First time staking - Potential rewards question

After some advice, if anyone would be so kind to help. Holding a little Cardano since 2017, but always just had it sat away not paying much attention to it.

Only recently have I realised you could stake it. I have updated Daedalus and staked it, during the process of staking the ‘potential rewards’ quoted would be around 18 ADA per epoch.

But now I have committed that, and paid a 2ADA fee, when I hover over the stake for epoch 251, the potential rewards says just 0.7 ADA - is this correct? Because I will re-delegate if that is the case, or is this somehow just looking at the 2ADA fee and not the actual staked amount?

Or maybe I have messed something up :man_shrugging:

Cheers for any advice from someone in the know.

Hello,

Delegating to a pool it will cost u 2ada + fee; 2ada u will receive back when u will undelegate.

The estimation is just an … estimation … in rewards nothing is for sure! on short-term rewards can fluctuate (pools are not making the same number of blocks each epoch) but on long-term (1 year) all pools will give u back ~5-5,5%

Cheers,

2 Likes

Thanks for the response Alex, and yes I understand that the potential reward might be lower than thought.

But a question in relation to the splash screen that displays when hovering over something you have staked, note the potential rewards at the bottom circled in red, its a long way off the 18 ada that was calculated when i picked the pool - so i wondered do i need to re-delegate to a different pool?

Screenshot 2021-02-23 at 20.32.30

So the annual return is approx. 5-6%. Is that approx. 5 of your current holdings? So I guess what you are seeing is the epoch reward. Also did you adjust the slider at the top? That’ll alter the calculated rewards and the pool ranking

Check in daedalus for my pool for example… it will show u 0.000 but my long term ROA is ~ 7,3% on adapools…
I think daedalus not reflecting very well the reallity;
Wait few epochs and make an average of rewards;

1 Like

Thanks both, not really sure why it shows that figure there. The annual reward is circa 1300 ada which is correct at ~18ADA for 73 epochs.

Not to worry, I’ll wait until the new epoch starts and maybe it will display correctly.

1 Like

So no worries, the Cradano protocol wont fail you :wink:

1 Like

Just incase anyone else is wondering about this, the epoch ended and i received the amount i was expecting, circa 5% (much more than the 0.7 quoted). I think whatever calculates this has a bug.

1 Like

It is showing correct value.
It will show the Rewards per Epoch. Think of Epoch as a period of time in the blockchain. One Epoch lasts 5 days.
So there are 73 Epochs in 1 Year.
For example, you delegate 100 ADA then the estimated rewards will show areound 0.07 per epoch.
0.07 ADA x 73 Epochs = 5 ADA approx.

The rate of return on staking is around 5%.

But this is still not the whole picture for a deeper understanding you need to understand how the staking pool is managed. A staking pool will validate blocks based on the total amount pledged and from the rewards first deduct 340 ADA which is the max fees they can charge for running the servers etc. for you.

For example:
So let’s say they earn x amount rewards during an epoch from the blocks they produce and there are total y amount delegated in that staking pool and your contribution to the pool is n ada (n<<y).
And the cost they charge for running servers etc for the pool c = 340 ADA + some fixed % fees.
Then your rewards per epoch (yrpe) will be

yrpe = (x - c) * ( n/y)

in simple words:
your rewards per epoch = total pool rewards minus pool running costs times your share or aka delegation ratio

delegation ratio is the amount you delegated vs total pool size