FREQUENTLY ASKED QUESTIONS
What is Cardano?
Cardano is a platform built for a sustainable future, to help people work better together, trust one another, and build global solutions to global problems.
Cardano is a cryptocurrency project which began with a vision of a world without intermediaries, in which power is not controlled by an accountable few, but by the empowered many. In this world, individuals have control over their data and how they interact and transact. Businesses have the opportunity to grow independent of monopolistic and bureaucratic power structures. Societies are able to pursue true democracy: self-governing, fair, and accountable. This will be a world made possible by Cardano.
Who founded Cardano?
Cardano was founded by Charles Hoskinson who was also a co founder and first CEO of Ethereum.
What is remarkable is the fact that he was able to put together a decentralized community of scientists, engineers, and thought leaders united in a common purpose: to create a technology platform that will ignite the positive change the world needs.
What is ADA?
ADA is the native token of Cardano. Ada is a digital currency. Any user, located anywhere in the world, can transact ADA as a secure exchange of value.
Is there a company behind the development of Cardano?
Three organizations have worked together in the development of Cardano:
Cardano Foundation: The Cardano Foundation works to drive adoption, shape blockchain governance, set commercial standards, and support the community of Cardano users.
IOG (Input Output Global - Used to be named IOHK - Input Output Honk Kong): This is the technology and engineering company contracted to design, build, and maintain the Cardano platform. Founded by Charles Hoskinson and Jeremy Wood, IOHK is committed to innovation through rigorous peer-to-peer scientific review and the highest standards of assurance in software development.
EMURGO: This is the enterprise arm of Cardano, operating to boost the platform through commercial ventures. EMURGO develops, supports, and incubates commercial opportunities and helps integrate businesses into our decentralized blockchain system.
I hear “Protocol” all the time in the crypto space. What is a protocol?
A Protocol is the basic set of rules and instructions that allow data to be shared between computers. For cryptocurrencies, they establish the structure of the blockchain which is the decentralized database that allows digital money to be securely exchanged on the internet.
There are multiple types of protocols in the crypto space but the most widely known are POW (Proof Of Work) used by Bitcoin and Ethereum 1.0 and POS (Proof Of Staking) used by Cardano, Polkadot, Tezos etc.
How do I buy ADA?
ADA can be purchased and transacted in any crypto exchange which supports it.
Go to this link, Click on “Markets” and you will be presented with a list of exchanges that support it and also the “Pairs” which each exchange transacts on. A pair is the 2 coins involved in a transaction. e.g.: ADA/BTC or ADA/USD.
Just like in any financial market you need to register with exchanges and comply with local laws and regulations in order to be able to participate in that market, in the cryptocurrencies industry you need to register with specific exchanges and comply with KYC (Know Your Customer) and AML (Anti Money Laundering) laws.
What is the difference between Cardano and the other prominent cryptos, such as bitcoin and ethereum? - Part 1
1. Bitcoin is known as the first generation cryptocurrency, since it invented the space. Ethereum is known as the second generation cryptocurrency, since it took Bitcoin’s code and it added smart contracts, which allows for programmability of the transactions. This really took the space to a much higher level with many possibilities. Cardano is known as a third generation cryptocurrency, since it took the concepts and virtues of Bitcoin and Ethereum and started from scratch (not copying any code from any other project). They utilized a scientific method of development known as peer review, developed a crypto currency which fixes some of the biggest problems of the previous two such as scalability, interoperability and sustainability.
2. Bitcoin and Ethereum 1.0 are based on a Proof Of Work protocol while Cardano is based on a Proof Of Staking protocol named Ouroboros. Proof Of Work uses mining hardware which consumes large amounts of electricity. This protocol also only provides economic incentives to miners. As of today, in order to be a competitive miner you need to invest large amounts of money to install industry level mining operations. In contrast, anyone who buys ADA and delegates it to a Staking Pool, can participate in the incentives of 5% yearly growth offered by Cardano’s protocol. Best of all this is done without adding additional risks, and without losing control of their ADAs.
What is the difference between Cardano and the other prominent cryptos, such as bitcoin and ethereum? - PART 2
Both Ethereum and Cardano are Smart Contracts Platforms but they have huge differences:
a.Tokens operating on top of Ethereum’s platform are treated as second class citizens since they operate as Smart Contracts (ERC20 or ERC721 standards). In contrast tokens running on top of the Cardano Network will operate without adding the complexities of smart contracts. They are at the same level of main coin ADA. This makes them much more easy to work with and cheaper since they don’t have to pay “gas” fees as on the Ethereum network.
b.As of today, due to the success of Ethereum and therefore the amount of transactions being processed in their network, processing times and fees are unpredictable and fees are extremely high making it very undesirable. Alternatively, processing times and fees in the Cardano network will be much more predictable and cheaper. Comparisons show fees of about $20 per transaction on Ethereum VS about $.25 per transaction on Cardano.
WHAT IS A STAKE POOL?
Stake pools are run by stake pool operators. These are network participants with the skills to reliably ensure consistent uptime of a node, which is essential in ensuring the success of the Ouroboros protocol and the Cardano network as a whole.
The protocol uses a probabilistic mechanism to select a leader for each slot, who will be expected to create the next block in the chain. The chance of a stake pool node being selected as slot leader increases proportionately to the amount of stake delegated to that node. Each time a stake pool node is selected as a slot leader and successfully creates a block, it receives a reward, which is shared with the pool proportionate to the amount each member has delegated. Stake pool operators can deduct their running costs from the awarded ada, as well as specify a profit margin for providing the service.
To learn more about Latino Staking Pool, we invite you to visit the following link LATIN.
WHAT IS STAKE POOL
The performance metric is an indicator of how well a stake pool is performing. Considering that the slot leader election process is private, it is only possible to estimate how often the stake pool should be elected based on the number of actually produced blocks. A pool can be nominated more often than expected based on its stake.. For example, if a pool only produces half the number of blocks that it was nominated for, its performance rating is 50%. This could happen because the pool has a poor network connection, or has been turned off by its operator.
Performance ratings make more sense over a longer period of time. If a pool has not yet been selected to produce a block in the current epoch, its performance rating will be 0%, even if it is likely to produce blocks later in the epoch. Performance ratings of over 100% are possible if a pool creates more blocks than it was nominated to produce.
In Daedalus and Yoroi, performance contributes to a stake pool’s ranking.
CAN I RE-DELEGATE MY STAKE
TO ANOTHER POOL?
Yes. Delegated stake can be re-delegated to another pool at any time. Re-delegated stake will remain in the current pool until the epoch after next (from the point of re-delegation), after which your delegation preferences will be updated on the chain and your stake moved to the new stake pool. Rewards are distributed from the end of each epoch, so you’ll continue to receive rewards from your original stake pool for two epochs before your new delegation preferences are applied.
CAN I DELEGATE TO MULTIPLE
In Yoroi, it is possible to delegate to multiple pools using a single wallet, but not in Daedalus. To delegate to multiple pools in Daedalus, you will need to create separate wallets. The stake associated with each wallet can then be delegated to a specific stake pool.
It is worth noting that multiple-pool delegation using a single wallet will not be supported on the mainnet.
What is STAKE POOL SATURATION?
Saturation is a term used to indicate that a particular stake pool has more stake delegated to it than is ideal for the network, and once a pool reaches the point of saturation it will offer diminishing rewards. The saturation mechanism was designed to prevent centralization by encouraging delegators to delegate to different stake pools, and operators to set up alternative pools so that they can continue earning maximum rewards. Saturation, therefore, exists to preserve the interests of both ada holders delegating their stake and stake pool operators.
The goal is to avoid any single pool becoming too large – thereby disincentivizing delegation to other pools – and receiving a disproportionate amount of the rewards. The health of the network is partly determined by having a high number of active stake pools with a balanced amount of stake delegated to them. The more numerous and geographically diverse the network’s pools, the better. Each stake pool’s saturation percentage is shown within the Daedalus stake pool selection menu.
WHAT IS STAKE POOL DESIRABILITY?
Desirability measures how desirable a stake pool is to an ada holder seeking to delegate their stake. It is influenced by a number of factors – including a stake pool’s margin, fee, performance, the total reward available in the current epoch, and saturation percentage – and contributes to determining a stake pool’s ranking.
hOW ARE STAKE POOLS RANKED?
Stake pools are ranked mainly through a combination of their desirability and performance, in addition to other factors.
HOW SHOULD I CHOOSE A STAKE POOL?
Shelley Daedalus features a list of all participating stake pools directly via the UI, while Yoroi shows the same information via their Seiza blockchain explorer. These pools are ranked and color-coded to help stakeholders make the best decision about where to delegate their stake.
HOW MUCH MONEY WILL I BE ABLE TO MAKE?
You can use the rewards calculator to get an idea of how much you will earn in rewards. It’s important to note that the calculator produces only reward estimates and shouldn’t be considered definitive or a guarantee of reward amounts. In the future, we will likely test different parameters that may affect reward margins. Amounts calculated are therefore subject to change, but represent a realistic and sensible level of return.
WHAT WALLETS ARE SUPPORTED AND WHERE DO I FIND THEM?
CAN I RESTORE AN ADA BALANCE FROM A HARDWARE WALLET?
Yes. You can use Daedalus to restore an ada balance from a hardware wallet. However, we advise caution doing so. Entering your hardware wallet recovery phrase in Daedalus can expose your hardware wallet private keys to additional security risks. Recommendations to minimize security issues are available via Daedalus during the hardware wallet recovery process.
WILL THE ADA REWARDS I EARN BE ADDED TO MY DELEGATED STAKE?
Yes. Rewards earned accrue with your original stake. When rewards are received, the balance of your reward account increases – and, consequently, the delegated stake is increased.
WHAT IS A STAKE?
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. The ability to delegate or pledge a stake is fundamental to how Cardano works.
There are two ways an ada holder can earn rewards: 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 receive 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 the rewards are shared between everyone who delegated their stake to that stake pool.
WHAT IS STAKE DELEGATION?
Delegation is the process by which ada holders delegate the stake associated with their 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.
Incentives are used to ensure the longevity and health of the Cardano network and ecosystem. The incentive mechanism is underpinned by scientific research that combines mathematics, economic theory, and game theory.
How Do I Store My Ada And Keep It Safe?
A cryptocurrency wallet is a software program designed to store your public and private keys, send and receive digital currencies, monitor your balance, and interact with supported blockchains. Ada can be stored using a Daedalus or Yoroi wallet - the primary wallets of the Cardano ecosystem, developed, respectively, by IOHK and EMURGO - or other third-party wallets.
In addition to the variation of wallets available, there are also two types of wallets: a hot wallet and a cold wallet.
A hot wallet is connected to the internet and can be accessed at any time with the requisite keys. Examples of hot wallets include mobile and software wallets, and funds stored on exchanges.
A cold wallet is an offline wallet. It is not connected to the internet and is used for securing storing funds that do not have to be frequently accessed. Examples include hardware wallets - which is a secure hardware device that stores the wallet’s private keys - and paper wallets. Cardano is supported by both Trezor and Ledger hardware wallets.