How Do I Stake My ADA?
There are a few ways you can delegate your ADA to a Cardano stake pool and finding the right pool depends on your specific situation.
This is a guide on how to stake to a pool of your choice through your wallet and also what to look and what not to look for when choosing a pool.
Staking with Daedalus
We use and recommend Daedalus as it is a full node wallet. This means it downloads a full copy of the Cardano blockchain and validates every transaction in its history independently. This makes the wallet more secure as you are not relying on any third-party servers overseeing your transactions.
If you haven't already, you can download it for any platform by going to https://daedaluswallet.io/en/download/
Once downloaded and installed (which can take a while to sync the first time), you can either recover an existing wallet or a create a new one.
Important note as without it your wallet cannot be recovered if you were to be locked out
Selecting a Stake Pool
You now have a wallet by either restoring an existing wallet or creating a new one and transferring your funds to it. You are now ready to choose your stake pool. Below I’ll explain how you go about choosing the right pool for you but in this example we’ll be using our own pool, ATM1.
First, go to the ‘Delegation Centre’ by pressing the tab that is second from the top in the left-hand menu. If you have wallets already delegated to a pool, they will show up here.
Second, from the tab at the top, select ‘Stake Pools’ to view all stake pools. If you are delegating to a pool already, that will also show here. In this case, we want to delegate to ATM1 so we input that in the search tab and press on the tile.
To delegate to the pool (in this case ATM1), press the blue button at the bottom. You will them be asked to choose the wallet you wish to stake from and input your spending password.
It takes 2 epochs to start earning rewards and another 2 to start receiving them. When you switch pools, you continue to earn rewards from the previous pool until the switch is complete.
Choosing The Right Stake Pool For You
Are you having trouble choosing the right stake pool? If you ask around, you’ll quickly find that everyone gives you a different answer. Ultimately, it depends on your situation and how often you would like to re-evaluate your delegation.
I’ve narrowed it down to the following points and broken down what to look for.
- Do you want to support community projects or charities – Many pools (like ATM1) are projects that benefit the Cardano community and require support from delegators. Remember, it is through adoption that ADA has value. Others give a portion of their earnings to charity so it’s worth knowing who you are delegating to and what their mission is.
- Saturation – Does the pool have enough room to accommodate your delegation? If it pushes the ‘live stake’ near to 32 million ADA then it will soon most be over saturated and rewards will start to decline. This is something you need to keep an eye on, the smaller the pool, the less often you need to check it.
- Small pool volatility – Many small pools don’t have enough delegated stake to consistently produce blocks every epoch. As an example, a pool may be predicted to mint 1 block so any less than 100% luck would equate to 0 blocks and no rewards. The upside is that small pools can have higher degrees of luck, so a pool that is predicted to mint 0.5 blocks but is assigned 2 slots will have luck of 400% and rewards are greatly increased which is why many find small pools more desirable. As a pool grows, this volatility is decreases.
We also want to mention a few things that can be misleading but also ethical questions regarding the pool operator themselves that don’t affect the performance of the pool.
- Lifetime ROA or ROS – This can be very misleading. People often say “look for a pool with 5% or 5.5% ROS” but a low ROS does not mean a pool is not performing properly so would need further investigation. Small pools that aren’t consistently producing blocks can suffer under this metric. Also, any pool can suffer ‘bad luck’ so a low ROS can mean that statistically the pool is due some good luck.
- 0% Pools – This can be very attractive to delegators; however, the difference in rewards is negligible when compared like-for-like; however, as rewards fluctuate every epoch due to the variable of ‘luck’, this difference more or less disappears. For example, let’s take 2 pools with the same amount of stake but one has 0% variable fee and the other 5%. If the 0% pool has 95% luck and the other 105%, the 5% pool is generating more rewards.
- Multiple Pool Owners – This is a hot topic for many. Do you want to support operators of multiple pools? Some argue that this is the success of having a strong brand but to many, this is harmful to the network’s decentralisation status and leave it vulnerable to sybil attacks.
- Block Produced Per Epoch – More blocks does not mean more money (necessarily), it is down to the ‘luck’ variable. A pool that mints 30 blocks in an epoch may produce less rewards than the small pool that produced 5, so it is all relative.
Our final advice is to choose a pool you believe in. They are all subject to the same variable of ‘luck’ so essentially are all the same. Many operators give constant updates on the pools performance and are very active on social media.
Get to know your pool owner, staking with an operator just because you like them is a perfectly viable reason. It is your money so the choice is yours.