Delegation on the Cardano blockchain is the process by which ADA holders delegate their ownership of ADA to a stake pool. It allows ADA holders that do not have the skills or desire to run a node to participate in the network and be rewarded in proportion to the amount of stake delegated.
Enjoy the elegance of staking with a stake pool and reap the fruits from the stake pool operators hard work to achieve the best results for you. Your ADA or tADA is always under your control.
During the ITN (Incentivized Testnet) the rewards for delegation were real and they will be transferable to the mainnet in a later stage. Now that ITN has come to an end and the switch is made to Shelley testnet (Haskell version of the Cardano node), rewards won’t be transferable to the mainnet.
Shelley testnet is mainly for pool operators to get familiar with the network and to experiment with the different factors in operating their stake pool. Pool operators can prepare themselves this way for the upcoming mainnet.
At the moment of writing there is no way for ADA holders to delegate their ownership of ADA to a stake pool.
An easy interface for ADA holders is in preparation for the launch of mainnet so that ADA holders can delegate their stake in a convenient way via their wallet into a stake pool and claim there stake back at any moment.
Currently there is only one way to interact with the Cardano blockchain on Shelley testnet, this is via the Cardano-cli (Command line interface).
Via the Cardano-cli a user can create a payment and staking address, both addresses come with a signing and verification key and the staking address comes with a owner staking certificate.
Before the staking address can be registered on the Cardano blockchain the payment address needs to have some funds to be able to facilitate a transaction. For this a faucet is in place where the user can request free tADA.
Faucet requests can be made using the following command:
curl -v -XPOST “https://faucet.shelley-testnet.dev.cardano.org/send-money/<payment address>
Once some tADA has been received on the payment address the staking address can be registered on the Cardano blockchain making use of the funds on the payment address to facilitate the transaction.
Next step is to generate a delegation certificate for the staking address, to delegate the staking address to the stake pool
This is about all there is to do to get your stake address working on the chain and earn worthless tADA. Your amount of rewards will be dependent on your total ownership of tADA. The pool fixed and variable rewards, the total delegation and a lottery on basis of these factors, the stakepool gets a block with transactions assigned. Once the outcome of the verification is correct and agreement upon this is achieved by other nodes, the pool will receive a reward for minting the block successfully.
The delegator will receive a percentage of this reward, based on its total ownership of tADA delegated to the pool, minus the pool operational costs and the pool rewards percentage.
If you like to try this process yourself, you can download the source code and install the Cardano-node, by compiling the sources via the haskell compiler, cabal and some additional libraries. You can find more details about this process on the github page of IOHK.
The outcome of the build process is a Cardano-node and Cardano-cli. The Cardano-node is required in order to run your own stake pool and relay(s) and the Cardano-cli is required start transacting on the Cardano blockchain.
If you are interested in experimenting with the Cardano blockchain, you are invited to join our Telegram group. There we can openly discuss the topics that you are interested in about the Cardano blockchain. Either running a stake pool or delegating your stake.