Cryptocurrencies and all the possible options to earn on them, might seem like a deep maze. Today, we're here to talk about staking your Cardano? How does this work? And why are we a great choice?All of the answers, can be found in our deep guide underneath.If you still come across questions - do not hesitate to inform us then.

What are cardano staking pools

Cardano staking pools are nodes that run on the Cardano network with a public address. You, as an investor, can delegate your ADA (Cardano Native Token) to a certain staking pool. As a result of delegating your Cardano, you receive rewards. This counts for most of the Cardano pools, which we call public pools. The difference between public and private pools will be discussed in another section underneath.

Stake pools are run by a reliable operator (or at least that's what you hope for): an individual or business with the knowledge and resources to run the node on a consistent basis. ADA holders can delegate to public stake pools if they wish to participate in the protocol and receive rewards, but do not wish to operate a Cardano network node themselves because they (e.g.) do not have the knowledge or time.

The more stake that is delegated to a stake pool, the greater chance it has of being selected as a slot leader. Each time it is selected and produces a block that is accepted onto the blockchain, the protocol rewards the delegators and the pool who produced the block. How much the stake pool operator and their delegators receive, is based upon the "Fixed fee" and "Margin fee" that the operator puts into place.

Extensive research and development has gone into ensuring a fair, competitive marketplace that proportionately incentivizes participation, and rewards the investment of time, energy and resources. In short: The protocol is put out there to make sure that there aren't too many pools or that some pools don't have too much share of the network. That would mean that it would become rather 'centralised' instead of 'decentralized'. Because Cardano wants to become the most decentralized network, that means that the participation, as mentioned above, is proportionately incentivized.

Types of staking pools

To make this maze a bit more simple, we are only going to focus on 2 types of pools, which are most common.
These are 3^rd party staking pools and non-custodial pools.

Let’s start with the least interesting option, and we’ll gladly explain you why!

3rd party staking pools

3^rd party staking pools are staking services that are offered by a (central) exchange. This basically means that you can stake when your money is on your exchange. It’s the shortest way from investing to staking but it’s by far the riskiest way of staking. Here’s why:

When you stake your Cardano (or other coins) into a 3^rd party staking pool, the (central) exchange is in charge of your keys, meaning that they ‘own’ your money, and therefore your complete investment and your rewards that are connected to that staked investment.
These central exchanges mostly offer a lower ‘return’ in general, because they keep a part from it, for themselves. Why? Because they stake your money for you.
If the exchange is in financial trouble, you could lose all of your staked funds.
For Cardano, there’s another ‘risk’ that involves 3^rd party staking pools. These exchanges will offer rewards for a ‘locked’ period. This means that you can’t withdraw your money for a certain period of time. The protocol of Cardano itself is liquid, meaning that the investor can withdraw it’s money whenever he or she wants. This is another reason why staking on 3^rd party staking pools is kind of shady. They lock up your money while the protocol says that you should be able to withdraw this at any time.
But how does this work? Let’s describe the process with an example.

Imagine that you’re investing 1000 ADA with a staking service on Binance.
If you want to do that, you sign a contract with Binance, where you say that you will ‘lock’ your Cardano for 30, 60 or 90 days, meaning that you can’t withdraw your money during that time, no matter what the market condition is. In return of their services, they promise you 2.5% return on that invested amount (1000 ADA).
What they actually do, is put the amount of ADA in to a staking pool of their own. They not only get an average of over 3% on the ADA, but the transaction costs per block made and a fee for the infrastructure they run per epoch.
Basically, they profit on behalf of your money. They get the 3+% and they return only 2.5% (or less) to their customers.

Non custodial staking pools

Like the word itself expresses: the pool is non-custodial, meaning it has no custody over your funds. Basically, non-custodial pools are not in charge of your private keys. This is a huge benefit, meaning that the money is in your hands completely. Because you ‘own’ your funds, your money is liquid, which gives you the opportunity to withdraw your funds at any time. The percentage that you earn is probably higher with a non-custodial pool and differs between 3 – 3.5% on a yearly basis, depending on the results of your chosen staking pool.
One point of attention is that the process to stake your Cardano isn’t as easy as with a 3^rd party staking pool, but at Cardaspians, we’ve got you covered. Our ‘start staking’ page offers a variety of step-by-step instructions on how to stake your Cardano with us (or another non-custodial pool), based on the wallet of your choosing. When you chose your pool, the process is done and you are automatically staking. In this article, you’ll also find the tools on how to ‘track’ your pool and how the rewards are distributed.

Benefits and risks

Benefits

·        The fact that you earn passive income, an average of 3%/year based on the success of your pool.

·        By staking, you actively support the blockchain and its underlying processes, which helps to make the project successful

·        By using non-custodial staking pool like Cardaspians, you are not only learning more about blockchain and PoS mechanisms, but you also learn more about how the entire blockchain system and its ecosystem works.

Risks

·        In some countries, there is a tax-liability on your invested funds, but also on the passive income you earn from them. Don’t forget to check how your country deals with this matter.

·        For every protocol, there’s the risk of a hack in that protocol. Although chances are really small, they are existing.

·        If you choose a custodial pool like Binance, Coinbase or other exchanges, you have the risk bankruptcy with the loss of your funds as a consequence.

·        If a pool operator breaks the consensus rules of the blockchain, they might get penalties. This process is known as slashing. Based upon that, the delegators might lose a part of their profits as well.

Vocabulary on staking pools

When explaining how staking works, we’ll cover a lot of specific vocabulary.
Words like epoch, delegators, SPO, pledge, saturation, ROA, Recent ROA, live stake and active stake might come to mind.
Although our FAQ page will help you a lot, you can find the specific explanation of these words in by clicking on them.

Possible profits

There’s a lot that we can tell about the possible profits that are involved in a staking pool, but we’re trying to keep it short and basic.

For each and every block that a pool makes, the network distributes rewards. The amount of blocks that a pool could possibly make, is decided at the beginning of each epoch.
We use the word ‘could’ because pools can lose blocks as well. This depends on their infrastructures, slot battles between pools, and other factors.
Each epoch, a minimum of 170 ADA (or 340 – depending on your pool) is for the operation of the pool infrastructure. This is called the fixed fee.
Next to the fixed fee that is paid every time, there’s also a margin fee. This is a variable amount, decided by the pool. Most pools offer margin fees between 0 – 5%. This means that the the % is withdrawn from the rewards that you get for every block.
Let’s set an example to explain this.

Imagine that you are a staking pool who gets 22 pool. You manage to make 20 blocks and you lose two of them because of slot battles.
The pool will get rewards based on the 20 blocks that they verify on the network.
For each block, the delegators from that pool get an average of 400 ADA/block, distributed between the delegators and the percentage of that they have (in comparison to the total money in the pool).
In total ,for this example, that would mean that this epoch, the total amount distributed would be 400ADA x 20 = 8000 ADA.
From that 8000ADA – the margin fee (0-5% - depending on your pool) is withdrawn and goes to the pool wallet. From this wallet the pool pays for the infrastructure.
An additional 170ADA is rewarded to the pool (this doesn’t make part of the 8000ADA), again, to pay for the infrastructure.

Depending on what your pool charges, it will make a slight difference in the percentage of rewards that you get.

On our website, we have a staking pool calculator which calculates the possible rewards.

Disclaimer: this is based on a number that could change, therefore, your rewards could be different then the amount that you see on our calculator.

How to choose a great staking pool

Choosing a good staking pool might seem more simple than it actually is. The good thing is, once you found a good pool, you’ll probably be loyal to it for a serious amount of time.

First off, and that’s our personal opinion, never choose a 3^rd party staking pool as your pool. Put in some effort and choose a pool which decentralizes the protocol and where you have control over your own funds.
That still leaves a whole bunch of pools.
The second thing to think about is: do I want to support a Single Staking Pool or a company who has multiple pools? That’s up to you. To get the network as decentralized as possible, we would rather choose the Single Staking pool option, but choosing a company with multiple pools (not 3^rd party) is a good option as well.

When you made these choices, you likely want to focus on a specific pool.
Ask yourself these questions?

      Do I find additional information about their pool, their performances and the team?

Search their website. If they don’t have any, you won’t get as much information as you would like.
Search for the team members and their socials. Are they trustworthy? Does it seem like they know what they are doing?
How is the pool’s performance? Are they getting results?
How can I follow the latest? Do they have social media accounts and do they post regularly?
Do they have a newsletter and do they keep their delegators up to date?

Last but not least? Are they socially involved? Do they support a charity of some sort?

If most of the answers to the questions are yes, chances are big that you have a trustworthy infrastructure and staking pool.
Try to get in touch with the team, see if they respond. And, if everything works out, don’t hesitate to stake your money with their pool.

Staking pool tools

Underneath we’ll describe 4 different tools that you can use to track the statistics of your staking pool, or to check out if another staking pool might be a better choice.

pool.pm

Pool.pm is a website where you can see the staking pool transactions that were made. You can search for the staking pool of your choice by typing in their ticker, which is the short code for your staking pool. Next to that you can search for wallet addresses, handles and you get to watch the blocks that are made in real time. These blocks are titled with the name of the pool that made them.

When you search for a specific pool you see some basic statistics. These include:

-            The total amount of stake in the pool

-            The saturation of the staking pool

-            The pledge of the staking pool

-            The fixed fee that the staking pool has.

-            The Margin fee that the staking pool has.

Then you can scroll down and see the blocks that they made (and how big they were). Next to that you will find the added or lost stake with each transaction that was made from or towards that staking pool.

cexplorer.io and pooltool.io 

We are naming these two websites in one breath because they basically do the same. They track pools, they give not only basic bus also detailed insights on staking pools and you can look for DApps and projects. These websites also focus on education so you will find the lastest news and articles which were written by members of the community.

Cardanoscan.io

This website offers the real-life follow up on the Cardano blockchain. You can search for transactions and other information like staking pools, wallet addresses and Cardano handles.
It offers a variety of technical information like transaction speed and ticket information on certain transactions.

Cardaspians

Our single staking pool (a non-custodial pool) is called Cardaspians – Ticker: CASP.
Cardaspians is the best Belgian Cardano staking pool in terms of performance, but our staking pool welcomes delegators from all over the world.
You probably knew that already, why else would you be on our website?
If you checked the subpart ‘How to choose a great staking pool’ and made an analysis about us, you will probably come to the conclusion that:

-            We have an up-to-date website

-            We have a great infrastructure

-            Our team doesn’t hide behind avatars but that we offer the possibility of knowing who we are

-            We are easy to reach

-            Our performances are above average, thanks to our SPO Mark and a great infrastructure

-            We are eager to inform you on our different socials and through our Cardaspians Monthly Newsletter

-            We have a charity that we gladly support.

-            We put energy in educating our members and visitors of our website – this blog itself is a great example of that.

-            We put safety first and are doing everything to keep your money safe.

 

If you come to the conclusion that we are a great choice to delegate your money to, we enthusiastically welcome you.  You can find a guide on how to stake your Cardano with multiple wallets on our ‘start staking’ page.

On the other hand we are extremely humble for all the members who chose us in the past. We’d like to thank them for their past, current and future trust in us and our infrastructure.

Disclaimer: There are a bunch of great staking pools out there. Feel free to support them as well, but we gladly welcome you when you choose for us.