sell ada for fiat or other cryptocurrencies using cryptocurrency exchanges. Visit coinmarketcap to see the list of exchanges that support ada.
As an ada holder, it is important to keep your funds secure, and that means you need to keep your private keys private. It is highly recommended to avoid keeping your cryptocurrency in an exchange longer than necessary, and instead to use a cryptocurrency wallet. We recommend either a full-node wallet like Daedalus, or the browser-based Yoroi.
A cryptocurrency wallet is a software program designed to store your public and private keys, send and receive digital currencies, monitor your balance, and interact with supported blockchains. Ada can be stored using a Daedalus or Yoroi wallet – the primary wallets of the Cardano ecosystem, developed, respectively, by IOHK and EMURGO – or other third-party wallets.
In addition to the variation of wallets available, there are also two types of wallets: a hot wallet and a cold wallet.
A hot wallet is connected to the internet and can be accessed at any time with the requisite keys. Examples of hot wallets include mobile and software wallets, and funds stored on exchanges.
A cold wallet is an offline wallet. It is not connected to the internet and is used for securing storing funds that do not have to be frequently accessed. Examples include hardware wallets – which is a secure hardware device that stores the wallet’s private keys – and paper wallets. Cardano is supported by both Trezor and Ledger hardware wallets
Daedalus is a full-node desktop wallet developed by IOHK. Daedalus is unique in that it downloads a full copy of the Cardano blockchain and independently validates every transaction in its history. This provides maximum security and completely trustless operation, without centrally hosted third-party servers.
Daedalus is available for Windows, macOS, and Linux.
Encrypted private keys and spending passwords, offering protection against security threats such as malware.
Wallets can be exported to paper certificates, providing the maximum-security option of placing funds in cold storage.
Powerful backup features to recover your funds anytime.
Configurable transaction assurance level monitoring, allowing users to be sure when transactions become irreversible.
Yoroi is EMURGO’s one-click-install, light wallet for Cardano. With Yoroi, it is not necessary to download a copy of the blockchain’s history. This makes it a simple, fast way to store and transact your ada (₳). Yoroi is the perfect day-to-day wallet for any Cardano user available as either a web-based extension or a downloadable app.
Yoroi is available for Windows, macOS, and Linux.
Encrypted private keys are never shared with servers or third parties.
Yoroi is built with security-audited, robust, high-quality code.
Light wallet implementation means that you do not need to download the blockchain when you open Yoroi. You can send and receive transactions right away.
Carefully designed, user-friendly interface offers a great user experience.