Delegation in Cardano Proof of Stake model

Firstly we need to go through some theory on how staking works at a protocol level, then we will look at how to delegate from wallets itself.

Time periods in Cardano: Epochs, slots and nominations.

The Cardano network has time periods called Epochs that last 432000 slots and each slot lasts 1 second. That means an epoch lasts 5 days. On average a pool node is expected to be nominated for block production every 20 seconds, and there are roughly 21600 nominations per epoch. This is determined by the active slot coefficient that currently is at 5% meaning that out of all the slots only 5% will at most be eligible for the pool to produce blocks. This is also why the network health is sometimes reported in chain density and ideally this number is close to 5% currently.

For each successful nomination there is a chance for a block to be produced on the network. Due to randomization and also pool block production issues each epoch is usually never 21600 blocks as can be seen on Cardano blockchain explorers (https://explorer.cardano.org/en) where the average hovers around 21000 blocks per epoch. This can among other reasons be caused by delays in block production due to latency issues, wrongly configured time synchronization, or hardware resources issues such as too low specs on memory or CPU power to calculate and report the block on the blockchain in time.

Timing and the delegation process: Delegation certificate, Snapshot, Active stake and Live stake, rewards calculation and rewards distribution.

Delegation certificate
So let us say that we are currently in epoch N — for example epoch 307 — and you decide to delegate your ADA to a staking pool such as ADA North Pool. Your wallet will generate a staking key with a delegation certificate at a cost of a transaction currently around 0.17 ADA and a deposit of what is currently 2 ADA, meaning you need 2.17 ADA on an account to register for delegation.

Snapshot, active and live stake. 
Assuming you create a delegation certificate in epoch N the snapshot of your wallet ADA amount will be taken at the start of epoch N+1 with the value held at the last block of epoch N, in the example this will be epoch 308. It then become the active stake in epoch N+2. In the example this would be epoch 309. The live stake is the amount at any given snapshot you hold in your wallet, and becomes the active stake in the next epoch after the snapshot. That means that if you move founds out of your wallet and back in again before the last block of the current epoch you will still register with the same amount, or for example if you buy more ada your live stake will increase, and will be registered in the snapshot in the next epoch and become the active stake in the the epoch after this.

Reward calculation
Rewards are calculated in epoch N+3, in the example this would be epoch 310. That means rewards are always calculated for the previous epoch. It will be based on such factors as blocks produced by pool during epoch N+2 (the active stake period) and the overall reward pool that is distributed will also be influenced by factors such as transaction fees collected during the epoch on the network. The pool will also collect fees before rewards are distributed. It is important here to know that there is a minimum fee of 340 (pools can choose to increase this but never under the minimum fee parameter) ADA that is a cost spread out over all delegators of a pool, and also there is a % fee that each pool will deduct from each delegators reward. You can find a reward calculator here: https://cardano.org/calculator/?calculator=delegator and at the time of writing this guide you can expect on average around 4.6% annual return on your delegation.

Reward distribution
Rewards are distributed at the start of the epoch after rewards calculation (technically at the end of the last block of the rewards calculation epoch) so N+4 or. In this example this would mean epoch 311. Keep in mind these are the rewards for the stake that was active in epoch N+2 (in this example epoch 309). These rewards are automatically part of the delegation of the wallet, but you will need to claim the rewards in a transaction (0.17 ADA currently) to send them from your wallet. At this point you will keep receiving rewards every epoch as long as you have an active stake amount.

Graphical summary

Useful resources:
Explanation of Proof of Stake https://youtu.be/zJUJG6V0Y1o

Full wallet (downloads the whole ledger history): 
https://daedaluswallet.io
Some lite wallets: 
https://adalite.io/
https://eternl.io/
https://yoroi-wallet.com/

If you found this explanation useful consider delegating to the staking pool. Ticker ANP. Here is how to delegate:

Daedalus

Synch wallet and login to the wallet. Click to go to delegation and staking and click staking pools. Then search for ANP and click and confirm to delegate and after confirmation you will be delegated to ANP!

Yoroi

After login in to Yori with your wallet andclick delegation list, then search for ANP and press the delegfation button. Confirm this and you will be delegated to ANP!

Eternl

Log in with your Eternl wallet click staking then search ANP and finally hit delegation and confirm this to be delegated to ANP!

Adalite

Log in with your Adalite wallet then click staking and you will have to manually enter the stake pool id for ANP – 0000fc522cea692e3e714b392d90cec75e4b87542c5f9638bf9a363a and then click delegate and confirm this and you are delegated to ANP!

Purchasing ADA

There are plenty of exchanges where you can purchase ADA, and sites such as coinmarketcap has lists of such available markets. We at NBX would love for you to consider purchasing ADA through our exchange at nbx.com. We offer competitive pricing, are regulated with norwegian authorities, and a high focus on security. The exchange also is part of the ledger crime insurance pool so has insured founds. After creating an user and login in you can buy ADA through for example the quick buy function and in scandinavian and european currencies: