Cardano

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Resources

Wallets supporting ADA

Staking

Cardano uses the Ouroborus Proof of Stake algorithm to secure the network. To stake your ADA coin, you can either set up your own staking pool or delegate your stake to an existing public pool which can be done from within a supporting wallet such as Daedalus or Yoroi. Pools can charge a percentage and/or a fixed amount per epoch. Each pool has a chance of winning the creation of each block every twenty seconds, their chance of winning is proportional to the total amount the pool holds for staking which is called the controlled stake. Rewards are distributed among all stake holders every epoch (which is 24hr in the testnet and 5 days in the mainnet).

Pledged stake: The Incentivised Testnet has the concept of pledging, whereby stake pool operators delegate their personal stake to their pool and register a pledge address when they register the stake pool with the Cardano Foundation. Pledging is not currently enforced by the network protocol (although it may be in the future) and functions to increase the attractiveness of a pool, meaning that other delegators are more likely to delegate to that pool. Pledging follows the same process as delegation.

Saturation & desirability: To help prevent any single stake pool from growing too large, the Incentivised Testnet has a mechanism to ensure pools saturate at a certain percentage. If any stake pool exceeds this percentage (of total stake in the network), then the rewards for that stake pool will no longer increase but will continue to be shared among delegators, making the pool less desirable. This saturation point is configurable and may be increased as the number of healthy pools grows. This limit I think is 1/k (k being the number of pools) and is discussed in this incentives paper.

Private pools: In section 4.1 (Stake Pool Registration) of the Staking Design Specification, it says that publicly announcing a stake pool for other people to delegate to requires two steps: posting a stake pool registration certificate to the blockchain, and providing pool metadata, additional information about the pool. The certificate contains all the information that is relevant for the execution of the protocol (public key hashes, cost, margin, and pledge) as well as the content hash of the metadata, while the metadata will be displayed to end users by their wallet. For specifics about the metadata, see Section 4.2. If no metadata is provided, the stake pool is considered a private pool, and will not be displayed in wallets.

Also in Section 3.4.5 it says that usually, the stake pool operator and owner will be the same person, but a stake pool can also have multiple owners. This is to allow people to coordinate and form a stake pool even if none of them had enough stake on their own to make a pledge that would make the stake pool competitive.

And finally in Section 4.6 (Individual Staking) is says stakeholders should not be forced to delegate their stake to a pool. Instead, they should have the option of running their own node, using their own stake. Technically, such stakeholders will create a private pool, which is just a stake pool with margin m = 1, and without providing metadata. Such pools will pay all rewards to the pool operator (which is not a special rule, but just the effect of having a margin of 1), and they will not be shown in the stake pool directory in Daedalus (although even if they were, they would always be listed at the very bottom, since they would not promise any rewards to their members).

We had looked at other options that would not require individual stakeholders to register a pool, but they either complicated the design, or made it possible for free riders to contribute stake and get a share of the rewards by using suitably chosen addresses. The mechanism of private pools adds no additional complexity to the delegation system (the only added work is to suppress their listing in Daedalus). Optionally, the front-end could even set up (and retire) a private pool at the press of a button, but this is not a must-have feature for the initial release.

Token distribution

As of December 2019, there are four ADA billionaires, thirteen addresses hold over 100M ADA, 157 addresses hold over 10M, and there are about 3000 ADA millionaires. There are about 290K addresses in all with just over a third holding under 1K ADA, just over a third holding 1-10K and about 20% holding 10-100K, 7.5% with 100K-1M and 1% are the millionaires.

See also

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