Understanding Delegating your Stake

Hi! I just wondered whether anyone had any insight on how the stake delegation vs rewards system works. I am having trouble understanding it. In most stake pools it costs about 340 ADA per epoch to delegate your stake. But then the rewards are something like 0.55 ADA. Am I missing something? What is the incentive to delegate your stake? I apologise if this is a stupid question, I just don’t get it…

the 340 ADA cost will be the reward received by POOL (extracted from the total reward) in case they will create blocks

so… this is how rewards are working

  • no blocks - no rewards

rewards calculation:

1 block = ~700ADA

the rewards which will be shared with the delegators will be = (number of blocks x ~700ADA) - 340ADA pool cost (deducted only once per epoch no matter how many blocks the pool will create) - pool margin

for example if a pool will create for example 3 blocks, cost 340 ADA and pool margin 1%

(3 x 700) - 340 - 17,6 = ~1742 ADA (rewards shared with the delegators)

when you will delegate you will not need to pay 340, you will pay only 2ADA (stake address register and you will receive back when you will deregister the address) + 0,2 ADA transaction fee


PS: I don’t know if I was clear, you can also read this topic

Thank you very much, I do think I get it. I appreciate the article too, I will read it now…

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The article is very detailed, thank you. May I ask you a follow up? Can you stop delegating at any point, or are you locked in? What if you need access to your ADA?

the funds are not locked… the ada need to be in wallet before the snapshot take place (once/5 days) after the snapshot you can do whatever u want with the funds

and you will not need to register the stake address again and again if you will not deregister it

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Thank you!

you’re welcome :beers: