CO2POOL Service:
What is proof of Stake?

Proof of Stake: Background

We rely on the Proof of Stake (PoS) concept of Cardano, which requires only a fraction of the energy in contrast to the Proof of Work (PoW) concept of Bitcoin and other cryptocurrencies. It is expected that the energy consumption of Bitcoin will soon account for 2% of the global electricity demand – in contrast, the entire Cardano blockchain infrastructure consumes no more energy than a village.

In Proof of Stake, blocks are not generated by high, competitive computing power (as in Bitcoin), but are allocated to the pools’ block producers by a random algorithm. In this process, the probability of being allowed to generate a block increases with the amount of “Active Stake”, i.e. the sum of Ada assigned to the pool via its delegators.
The more delegators and Active Stake our pool has, the higher the probability that our pool will produce blocks and receive a reward for it. Here is more information about Staking and Rewards and in general about the system behind it. This reward is for the benefit of you — our delegators. The reward is distributed to the delegators after deduction of the operating costs of the pool and the fee share for climate protection, in proportion to their contributed share. On an annual average, a “return” of ~5% can be expected — where else is there such a thing? And this is all completely risk-free for you.

Is staking really risk-free?

Yes it is — your ADAs remain in your full possession on your wallet. The procedure is somewhat comparable to a lottery. Imagine you have a pile of banknotes. Each banknote has a number. Now the numbers are drawn, and each number drawn gets a prize. You don’t need the banknote – just the right number. By delegating your Ada to our pool, you are only providing the numbers (for the draw), not the Ada itself. Our pool has no access to your Ada — even in case of a total failure of our pool, nothing will change on your Adas on your wallet.
ATTENTION: Please NEVER send Ada for staking! Reputable pools will never ask you to do so. Secure wallets like Daedalus or Yoroi have a function to delegate your stakes to the pool of your choice: [CO2P].

How does staking work?

The basis for staking is an Ada wallet that allows delegation to a stake pool. We recommend Daedalus or Yoroi (links see above).

Your Adas have to be in your wallet first. If you still have the Adas on an exchange like Kraken, Etorro or Binance, then first send the Ada to your own wallet’s address.

You can get the address e.g. in your Daedalus wallet under “Receive”. Copy this address.

In your exchange there will be a function to send the Adas. In Kraken you can find it under “Funding” / “Withdraw” – there you enter the address of the wallet you want to send the Adas to. Of course the address from your own (!) Wallet, which you have copied before (see above). If you are unsure, try it first with a small amount (e.g. 5 Ada) – the transaction will take a few minutes at most, sometimes only a few seconds. If the Ada sent by the exchange arrive in your wallet, then you have done everything right.

In the wallet you now go to the “Delegation Center” (Daedalus). There you can choose a pool to which you want to delegate. Don’t let the “ranking” in Daedalus influence you – smaller pools are currently still disadvantaged there and are not displayed adequately. There are better sources to select pools (see below). The performance of CO2P is currently very good and the amount of rewards – despite donations for climate protection – even better than many large, purely profit-oriented pools.

If you need help, please contact us! We are also happy to give you direct / personal support, via Telegram or by phone if needed.

When do I get the rewards?

If you delegate for the first time, it takes 16-20 days until the rewards are displayed in the rewards account of your wallet. This is the case for all pools and is due to the Cardano protocol.

Example:

  • Epoch 247: New delegation of a sum of Ada (1- 5 days).
  • Epoch 248: registration (snapshot) of the added Ada to the pool (5 days).
  • Epoch 249: delegated Ada participate in the generation of blocks for the first time (5 days)
  • Epoch 250: calculation of rewards (5 days).
  • Beginning of epoch 251: distribution of the rewards.
Rewards automatically go to your wallet and increase your stake amount. Per epoch (5 days) and 10,000 ADA this is approx. 5 – 8 Ada.

Why is CO2P supported by the “Cardano founders” (Input/Output Hong Kong IOHK)?

Currently, CO2P is one of the 100 pools (out of more than 1500) selected by IOHK to be supported with a delegation amount of 3.2 M Ada in the next 3 months (since epoch 247). CO2P was selected because we have been around since the beginning of the Staking era, are involved in the Cardano Public Testnet, we are a small pool, and we only operate a single pool (and no pool farms). We are involved in several initiatives, e.g. the Cardano Singlepool Alliance (CSPA) and Cardano Mission Driven Pools (CMDP). And, of course, we were selected because our support of climate action initiatives represents the same values that are important to Cardano’s founders and developers.

Are there other sources of information?

Registered pools, their backgrounds, Performance and ID can also be found on Adapools.org and pooltool.io. Pool.pm provides a nice graphical overview of what is currently going on in the Cardano blockchain. You can get support for practical questions on the official Telegram channels of the Cardano Foundation, e.g. here and here (german).

Some large pools already have more than 64 million Ada and are thus oversaturated – in this case, the amount of rewards even decreases to the detriment of the delegators.

So it is time to support the smaller pools. Besides CO2P, there are other pools that are also socially, politically or ecologically motivated. You can find them, for example, in the charity pool list maintained by our pool at Charity-Pool-List or on the websites https://stakingforgood.com/ and https://missiondrivenpools.org/.

Together for a better world!

We are also a member of the Cardano Single Pool Alliance, because we think it is important that the Cardano network remains decentralized so that it remains permanently safe from manipulation and 51% attacks. We reject pool farms (i.e. operation of several pools by one owner). We have made a joint commitment with our alliance muckrakers to operate only a single pool and never to create another pool. When our pool reaches saturation, we will ask our delegates to delegate to another reliable pool. Unfortunately, this is not (yet) a matter of course.

Note / Disclaimer

We only provide the infrastructure of our StakePool and support the Cardano project, but explicitly do not give any advice on financial issues. Each person must decide for him/herself whether an investment in ADA is a good decision or not and what risk is associated with it. Any investment in financial products involves risks, especially price fluctuations, which can occur at any time with both stock market prices and cryptocurrencies. We expressly assume no liability for your profits or losses.

Please also inform yourself independently about all relevant tax issues and, if necessary, obtain information from your local tax authorities.

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