Cardano Ouroboros Genesis Provides New User Details on How to Earn ADA Rewards Via Staking Pools
With the transition of Cardano from the Ouroboros Classic to the new Ouroboros Genesis consensus algorithm, the staking functionally on the platform will be enabled for the general users on the platform, and with all this, it gives users the opportunity to be able to earn some interest on the Ada holdings.
The Cardano platform also went ahead to reveal more details on how the staking pool will in fact work, you can read on to prepare yourself on the Staking just before the implementation of the protocol takes place.
How The Staking Works
The staking option is used to quickly determine who is able to validate the next block that is on the chain. As a user, the higher your stake within the network the more likely you are to forge the next block.
The stakes in the system are rewarded for the efforts together with their honesty when they participate in the network.
“In a proof of stake (PoS) blockchain protocol, the ledger is maintained by the stakeholders that hold assets in that ledger. This allows PoS blockchains to use less energy compared with proof of work (PoW) or other types of blockchain protocols.”
For the user who is selected to forge the next block, they are referred to as the slot leader. The user is expected to be online within the designated time to ensure they are the slot leader. Being online on the system 24/7 is not practical for the staker, so instead, they would delegate some of their stakes within the stake pool.
As a stake pool owner, you will need to ensure that the systems are always online.
The Details On The Cardano Staking Pools
With the stake pools, it will allow the different users to easily combine their staking powers and be able to stake something more substantial within the entity.
Most of these stake pools are comprised of a group of different people within the network who are solely dedicated to being online all the time; this is just to ensure they are able to maximize on the chances a pool member is made to be the next slot leader.
When the block rewards get awarded to a slot leader, this is then shared amongst the members who are within the stake pool. The stake-pool-owner is also not left behind as they also get some bonus as being there reward, they get the reward because it is evident that they have managed to operate the network efficiently.
The Cardano stake pool explainer is now live, you can find out more here and also check out the stake pool FAQ: https://t.co/ROcXPkrXuU #Cardano #CardanoCommunity #blockchain #staking pic.twitter.com/TTSHGxNW4D
— Input Output (@InputOutputHK) April 2, 2019
The system has also been designed in a manner that there is no set minimum on ADA that a user could stake, but if they hope to be stake pool owners, then they will need to ensure that they have enough funds that will cater for the transaction charges.
Another thing you will need to take note of is that staking is also not possible if the current coins have been kept in the exchange wallet, but such functionality might get deployed in the future.
When you purchase the ADA it increases a user’s stakes; this is even in the event that a staking power gets delegated to a staking pool, as a user you will still be in possession of your ADA in your wallet.
More On The Stake Pools
They have been designed to ensure the users remain competitive together with decentralized. So this means when a pool becomes significantly large and has started taking up a substantial amount of space within the network the returns will slowly decrease, this is done through the programmatically implemented laws that are used in diminishing the returns.
With this, it will force the pool members to get into another pool and invest in or simply create there staking pool. Thus, it ensures that the members are continually moving around and giving the needed space for the new investors within the platform