Cardano staking and how does it work?

Staking is the process of allowing people to participate in the decentralisation and security of the Cardano network. People can earn rewards for participating. In a decentralized network, decision-making power must be distributed among the participants. ADA coins are used to do this. Everyone who owns an ADA coin holds a stake, i.e. a certain share of decision-making power. These people are called stakeholders.

ADA coins can be used to actively participate in the network consensus. New blocks must be created in the network at regular intervals. Entities called cardano stake pools are responsible for producing blocks. A pool is a network node that is operated by a pool operator. Anyone with the necessary technical knowledge, equipment and a certain number of ADA coins can operate their own pool.

Stakeholders can take advantage of ADA coins and engage in stake delegation. It is necessary to have coins in your own wallet, which will allow you to choose one of the many pools to which coins can be delegated. By delegating coins, the selected pool gains a stronger position in the network and gets the opportunity to create more blocks. The strength of the pool is capped and can grow to the point of saturation. Stakeholders become delegators. Let's add that by delegating, stakeholders are essentially putting their trust in a selected pool. It is a kind of voting process.

During the process of delegation, the coins still remain in the owner's wallet and are not locked. The owner cannot lose the coins and can even spend them at any time. Time is divided into epochs of 5 days in the Cardano ecosystem. Between the transition from epoch to epoch, a so-called snapshot is taken, during which the exact number of ADA coins in the wallets involved in the staking is scanned.

Stakeholders may spend some of ADA coins or, conversely, acquire new ones. During the snapshot, the current state is taken into account. If the stakeholders have delegated to a pool producing blocks, in a few epochs they will start receiving regular rewards. The rewards are automatically counted into the staking during subsequent snapshots. A staker can delegate to another pool at any time.

The process of staking and delegation is similar in principle to bitcoin mining, but more inclusive. There is no need to acquire expensive hardware and pay electricity bills, so anyone who owns ADA coins can get involved.

For more information, stake analysis and exploring, visit cardano explorer (cexplorer.io)