What is Staking?

In contrast to a Proof of Work system like Bitcoin, where everyone tries to solve a riddle to mine a block and get a reward, Cardano uses a Proof of Stake system, which is more like a lottery.

In this lottery, each ADA is like a ticket, and everyone who participates can win. Those with more ADA have more tickets, and thus a better chance to win the lottery, and get a reward.

To be precise, you don’t win the block, but the chance to make a block. The one who wins has to do a bit of work, so, to take the chance, the winner has to be online the moment they win.

This is where the concept of delegation comes into play:

A stake pool is online 24/7 on your behalf, so you don’t have to be. You can delegate your stake to a pool, and get your rewards even if you are offline.

They charge a fee for this, which they determine themselves.

Delegating your stake to a pool does not put your ADA at risk. Remember, you are not sending your ADA.

They are also not locked up.

There is no minimum required to stake, and you can still at any time add or remove ADA from your wallet.

Delegating to a pool has nothing to do with vote delegation as pools don’t vote for you.

You don’t have to trust a pool to distribute the rewards properly.

A pool only sets a fee, then the rewards are distributed by the protocol, not by the pool.

The worst thing that can happen is that your selected pool does not perform well.

Make sure to track your pool performance from time to time.

Pools can change their fee every epoch.

Should a pool you have chosen change their fee, you will be notified by your wallet. Delegating your stake is done within your wallet.

It’s as easy as selecting [from] a drop-down list of pools. Besides Daedalus and Yoroi,

Credit:  adatainment.com