(8/7/2020) NOTE: Recent news from Input-Output Global has made some of the information in this post obsolete. Please click here for the updated information.
If you are a holder of ada, the chances are quite high that you are really excited about the arrival of Cardano’s Shelley mainnet. As a matter of fact, I’m pretty excited too! Now, if you participated in the incentivized testnet (ITN) that ran from December 2019 to June 2020, you already have some experience with what it is like to stake in the Cardano ecosystem. If you didn’t get a chance to participate in the ITN, don’t worry — you haven’t missed the boat by any means. We are still at the very nascent stages of Cardano’s Proof-of-Stake era and many opportunities abound.
This is a post about setting reasonable expectations for what the start of staking will be like on mainnet so you are not surprised when you discover that there are significant differences between staking on mainnet and what you experienced as a delegator on ITN. If you’re new to staking, then you should keep reading too because this information will put you way ahead of the game when it comes to knowing why things are unfolding the way that they will over the next few days and weeks.
First, it is important to understand that ada in the ITN was testnet ada. It had no real monetary value in itself. Of course, we all participated knowing that at the end we would be able to exchange the ada we received in rewards for actual mainnet ada, but the testnet ada itself that we used for staking never did have any value. It was just a copy of our mainnet holdings in Daedalus or Yoroi at one moment in time back in November 2019. So, the most important difference to understand with mainnet staking is that the decisions and transactions you make in mainnet are for keeps, and they are made with real ada that has actual monetary value. So, think carefully before you decide to act with the ada in your wallets. This is paramount.
Second, if you haven’t read my post from yesterday, please check it because it will give you some basic education about the time periods by which Cardano staking evolves. Staking periods are divided in epochs and slots. Your preference for staking with a certain pool is locked during an epoch, for example, and cannot change until an epoch boundary arrives. In fact, depending on when you decide to change your stake delegation from one pool to another you may have to wait one or even two full epochs before those new preferences take effect. All of this information is tracked in Daedalus, which will tell you how long you will have to wait if you decide to switch stakepools, or increase/decrease the amount of ada you are staking.
So, now we come to one important and major difference between mainnet staking and ITN staking. The epochs on the ITN were one day long, but the epochs in Shelley mainnet are five days long. It makes sense to have shorter epochs in a testnet because it’s a time to try things you wouldn’t want to explore for the first time on mainnet with real ada, and it’s silly to have to wait five days just to see the results of an experiment or test. In the ITN, if you didn’t like your stakepool, you could be earning rewards in another one by no later than the third day after you changed your stake delegation in Daedalus or Yoroi. This will certainly NOT be the case in mainnet. You will have to wait a minimum of five days, and depending on the timing of your decision relative to an approaching epoch boundary, you could even have to wait more than ten days for your stake delegation to become active on another pool!
As we begin the Shelley mainnet, and everyone is eager to start seeing rewards rolling in, five days for an epoch is going to seem like an eternity (rewards are paid out at the end of an epoch), so patience will be required. In fact, the first rewards will not be paid out until the end of epoch 4 on August 18, 2020. Yes, you read that correctly — August 18th. If you look at the figure above, the Cardano Delegation Cycle has been diagrammed. I’ll spend some more time going through this figure in a future post, but I didn’t want to hold this information back because it can help you understand and set expectations for the next few days and weeks. Note that the rewards paid out on August 18 are the rewards for the blocks produced in epoch 3. So, there will be no rewards for the first two epochs of Shelley, because as we just went over it takes up to two epochs for your staking delegation to become active on a pool. Then, the rewards for epoch 3 don’t get paid out until the end of the epoch AFTER epoch 3, which is why they won’t show up until August 18th, at the end of epoch 4. As long as your pool is making blocks by epoch 3 and continues to do so each epoch thereafter, you should begin to start seeing staking rewards every five days after August 18th.
Alright. Phew! That was a lot of information to slog through. There’s a bunch more to say, but let’s stop here for now and pick it up again later. Make sure you study this part as it’s super important! Do you have any questions or comments? Did I get something wrong? Drop a comment or send me an email using the contact form! Also, if you found this article helpful, please consider passing it on to your friends. Thanks!