Cardano is one of the most hyped cryptocurrency projects in the world with its approach to peer-reviewed academic research.
At the time this post was written, the Cardano team was still developing “Shelley”, which would finally introduce the concept of staking to the Cardano blockchain. Once the Cardano team finishes Shelley, you can begin the staking process. With this article, we will explore what to expect from Cardano staking once it becomes available.
The Idea of Cardano Staking
The function of staking Cardano is similar to that of other coins. Staking helps validate new transactions on the blockchain and secures the network. As a reward for doing so, you earn more coins.
Delegated Proof-of-Stake (DPoS) allows you to ‘delegate’ your staking to a representative on the blockchain. The standard DPoS system will only have 20-50 validators, different than Proof-of-Stake (PoS) systems. The community ‘votes’ and ‘stakes’ their coins to these validators, and they will be rewarded with more coins after a certain period of time. Usually, the representatives set their own reward and compete against each other to attract votes.
Cardano uses Ouroboros Proof-of-Stake. It’s similar to DPoS systems. In Cardano, individuals who want to stake ADA must run their own pool or join an already-existing pool.
One big difference between Cardano and DPoS systems. Cardano will have different keys for spending and staking. This feature allows users to spend their coins anytime they wish. In other words, you don’t have to ‘freeze’ your ADA for a specified period of time. This feature makes Cardano’s staking concept more flexible compared to its competitors.
There are several different details outlined on Cardano official page about staking. One of the most important points is about stake pools. In Cardano, 80% of the stake will be delegated to a reasonable number of stake pools. They are thinking of experimenting with 100 stake pools in the beginning, although the final number is yet to be confirmed. The other 20% will be delegated to smaller players with more flexibility.
They don’t want to make it too ‘easy’ to register a stake pool. You will need to have your own registration certificate and pay your pool registration fee before you can officially register as a stake pool.
Everything will be incentivized. Cardano core team believes it’s pointless if a proof-of stake system does not incentivize its use. To maintain ‘order’ and ‘security’ of the network, all the important players and stakers will be given rewards.
Within the Ouroboros operation, they want to make sure ‘time’ will become important. Time is divided into two things, epochs and slots. Each epoch contains 21,600 slots and will last for five days. Meanwhile, a slot lasts for 20 seconds.
Incentives in the Ouroboros proof of stake system will be distributed per epoch. Transaction fees from the blocks during the epoch will be collected into one virtual rewards pool. They will then be distributed to stakeholders.
More details about staking Cardano can be found on the official wesbite. Remember, the numbers and examples presented here are just used to explain the concept. The numbers are not meant to be taken literally, as they are still developing ‘Shelley’.
You need to wait until they release the staking feature before we can give you a more in-depth tutorial on how to stake ADA on the Cardano blockchain.
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