Cardano Staking Question: If you stake 40,000 ADA, supposedly you’ll earn roughly 144 ADA per month, according to www.stakingrewards.com. If the pools Costs is 5% to 340, does this mean you’ll actually LOSE ADA each month? Seems like 144 MINUS the fee of 340 is NEGATIVE! Am I understanding this correct? Thanks!
Nope…first u want to became a pool operator or want to delegate to a pool?
No, you won’t lose ADA. You will never lose anything. You only have something to gain by staking. The pool margin is a percentage as you already noted. The min fee, 340, is deducted from total rewards for everyone in the pool. Note that this is deducted from REWARDS only and also 340 from EVERYONE’s rewards off the top.
Let’s say 9 ppl stake 1000 ADA each, pool owner with 1000 as well. Total stake is 10K. Pool gets a block, block reward about 1K. Pool takes 340 of that which leaves 660. Let’s say for argument’s sake that pool margin is 0% so pool then takes 0% of the 660 which is 0. The rest is distributed as rewards based on everyone’s stake. In this toy example because everyone’s stake is equal everyone ends up getting the same amount ( reward left / total pool stake ) x your own stake = 660 / 10000 x 1000 = 66
In an extreme example if the rewards don’t cover the fees then the pool simply covers what it can from its costs and no one gets any rewards but you don’t lose any ADA by doing so. No one has control over your ADA but you. Staking doesn’t forego control of it. I.E no one can spend your ADA on your behalf so you don’t risk losing any of your investment. Just keep your keys safe
Hope this helps.
Perfect explanation! Thanks!