Cardano

Time factors

	Protocol time	Human readable time
Protocol time 1	Slot	1 second
Protocol time 2	Epoch (= 432,000 slots)	5 days
First reward delay	3 epochs	15 days
Reward frequency	At the end of every epoch	5 days
Unbonding period	None	-

Lifecycle

• Rewards are distributed at the end of each epoch.

Must know before staking

Minimum stake amount	✅	2 ADA
Partial stake changes	✅
Partial reward withdrawals	✅
Compounding	✅
Penalties	❌
Slashing	❌

• Validators are referred to as stake pools.

• To begin staking, stakers need to register their address with a 2 ADA deposit. The deposit will be returned after stakers unregister their address.

• Stakers can increase or decrease their staking balance by transferring tokens in or out of their staking address.

• Rewards are added directly to the staking balance of stakers. They do not need to be claimed.

• Staked tokens and rewards are not locked and can be transferred anytime.

Advanced topics

General

• Validator saturation. The saturation point of validators is $\text{circulating supply} / k$, where $k$ is the target number of validators (currently set at 500). Validators and their delegators don’t earn any rewards for any additional stake beyond this saturation point.

Rewards

• Rewards come from newly issued tokens and transaction fees.

  • Reserve. The total amount of non-circulating tokens (max supply - circulating supply) is called the reserve. Every epoch, the reserve will send 0.3% of its balance to the pot. 20% of the pot is sent to the treasury and the rest is distributed as staking rewards.

  • Transaction fees. Fees are sent to the pot. 20% of the pot is sent to the treasury while the rest is distributed as staking rewards.

• Factors that impact realized rewards.

  • Validator performance. Validators need to create canonical blocks in the slots they are assigned to in order to receive rewards. Block creation opportunity increases with validator stake until the validator saturation point.

  • Validator saturation. The saturation point of validators is $\text{circulating supply} / k$, where $k$ is the target number of validators (currently set at 500). Validators and their delegators don’t earn any rewards for any additional stake beyond this saturation point.
  • Pledge. Self-bond pledges help increase total rewards earned by a validator and its delegators.

  • Commissions.

Risk

• The protocol does not have any penalties or slashing.

Validators

Total validator cap	❌
Validator requirements	✅	500 ADA

Resources

• Cardano documentation: https://docs.cardano.org/

• Stake Pool course: https://developers.cardano.org/docs/stake-pool-course/

• Cardano explorer 1: https://cardanoscan.io/

• Cardano explorer 2: https://cexplorer.io/