Cardano (ADA) Staking Will Offer ROI of 6%-6.5%, IOHK Releases the Details for CIP
Cardano has released the details of the parameters that are set before the Shelley mainnet is launched. The goal behind these parameters is to be “truly decentralized,” have stake pool operators incentivized, and that they can remain unchanged.
These parameters and values will be issued via a Cardano improvement proposal (CIP), said Lars Brünjes, Education Director.
The number of pools has been decided at 150 which reportedly “makes Cardano an order of magnitude more decentralized than any other blockchain.” Over time, they could be gradually increased. The update reads,
“Based on what we have learned from both the Incentivized Testnet (ITN) and the Haskell Shelley testnet, we know that our community is highly motivated to set up pools and support the chain with hundreds within a matter of weeks.”
Coming onto the staking rewards, they will be taken from two sources; transaction fees and monetary expansion.
All the transaction fees will be basically put into a virtual “pot” and a fixed percentage (0.22%) of remaining ADA will be added to that pot. Basically, every four to five years, half of the remaining reserve will be used which mean,
“Cardano reserves will deplete at about the same rate as bitcoin reserves.”
A certain percentage of this pot will be then sent to the treasury and the rest will be used as rewards.
Initially, the portion of reward taken from the reserves will be high because transactions will be low and over time additional fees will compensate for dwindling reserves as transaction volume increases.
The cost to operate the pool has taken at $2,000 for the minimum operational cost out of the typical range of $2,000-$15,000. This is to ensure that “the pledge influence factor is effective, by avoiding a ‘race to the bottom'.”
This brings the ROI of the stake pools at 6%-6.5% on average.
More to Come
Besides the upcoming Shelley mainnet release, the Cardano Virtual summit is taking place next week that will have the likes of Vint Cerf “fathers of the internet” as the key speaker.
The two-day summit will also involve keynotes from mathematician Stephen Wolfram; Mark Gordon, Governor of Wyoming; Mamuka Bakhtadze, former Prime Minister of Georgia; and of course Cardano founder and IOHK CEO Charles Hoskinson.
Amidst all this excitement, ADA prices are currently dull along with the rest of the market, trading at $0.0821. However, the cryptocurrency is up 143% YTD which has it climbing at the 9th spot as per its $2.3 million market cap.
The cryptocurrency still has a long way to go as ADA is down 94% from its all-time high of $1.33.