As a Cardano stakeholder, you are probably interested in delegating your coins to a pool. In short, you are interested in staking. This article can help you to understand the big picture behind the whole staking and rewarding process. We will show you how you can find all the relevant information in the ADApools tool.
ADA coins overview
We have intentionally simplified some processes and calculations that you will find in the article. We wanted to provide understandable information for everybody. We can go deeper into details next time.
Cardano has a capped supply of coins and only 45,000,000,000 ADA coins will be in circulation. Let’s call it maximum supply. It will never change, thus, it makes ADA coins a precious resource. Currently, around epoch 220, ~31,600,000,000 coins circulate (circulating supply) and ~13,400,000,000 coins will be gradually released by the protocol in the following years.
The protocol rewards pool operators and stakeholders for active participation in the decentralization. There are two sources from which ADA coins are taken to be used for the epoch reward (we will continue with the distribution of the epoch reward in the next chapter):
- Transaction fees: It is expected that there will not be many transactions in the beginning. The number of transactions will grow with time as the protocol will be more useful and more people will use it. Thus, the fees will gradually form the main resource for rewarding.
- Monetary expansion: The protocol has ~13,400,000,000 ADA coins for rewarding. Let’s call it a reward budget. The resource will be gradually consumed in every epoch. Thus, rewards are relatively high in the beginning and they will be lower in the future.
In the beginning, the monetary expansion will be the main resource for the rewarding and it should be gradually substituted by the collection of transaction fees. Notice, that in contrast to the monetary expansion, the collection of transaction fees do not increase the circulating supply. Coins collected in a given epoch are just redistributed from users to the…