Cardano Overview
  • 📖What is cardano?
    • Cardano 101
    • Onboarding Guide
      • Simple Cardano
    • Cardano Statistics
    • Flawed Narratives About Cardano
      • Facts About Cardano Market Evolution
  • ⚙️How does Cardano work?
    • Table of Contents
      • Three Layers
        • Consensus Layer
          • Proof of Stake (PoS)
          • Pros and Cons of PoS
        • Ledger Layer
        • Network Layer
      • Cryptography
      • Peer-to-peer Communication Between Nodes
      • Interoperability
      • Hard Fork Combinator
      • Stake pools
      • Financial Aspects
        • The ada token: definition and functionality
        • Staking
        • RealFi
  • 🌐Blockchain Model
    • Blockchain Model Contents
      • Cardano Roadmap
        • BYRON
        • SHELLEY
        • GOGUEN
        • BASHO (We are here)
          • Basho Era Progresses with Vasil Hard Fork
        • VOLTAIRE
      • Extended Unspent Transaction Output (EUTXO)
      • No-Surprises Transaction Validation on Cardano
      • Things Cardano Does Not Do
        • Cryptocurrency Burning
  • 🕸️Descentralization
    • Descentralization Contents
      • Ouroboros
      • The Ouroboros Path to Descentralization
        • Further Reading
  • 🌌Scalability
    • Scalability Contents
      • Taking a Closer Look at IOG Research
        • How Layer 1 and Layer 2 Solutions Create a Faster and More Resilient Blockchain
        • Scaling Cardano
      • Layer 1 Solutions
        • Pipelining in Ouroboros
        • Input Endorsers
        • Tiered Pricing
      • Layer 2 Solutions
        • Sidechains
          • Easy Addition of New features
          • Scalability
        • Hydra
        • Mithril
  • 🏛️Governance
    • Governance Contents
      • Liquid Democracy
      • Project Catalyst
      • Catalyst Circle and Community Participation
  • 🎨Cardano Ecosystem
    • Ecosystem Contents
      • Wallets
        • Daedalus
        • Lovelace
          • By building Lovelace we aim to...
        • Yoroi
        • Hardware wallets
        • Other compatible wallets
      • Ecosystem
        • Ecosystem Explorer
        • Marketplaces -Minting service
        • P2P trade
        • Cardano Blockchain Explorer
        • Tools
        • Faucets
        • Documentation
        • Payments
        • News
      • EVM Compatibility
        • Milkomeda
        • Blueshift
      • Descentralized Exchanges (DEX)
      • DApp Store
        • Demeter Run
      • Stable Coins in Cardano
      • Projects
        • Digital Identity
        • Educational Initiatives
        • A Long List of Projects
      • NFTs
      • Glossary
  • 📣Social media
    • Social Media
      • Official Cardano Media
      • Cardano Fans Media
  • 🛠️Developer portal
    • Developer Portal Contents
      • Programming Languages
        • Haskell
        • Plutus
        • Marlowe
      • Plutus Tx: Compiling Haskell Into Plutus Core
      • Cardano Resources and Further Reading
      • Research Papers
  • 📝About
    • About
      • Purpose of This Site
      • Who am I?
Powered by GitBook
On this page
  1. How does Cardano work?
  2. Table of Contents
  3. Financial Aspects

Staking

PreviousThe ada token: definition and functionalityNextRealFi

Last updated 2 years ago

As a fully decentralized blockchain, a large network of Cardano stake pools creates 100% of the blocks. These pools gather the ada that has been delegated ('staked') by ada holders, earning rewards that are based on the blocks that the pool contributes to the chain.

Every 5 days (a Cardano ), Ouroboros chooses certain pools to add blocks to the chain, in proportion to the ada that is held by each pool. At the end of the epoch, block creation rewards are given to the pools that have been selected and that have successfully created their assigned blocks. These rewards are distributed among those ada holders who staked their ada as well as the pool operator, and contribute to the pool's maintenance, growth, and sustainability.

Since the chance of a stake pool being selected for block creation increases based upon the amount of ada delegated to it, it's important for the pool to attract as many delegators as possible, up to the point when the pool becomes ''. When the pool is saturated, it has reached the peak return-on-investment (ROI) for its delegators. Any more ada delegated to a saturated pool will dilute the rewards for other delegators, reducing the ROI. The saturation property is designed to avoid a single pool dominating block creation, encouraging staked ada to be distributed among many stake, non-saturated pools.

Check out this for more information.

epoch
saturated
staking tutorial
⚙️
Page cover image