Steps To Earn Passive Income With Cardano

Cardano’s Shelley update will allow users to delegate their ADA tokens to stake pools. These staking pools process and secure transactions on Cardano’s Blockchain. By delegating your tokens to these staking pools, it increases the pool’s chance to be chosen as a block producer and increase the pool’s profit potential. These staking pools will try to encourage users to delegate their ADA to their pool by offering various rewards. This will naturally increase the competition between the different pools which will help increase the profit potential for the users delegating their tokens to them.

You can learn more about Cardano’s staking incentives here – https://staking.cardano.org/

WHAT IS STAKE AND STAKE DELEGATION?

Ada held on the Cardano network represents a stake in the network, with the size of the stake proportional to the amount of ADA held. If you hold 10% of all available ada, you have a 10% stake in the network.

The ability to delegate that stake is fundamental to how Cardano works. There are two ways an ADA holder can earn rewards, and thus be incentivized to keep the network running: by delegating their stake to a stake pool run by someone else, or running their own stake pool. The amount of stake delegated to a given stake pool is the primary way the Ouroboros protocol chooses who should add the next block to the blockchain, and get a monetary reward for doing so. The more stake is delegated to a stake pool (up to a certain point), the more likely it is to make the next block – and then the rewards are shared between everyone who delegated their stake to that stake pool.

Stake pools are nodes delegated to by ADA holders that do not have the knowledge, resources, or desire to run a node. Conversely, stake pool operators are those with the expertise and resources to reliably operate a node 24/7.