How to Choose the Most Lucrative Cardano Staking Pools

Handy Tips / 22.06.2021

A staking pool is where multiple stakeholders can combine their computation resources to increase their chances of getting a reward. In layman’s terms, staking pools give stakeholders the chance to unite their staking power in the process of verifying and validating new blocks, thus increasing the probability of earning block rewards. A pool operator manages a staking pool where the stakeholders who joined the pool lock their digital assets in a specific blockchain address (wallet).

It is important to note that the number of rewards paid out depends on the size of the stake in a given pool. For example, a staking pool with a bigger stake than 1 million may produce one block every five days (epoch) and give you consistent rewards, whereas a staking pool with a small amount of stake will rarely produce blocks.

Getting the Right Angle 

To be on the safe side, you have to decentralize your stake in multiple pools since it will garner more value besides the staking reward. Staking pools are similar to mining pools, but they provide more predictable and frequent staking rewards. 

However, you may have to face some deductions on your staking rewards due to charged fees. These fees are on almost every staking pool, and they tend to reduce the final payout. For this reason, staking pools are ways for stakeholders to earn passive income without the hassle of technical implementation and maintenance of setting up and running a validating node while paying for the services rendered.

So, What are Cardano Staking Pools?

A Cardano staking pool is where stakeholders stake ada on the Cardano network and earn a reward as an ADA holder. The size of the stake of Cardano is proportional to the amount of ADA held on the Cardano network. Stakeholders get to delegate a stake while pool operators pledge a stake and these abilities form the fundamentals of how Cardano works. 

In addition, the pristine ability of the Ouroboros protocol gets to choose who adds the next block to the Cardano network and gives a monetary reward for doing so. As an ADA holder, you can participate in public staking pools if you don’t wish to operate the Cardano network node by yourself. 

On the other hand, you can run your staking pool (private stake pools). These pools only deliver their rewards to their owner. The more stakes delegated to a staking pool increase the chances of the staking pool to make the next block, and rewards go to the operator and delegates.

How to Choose Cardano Staking Pools

Before you decide on a Cardano staking pool to implement, it’s crucial to assess its traits and find one that suits your style. First, make sure that you are the one controlling your stake. Be on the lookout for exchanges, and it’s best not to use them for storing your crypto since they are vulnerable to collapse. The secret is not giving up control of your funds and keys; instead, you should opt to use Cardano wallets like Daedalus, Yoroi, and AdaLite.

Second, be specific on evaluating pool performance. If a pool you delegated to is missing the slots, they have been scheduled for, shun it because your ROS can experience a colossal hit. Likewise, avoid poorly maintained pools which tend to miss opportunities to mint blocks, which can cause the total reward to stakes to plummet. 

Thirdly, focus on staking pools with low fees to maximize your reward.  They include a fixed fee rate – a fee charged from the total reward a pool produced in an epoch – which is not charged on each delegate.  Then the margin fees charged after deducting the fixed fee rate go to the pool operator to cover the costs of running their pool. 

Nevertheless, when you keep in mind that “when the deal is too good, think twice,” beware of low fee pools with 0% margin fees. Lucrative offers that seem too good to be true tend to raise their fees after filling pools.

Top 5 Cardano Staking Pools

It would be best if you were picky on the Cardano staking pool to use while considering the best traits you wish in a staking pool. These are the best staking pools:

Adavault

Adavault consolidates its place as first on the list since it provides delegators with reliable rewards of more than 5% for the fixed fee of 340A per epoch.  Adavault offers delegates a continuous return on their ad investments. 

It also plans to waive the variable fee for both new and existing delegators until 30th September 2021, returning to 0.99%. With an average stake pool return of ~6%, Adavault emerges as one of the best staking pools in a theoretical annual return within the Cardano ecosystem.

Cardanode

Cardanode boasts of a 0% fee, and they don’t expect to change it. It doesn’t focus on profits since it benefits from its staking rewards and Cardano’s compulsory minimum fee. Cardano is highly effective in that it does not miss a block with its 100% uptime – checking nodes every 10 seconds – and its 24/7/365 monitoring capabilities. It also ensures rapid block propagation with five relays that connect to 30 different nodes on three continents.

AzureADA

AzureADA is one of the best options because of its large pledge amount, which depicts how invested they are in the success of their pool. It also makes the best of the Microsoft Azure cloud platform, which is the most feature-rich cloud platform worldwide.  Also, it’s backed by multiple professionals involved in Cardano, and it indicates a proven level of competency for delegators.

Staking247

It mainly focuses on maximizing stakeholders’ rewards. However, it charges a small pool fee, a 0.5% margin fee, to keep its infrastructure running efficiently. It has a software-experienced team that provides one of the most reliable staking pools.Staking247 serves delegators with transparency, and you can monitor real-time node status on their dashboard.

Flowr

Flowr stake pool has three dedicated servers in different data centers around the world. It has a 2% fee to help in improving its infrastructure. Flowr offers redundancy since it runs completely on new hardware (bare metal servers), which has an optimistic view on the future. When you consider important factors like reliability and safety on your staking pool, it becomes clear why Flowr staking pool lands on this list.

Wrapping Up

The staking pools described above are among the best in the craze, but this is just the tip of the iceberg that has calved from the frozen unexplored continent of staking pools. Some might be keen on assessing the overall pool performance; some might focus on pool fees while others on communication and transparency.

Either way, you need to do extensive research on the staking pool you choose. The staking pool realm is huge, the good ones have a short at making you significant profits, and naturally, the weak ones will crash and burn.

Adam is an outgoing young lad who likes adventures and discovering new things. Despite his boring life, he loves writing about cryptocurrencies and exploring what blockchain technology can do for the coming digital world where all adventures will be virtual.