As you can see in the link above - ada will be MINTED and issued as a reward for Stakeholders that keep their stake online. The purpose of staking pools is to allow any stakeholder to delegate their ada to a pool and thuus get a reward.
A very simplified explanation is this:
You move your Ada to your Daedalus wallet, and from there, you designate a pool to represent you, and agree to lock those funds for a certain amount of time. (*note - you never send the funds to your pool!).
Once it is committed to a pool, then the pool represents you on the Cardano network with their server(s) running Cardano SL (settlement layer) nodes, and waits to see if you or any member of the pool is elected as a ‘slot leader’.
Every 20 seconds a new block is signed in Cardano. From the pool of available stakers, one is chosen at random to sign each new block.
If a member of the pool, including you, is chosen for that block, then the pool’s server does the work of doing the actual block signing. As a result of signing a block, then the person chosen/their pool gets a reward of Ada.
The rewards are aggregated in the appropriate pool and then shared amongst the members participating in the ratio of their stake/total pool stake - pool fee.
Your % of the rewards is then passed back to you in your wallet on a schedule (could be once a week for example…we don’t know specifics yet).
Once your staking period is up, you basically have your funds unlocked for use and also have your new Ada from your % share of the pools rewards.
You can then re-commit for another cycle, etc.
That’s the basic gist of how it works to participate in a pool. If your question is more about how does PoS systems work vs PoW, that’s a bit different but hopefully the above gives you a quick overview of the process.
One last note - I’ve seen a lot of confusion from people hearing that you can lose some of your stake when staking…for Ada, you cannot lose anything. In fact you never send the funds to the pool at all. You simply appoint them to represent you.
In Ethereum however, they have an upcoming change from PoW to PoS using a protocal called Casper. There, you do have to send your money in to the pool, and you can lose some of your money…so just be clear that PoS implementations vary in many respects.
My summary above is tailored towards Ada PoS and pooling.
Hope that helps!
Thanks for the kind feedback!
I agree with you that voting right is not the best term, and hoping we can find a better but easily understood way to describe it.
It’s not completely incorrect as delegated pools will do three things for their stakeholders:
1 - Sign new blocks on their behalf
2 - Participate in the random slot leader selection
3 - Vote on their behalf for the update system (software updates).
"delegates are able not only to generate new blocks or taking part in MPC/SSC, but also to vote in the Update system."
But regardless I agree a better descriptor is needed. The main point being made though was trying to ensure that people immediately grasp that they do not send their currency to any pool but rather simply appoint the pool to represent them in the blockchain production work.
I’ve already seen people getting confused b/c there are a lot of videos out on Ethereum and their upcoming PoS where actual coins have to be committed (since you can lose them as you have to ‘bet’ on what is the next block).
The concern is that if some scammer tries to open a Cardano ‘pool’ and then has people send actual Ada currency and run off with the proceeds…so that’s why voting rights was used to try and make it clear you never send any actual Ada in.
I’ll have to think about this a bit more and see if there’s a crisper term that is both easily understandable and at the same time, more accurate. I like your staking rights term but as you note, it’s not easily understood yet…maybe “blockchain production rights”?
Hope you are doing well!
Great question. So the way you get Cloudflare protection is you put your servers ‘behind’ CloudFlare - so as you mentioned to some degree you become them to outside servers. They proxy for you and then pass through to your actual server.
They have a whole page on how they defend DDoS here you can review:
But a quick summary:
“Cloudflare’s network capacity is 15x bigger than the largest DDoS attack ever recorded. With 15 Tbps of capacity, it can can handle any modern distributed attack, including those targeting DNS infrastructure.”
No Performance Tradeoffs
Eliminate security induced latencies by integrating with Cloudflare’s included performance services, including …smart routing…and the latest web standards."
You are right that if a major DDoS attack takes place it could present a serious threat to the network.
Related to that - I ran a simple test earlier b/c I thought - maybe since we are only running SL nodes, no http traffic or website, no overt DNS registration since no website, etc. then we get security by being sort of ‘invisible’ relative to sites with websites.
So I spun a new SL node on a clean server, and put it out for the weekend with no Dome9 on it to see what would happen.
Logged back in after 48 hours and…
So unfortunately we are clearly not invisible by virtue of running only a private SL node. We don’t have any of this with Dome9 on the servers (as that is basically what it does, make the server invisible via an agent at the kernel level) but does mean that security will be vital for all SL nodes.
Hope you are doing well!
Are you saying you are using Cloudflare as your DDoS protection provider?
Just for clarity, CloudFlare is but one remote DDoS protection proxy and is not suitable as a cryptocurrency protection DDoS schema. Do not confuse NAT forwarding or GRE and VPN tunneling as being secure enough to run a bank on.
We are talking about a mission critical financial service here not just a website that accepts payments.
I realize you are trying to start a business @MegaWind and gain first movers advantage but please take care as many here are new to space and can be easily confused.
We currently use CloudFlare Pro plan for our websites, but not the server nodes at this point.
I have a meeting with CloudFlare Enterprise on Thursday for their proposal on how to protect our server nodes re (D)Dos. They are currently protecting a large crypto mining pool and are proposing a similar setup for us but I don’t have all the details yet.
We are also going to test two other DDoS protection systems. One is based on AI and I think that may be the winner as long as it doesn’t impact performance, but first we’ll test and see (should be next week).
Hope you are doing well!
From my experience with ddos (Russians blocking a journalist story) - if they really want to shut you down - they will do it, your incentives will be a lot smaler than the cost of protecting against high level ddos attacks.
Thanks for the feedback! I should clarify that Cloudflare is proposing a customized solution for us based on their work protecting a large cryptomining pool. I will know more info after Thursday.
So yes your point is well taken - this isn’t the generic CloudFlare CDN type of plan
I’ve been in discussion with two other vendors, one of which looks promising as it’s an AI based setup solely focused on all variations of (D)Dos attack protection with automatic mitigation.
Cloudflare has some limits in terms of autodeteck vs the AI system claims to have autodetect for all level of attack…
Awesome. Let me know when you’ve fully enshrined your servers in some form of DDoS protection. I might be interested in delegating my 5 figure Ada stake to your pool.
Awesome and thanks MartinMKD.
I’m working with the Sr. Dev now from the AI DoS attack protection company to help them understand the SL node, so they can propose the proper solution/implementation and then we’ll move to testing it live on one of the servers.
I’ll thus have a lot more info over the next couple days re: enshrined servers
Hope you are doing well!
With that amount under your direction you really should be running your own pool, public or private.
Every 10,000 ADA x 0.01%* = 100 ADA
- Pool tax, seems like that is what the operators are going to be charging.
This is not an actual number!
Support ADA if you can.
How did you come up with that 0.01%?
It is my understanding that your demonstration from the other day (this one: Solo staking) implied that, no matter what the amount of the ADA holder it was more interesting to stake in a pool vs solo?
Also I think I read somewhere that you can’t have daily rewards like in a pool if you are staking solo, but yearly?
I am in the same boat, and will be waiting for official instructions on how to set up a pool stake solo, just to compare
Pool tax, seems like that is what the operators are going to be charging.
It is not an actual number!
They aren’t going to charge .01% of your stake, they will charge .01% of the transaction. Otherwise nobody will use their service.
Correct which is why I added - “It is not an actual number!”
Fair enough… You seem to have a better grasp of the crypto sphere than I do so I kinda figured it was me who was confused. I just wanted to clarify because I’m sure there’s more noob’s like me who thought the same thing.
Nope I was just lazy, thanks for keeping it real.
No one knows what the pool fees will be nor what the staking rewards will be yet…
But to show a concrete example,here’s two estimates for a 10K stake.
Stake = 10,000 ADA
Rewards = 9% (have seen this floating around…it’s pure conjecture though)
Annual reward = 900 Ada (Ada @ .56c as I type, so $504 USD gross)
Pool fee @ 1% = 90 Ada ($50.40/year)
Pool fee @ .5% = 45 Ada ($25.20/year)
Hopefully we’ll all have a lot more info over the next few weeks and won’t need to do speculative numbers!
I am afraid if we have 50k pools - that the fragmentation of the network will be HUGE. I would speculate that after staking takes of - only pools with ~100 mil will exist