We’ll be extending this section with useful information on Cardano, and guidance on how to choose a stake pool, set up your wallet and delegate ADA to a pool. It’s the place to start if you are new to this.
What is Cardano?
Cardano is a proof-of-stake blockchain network, being developed into a decentralized application (DApp) development platform with a multi-asset ledger and verifiable smart contracts. Built with high-assurance formal development methods, Cardano aims to achieve the scalability, interoperability, and sustainability needed for real-world applications.
Based on peer-reviewed academic research, Cardano has an ethos of openness and transparency. All of the research and technical specifications that underpin Cardano are publicly published. When the network is fully decentralized it will belong to the community, and it will be the community who decide its future through the built in governance features.
Check out this summary for a great overview.
This whiteboard session from Charles takes you through the journey and explains how Cardano builds and improves on the 1st and 2nd generation projects such as Bitcoin and Ethereum.
What’s the roadmap?
There are 5 work stream to the project delivered in overlapping phases:
- Byron- foundations (Complete)
- Shelley- decentralisation (Deployed, 50% decentralised)
- Goguen- smart contracts
- Basho- scaling
- Voltaire- governance
Full details of the roadmap are available, there has been significant progress during 2020 as the foundations have been delivered and this is expected to increase during 2021.
What is a Cardano Stake Pool?
A stake pool is a reliable node on the Cardano network that processes transactions and mints new blocks on the block chain by running the Ourboros Protocol.
The Ouroboros protocol is a Proof of Stake Protocol that requires a reasonable number of stake pools to be online at any time. 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 pools are run by Stake Pool Operators (SPO). SPO’s need to have the skills to reliably ensure consistent uptime of a node. Stake pool operators can deduct their running costs from the awarded ada, as well as specify a profit margin for providing the service.
How do I choose a stake pool?
Ignoring the fact that you already have a great option in ADAvault the best place to start is on ADApools.org.
ADApools rank pools based on a number of characteristics:
- Live and Active Stake- how much Ada is staked this Epoch and how much is staked in the coming Epoch
- Saturation level- past approx 200M Ada rewards for delegators start to decline
- Block production history- pools need to be online processing transactions for their assigned slots in order to lead and mint a block.
- Pledge- how much have the pool operators pledged to the pool and is the pledge actually in place
- Delegators- how many people have chosen to delegate to the pool
- Fixed and variable costs- how much does the stake pool charge for its services
Using these factors a score is calculated which is used for Adapools and Yoroi. At the moment the Daedalus rankings are evolving and may not take all factors into account. The Daedalus rankings are expected to become authoritative in time.
We recommend starting with unsaturated pools that have a reasonable track record minting blocks, and then researching further to check pool goals.
You may wish to create a number of staking wallets and delegate across a number of pools, future releases of Daedalus are expected to support multi-pool or portfolio delegation.
What wallets can I use?
There are 2 main wallets available for Cardano which support staking:
- Daedalus– an open source full node wallet supported by IOHK. Available for download here, Daedalus has a really intuitive user interface, and runs on Mac, Linux and Windows. But, best of all it supports dark mode. Historically it’s been a bit slow to sync (due to the need to maintain a complete local copy of the blockchain) but recent performance improvements have sorted this. We think this is one of the best wallets we’ve used across any crypto project, period.
- Yoroi– an open source light weight wallet that runs in most browsers, for example Chrome, Edge, iOS and Android which gives coverage on a wide range of end user platforms. The staking options are less intuitive than Daedalus, and at the time of writing you still need to use pool ID’s. You can find more details on Yoroi here.
How do I delegate?
More information on Daedalus in available on the IOHK support page.
Where can I buy Cardano Ada?
We recommend Kraken because we have long experience of the exchange, and believe they have fair charges, deep liquidity in most traded cryptocurrencies, and a wide range of traded pairs.
They have good in country presence as well which matters when you are transferring to or from fiat currencies.
Like any exchange we do not recommend that you keep deposits on them any longer than necessary to trade. Once you’ve traded move them back to a secure wallet. Kraken have reasonable deposit and withdrawal limits, especially once KYC checks have completed.