Cardano Staking vs Exchanges

Staking vs Exchanges

"It sucks that Cardano will not be allowing exchange staking like other PoS protocols."

Now, why do you suppose an Exchange if one could speak, would be saying this?

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Beautiful in my opinion. No need for multi billion dollar exchanges to skim off staking rewards of ADA holders. It’s time for ADA holders to own their financial autonomy. We take our ADA off the exchanges and live within the ecosystem.


no idea, but it might have something to do with their stake size … :slight_smile:


Spot On.

Which also makes the exchanges more honest by requiring them to have the actual amount of Cardano on hand.

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If you have your coins in a exchange or other third parties, you do not controll your personal investment.

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The details on how this might work are a bit fuzzy. They want to discourage staking by offering exchanges some extra functionalities/security for their wallets in exchange for transparency.

I like the idea of exchanges being excluded from staking, but in this particular case their interests will be opposed to those of Cardano.

Imagine you are a trader you have two choices:

  1. Send/Keep your ADA to a non-staking exchange

  2. Send/keep your ADA on a staking exchange.

With exchange 1 you get slower confirmation times moving your stake in and out, more security in case of a hack and no staking rewards. Faster confirmation is possible but will cost money.

With exchange 2 you get faster transfers and staking rewards.

Where do you think the traders go?

Exchange 2 would sound more promising to traders. Especially if they are trading already. It introduces no change from status quo on trading and gives an upside from staking.

One way to really discourage staking by exchanges is to require actual ADA for forming a pool. I would even make it proportional to the size of the pool—say 10%.

Exchanges are middlemen. They won’t like the idea of putting up their own cash to participate in a network. Why bother when they are making money on spreads?

This could effectively reduce their motivation to stake as it would require diverting huge resources to an activity they know little about.

The Daedalus wallet will have extra bits that are very important to exchanges, but as I understand it those extra bits, appropriate for exchanges only, will be available to them once they activate their enterprise address.

“Enterprise address: Staking is not possible. This address type is meant for exchanges, who are not supposed to use funds entrusted to them for protocol participation.”

Stake = Control

No exchange should have the ability of controlling Cardano. Cardano stakeholders can delegate their right to protocol participation while retaining Ada monetary value, 100% in their control, where it belongs.

Exchanges, as they are today, will continue to profit on spreads, they just won’t make that little bit extra from running Cardano protocol.

Pool operators will be required to declare their:

  1. Stake
  2. Operational costs

The key is to have the desired properties for optimizing Cardano reflected in the number and quality of pools in operation at any one time.

It could be 10% or any other percentage that gets to those desired settlement layer properties for Cardano.

Good discussion @ZCryt0Knight


Just to add, in case you guys missed it, the staking website has been updated with more content.

Here you will find the general direction of the research (on incentives and delegation) but note that there will be refinements and additions as the work and research progresses.


My perspective is quite limited because I recently became familiar with crypto

But I was looking at Tezos’ case, and the over-delegation concept and in a way helps the currency, because it forces the exchanges to buy enough tezos for the baking. So looking at it from this angle, it has its advantages

Or Am I wrong?