What is Staking?

In short, staking is holding back assets in order to earn rewards (= additional income) on that asset.

. This works for Blockchain projects based on a Proof of Stake consensus mechanism.
Unlike a proof-of-work-based blockchain (such as Bitcoin or Ethereum), Cardano is based on such a proof-of-stake consensus mechanism.
What does that mean?

Well for that we have to briefly go into the term consensus mechanism.

Consensus mechanism


Since with a blockchain the control of the ledger/table/database is supposed to function decentrally, i.e. no longer under the control of a central organisation, there needs to be a mechanism/methodology to ensure that no one has the ability to forge anything.
For this purpose, every few seconds / minutes / hours (depending on the blockchain; for Bitcoin approx. every 10 min, for Cardano approx. every 6 seconds), the newest part of the ledger / table is "cut off" by a certain validator / pool and distributed to all nodes / validators.
They check the received block with what they have written themselves.
If the distributed block matches all the others that check, it is written down firmly in the blockchain.
In this way, a forgery-proof transaction booklet (or even database, depending on the blockchain) is created in such a blockchain.
If you now delegate your ADA to a pool, this is called staking.

. For a staking pool, delegated ADAs are to be considered as lottery lots.
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How staking works

Other Questions & Answers about this topic

Staking can help you generate passive income. If you delegate your ADA to ADA Suisse, you will receive around 5.5% rewards RISK-FREE. This is similar to having money in a savings account and generating 5.5% interest annually (which is currently rather difficult).

Price fluctuations remain, of course, and the value of an ADA can still increase or decrease. You may also delegate your ADA to a pool where you receive less or no rewards.

However, the initial amount remains the same and your ADA is still fully under your control. You can sell, swap or send your ADA to another wallet at any time.

This means:
If you delegate a wallet with 1000 ADA to a Stake Pool, they will at least remain there.
Normally you will receive about 5-6% rewards per year, so after one year you will have about 1050 on your wallet.

*Minus the one-time registration deposit & costs, but these are marginal, more on this below.

For all transactions involving ADAs, 0.17 ADA transaction fees are charged, which are paid out again as rewards. In addition, the rewards also come from ADAs that have not yet been circulated.

Initial costs

To delegate a wallet, it is necessary to register its so-called stake address in the blockchain.
This happens on the basis of a transaction.
Therefore, a one-time fee of approx. 0.17 ADA is charged.
A deposit of 2 ADA is also required. The deposit is returned as soon as the wallet is unregistered.

Note: You stake / delegate a wallet, not an amount. This means that the above process only has to be carried out once initially.
If you send ADA to the corresponding wallet, these costs are no longer incurred.

Costs of the pool

A Cardano Stake Pool charges two types of costs:

Staking costs

Staking costs example

Rewards are distributed directly by the algorithm, without the influence or intervention of the pool operator or similar.
If the pool does not mine a block in an epoch (which can happen in particular with small pools and is completely acceptable), the rewards for this epoch are zero, which also means that no fees are incurred.

The most important thing is that the pool is reliable and online when it needs to produce blocks. ADA Suisse’s nodes are available 24/7 and all run on our Swiss-operated servers.

You can find out more here.

Author
Author

I am Patrick, operator of the ADA Suisse Cardano Stake Pool.
My motivation is to make the world less unfair.

Would you like to help?

Stake your ADA with ADA Suisse (Ticker: SUI)

About me:

I've been in the blockchain world for just under 10 years & started with ADA Suisse in August 2020.
More about me can be found here..

If you have any questions and/or uncertainties, please do not hesitate to contact me.

Become part of us & Cardano!

Do you like the articles? You can actively help by delegating your ADA to ADA Suisse (Ticker: SUI).
Why?
Because a full pool would allow me to do this full time & therefore professionally.
Meaning: 0 risk for you, but full return, thanks to great articles!
And of course: check out the ADA Suisse Loyalty Bonus!
As I said, staking with Cardano & ADA Suisse is worth it!