Staking and Delegation Information
All opinions are our own and do not constitute financial advice in any way whatsoever.
Nothing published by us constitutes an investment recommendation.
We strongly recommend you perform your own independent research before making any financial decisions.
- Ouroboros divides time into epochs that are made up of slots.
- You can think of slots as being similar to working shifts at a factory.
- Each epoch is 5 days.
Delegating Your Stake
- If you stake your ADA with LOCO, you could earn a return on your investment.
- Cardano addresses have separate keys for spending and staking.
- If you decide to stake your ADA tokens, they will never leave your wallet.
- Your tokens are not locked, you can spend your tokens at any time.
- Your ADA is never at risk when you delegate.
- You always remain in control of your funds.
- The worst case scenario is a pool does not generate rewards.
- Active stake is the stake upon which the rewards for the pool will be calculated.
- Live stake is all stake that is currently delegated to the pool.
- For delegated stake to become Active stake it takes the current epoch + 1 full epoch.
- For example, stake delegated during epoch 212 will not be part of Active stake until the beginning of epoch 214.
- This is why it might make sense to wait until near the end of the current epoch to switch pools.
- There is no advantage to switching pools in the middle of the epoch.
- If the pool you are staking with out performs expectations near the end of the epoch, you may change your mind and not want to leave the pool.
- If you are staking with LOCO and change pools now, you will still earn rewards with LOCO until your stake is active in your new pool.
Return On Stake (ROS)
- ROS has basically a similar meaning as ROI, which means Return On Investment or ROA which means Return On ADA.
It is a measure of the percentage of return on your investment.
- Example: The LOCO Cardano Stake Pool had a 42.65% ROS for Epoch 218.
- Pledge is the amount of ADA the stake pool operator (SPO) delegates to their own pool.
- The pledge is done during stake pool registration and the SPO has to honor that pledge amount.
- If the operator does not honor the pledge, the rewards will decrease.
- However, pledge does not equate to minting blocks, slot leadership is mainly dependent on total stake delegated to the pool regardless of whether it's pledge or not.
- For the foreseeable future, all LOCO stake pool profits left over after giving to our charity, will be added to our pledge in an effort to attract more delegators and improve pool performance.
- During the transition from one epoch to the next, the block schedule is determined and blocks are assigned to stake pools.
- The blocks assigned to stake pools is based upon their Active stake.
- There is no guarantee one or more blocks are assigned.
- Nobody knows when the blocks will be produced, it is completely random.
- If the pool hasn't produced any blocks during the first days, it could be that the blocks are scheduled later in the epoch.
- Stake pool operators have a long list of costs associated with maintaining and marketing their stake pool. Hardware, software, internet connection costs, labor to name a few.
- The margin of the pool is the profit the operators grant themselves.
- Pool costs are taken from the total rewards first.
- Then from that remainder, the margin is taken.
- The remaining ADA is divided across the delegators relative to their amount of delegated ADA.
- In the case of the LOCO stake pool, the pool costs are set to the minimum of 340 ADA and the margin is set to 1%.
- As stated above, all pool profits will be added to our pledge in an effort to attract more delegators and improve pool performance.
- Pool holds ADA.
- Rewards will increase as more ADA is added to the pool.
- Pool becomes full of ADA (too much live stake).
- Pool is saturated, rewards are now flat for delegators.
- Same rewards are split across more delegators.
- You are encouraged to find a new pool.
- Stake pool saturation can be calculated by Total ADA Supply / K.
Rewards Cycle Example
✓ Epoch 213/214 boundary
✓ Epoch 214
✓ Epoch 215
✓ Epoch 216
✓ Epoch 217
Snapshot for epoch 215 was taken at the epoch 213/214 boundary and we had
3 delegators plus pool pledge totaling 1.37M live stake.
Epoch 214 passed and the 1.37M snapshot was not active stake during this epoch.
The snapshot taken at the epoch 213/214 boundary was active during epoch 215.
We minted 1 block in epoch 215 with our 1.37M active stake.
In epoch 216 the rewards for epoch 215 were calculated.
Rewards for epoch 215 were distributed in epoch 217. ROS:8.26%
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