Cardano Staking: Why and How To
Cardano is a Proof Of Stake (POS) blockchain that aims to be fully decentralized and scalable.
It achieves this by having the nodes that run the network being run by the Cardano community via Stake Pools.
Whether a Stake Pool is chosen for a block is based on the Stake that they hold in the network. New blocks are created every 20 seconds through slots and every epoch (5 days) new slots are created.
The community members are awarded for their participation in the network with ADA, the native token of Cardano.
Participation and rewards are possible through two avenues. Either by running a Stake Pool themselves or by Delegating their Stake (ADA) to someone else's Stake Pool. The amount of Stake in a pool the more likely it is to be chosen to create the next block of the blockchain.
If the pool successfully generates blocks then the pool is rewarded and these rewards are split with the Delegators. There are blocks
Setting up a Stake Pool is beyond the scope of this post which will focus on Delegation. If you are holding ADA anyway there is no reason not to Delegate as your ADA need not leave your wallet to start earning rewards. Also if you ever want to move your ADA there is no problem to send it to an exchange, use it as payment etc. although this means it is removed from the pool and you will lose your Stake (but not rewards already earned in previous epochs).
Rewards should be paid out every epoch with the exception of when first delegating it will take about 3 weeks for the rewards to appear. Any rewards paid out should be automatically added to your Staking balance for the next epoch.
Things to look for
To ensure decentralization is kept to a maximum there is a limit or "Saturation" that pools can reach before rewards are reduced. If a pool is over saturated then the rewards are reduced for everyone in the pool. This encourages Stake holders to do some research and delegate to smaller pools to ensure a more fully decentralized network. If a Pool has very low Saturation it is less likely to be picked to validate blocks, however, if it DOES get chosen the rewards per Delegator would be higher. A more Saturated Pool will generally get more consistent but lesser rewards as it gets chosen for more blocks but the rewards are split among more Delegators.
Saturation (and other important notes) can be checked on websites like https://adapools.org/
Clicking on a pool here will show the Pool's Saturation, how many blocks it has minted on different days, the Pool's fees (these will be a % of your rewards and are to reward the Pool operator and help with costs of running etc. The pool needs to be on 24/7 after all.) and the Pool's pledge, this is basically how much ADA the pool operators have invested in the pool and a larger amount will mean an increase in rewards also.
Staking
If Staking from a hardware wallet (for example a Ledger nano S) you will obviously need to have the Cardano app installed.
There are several wallet options to Stake from, they all involve the same process. Obtain/Possess ADA -> Move to your wallet of choice (options include AdaLite, Deadalus and Yoroi) -> Delegate ADA.
Each of the aforementioned wallets will have specific instructions how to Delegate but they are all very similar.
Image. Adalite main screen.
For example on AdaLite (which I have been using with Ledger).
Visit the AdaLite website https://adalite.io/ and select your access option (in this case Ledger Nano) and open the app on your device. The device itself will ask you to export your public key to the wallet when you do this it should open a screen with Spending and Staking Sections. It should display your balance.
From here you can convert your held ADA to a staking balance and pick a pool. If you explore the options of pools available from somewhere like https://adapools.org/ or https://pooltool.io/ once you have chosen a Pool you like you can copy their Pool ID into the staking section of your wallet and Delegate/Redelegate to that Pool. Your Staking balance will stay in you chosen Pool until you change it.
So that is the very basics, there is a lot of info to be found online on the topic (links below to get started).
But by Staking you will be earning real ADA rewards at no effort besides the initial setup and checking your Pool is not Saturated every now and again and by Staking you will be improving the Cardano network and helping decentralization!
References:
https://forum.cardano.org/