Participate with confidence based on Bison Trails’ expertise and experience on the Cardano network. Our engineers and protocol experts are deeply engaged with the Cardano Foundation and IOHK team.
Cardano is a proof of stake blockchain based on peer-reviewed research and evidence-based models. It will support smart contracts, sidechains, governance, and a voted-upon treasury system once fully launched.
This full launch of Cardano will be executed in five phases:
The protocol is currently operating in a limited live mainnet within the Shelley phase. At full launch, its core features will include:
You can learn more about Cardano in our guide.
Cardano uses a novel proof of stake consensus mechanism, Ouroboros. Ouroboros is considered secure as long as 51% of the stake is controlled by entities who are not misbehaving, as opposed to the 67% control required by the majority of proof of stake protocols.
The main participants in the Cardano network are core nodes and relay nodes, which together comprise a stake pool.
The d and k parameters, protocol-defined variables that influence Cardano’s stake pools, are an important aspect of Cardano’s staking dynamics and level of decentralization.
The d parameter controls the ratio of work completed by the “Federation of Nodes,” or the original three nodes running Cardano in its early phases, to the work completed by other stake pool operators. As the value of the d parameter decreases, the amount of work completed by stake pool operators at large increases, moving the network toward further decentralization. The value was set to decrease by .02/epoch, and in March of 2021, reached 0, bringing Cardano to its fully decentralized launch.
The k parameter controls the number of stake pools in the network by way of adjusting the maximum amount of ADA that can earn rewards when staked to an individual pool (the stake cap). The higher the k parameter, the lower the maximum stake cap per pool. This incentivizes operators and delegators to distribute their tokens across a larger number of stake pools, further increasing decentralization.
For example, if the k parameter was set to a 100 ADA cap per pool, a stake pool with 100 ADA and a stake pool with 200 ADA would both earn the same rewards. Currently there are upwards of 1100 stake pools participating on the network protocol at any particular time, and a k value of 500.
There is no active set for proof of stake validation on Cardano. In the long run, the intention is to set the k parameter to optimize the participation of 1000 stake pools.
ADA holders who want to participate in Cardano without becoming a stake pool operator can delegate. There is no minimum requirement for delegation, outside of having enough ADA to cover the transaction fees—in order to ensure one has enough ADA to cover those fees the protocol does require a user to have at least 10 ADA in their wallet in order to delegate. There is no lock up or unbonding period for delegating within Cardano; delegators can unbond their tokens at any time. Delegators can also change their stake pool at any time, and may divide their ADA delegation between as many stake pools as they would like by creating split wallet addresses within individual wallet UIs.
Want to learn more? Our guide to Cardano includes more information about participating in Cardano.
Stake pools earn fees from delegators for conducting the service of validation. There are two distinct fees, a fixed fee (the Pool Cost) and a variable percentage fee (the Pool Margin). The Pool Cost, a fixed amount of ADA the stake pool retains from rewards each epoch, provides stake pool operators with a regular, stable reward amount, instilling confidence in the value of continuing to operate a stake pool. The Pool Margin, a percentage of rewards post-fixed fee, allows a stake pool operator to scale their earnings with their pool’s success.
There is no mandatory self-bond on Cardano, which instead uses a pledging mechanism. Pledging is an optional self-bond that increases the reward rate experienced by the stake pool and, most importantly, functions as a mechanism to prevent Sybil Attacks on the Cardano Network.
Stake pool operators are rewarded for pledging their own ADA to their own stake pool. The higher the pledged amount, the higher the reward rate for the pool. A stake pool that reaches its stake cap with no ADA pledged earns only 77% of the rewards that a stake pool composed completely of pledged ADA earns. The stake pool operator is therefore incentivized to self-bond via pledging and thus prevent the likelihood of a Sybil attack.
Pledging is also the key to optimizing rewards on Cardano. The higher the pledged amount, the higher the reward rate experienced by the pool. For operators with low delegation expectations can optimize rewards by pledging the whole stake cap for their stake pools. Operators who expect to draw a significant amount of delegated tokens can determine the best delegation fee to optimize the return for delegates and themselves, thus increasing participation.
More information about Cardano’s rewards structure, including examples and information about inflation and staking, can be found in our guide.
There is no slashing within the Cardano protocol. However, poor behavior can cause a node to miss out on potential rewards. The most common penalties are for:
There is no on-chain governance in the current phase of Cardano (Shelley). The Voltaire phase of Cardano’s launch will focus on proposing, experimenting with, and implementing a decentralized governance model for the protocol to set a voting and treasury system.
Cardano Improvement Proposals (CIPs) are one of the first implementations of off-chain governance for Cardano. CIPs are led by the Cardano Foundation, which was founded with the mission of overseeing and supervising the advancement of Cardano and is focused on core development and ecosystem growth for the protocol.
A CIP is a structured design document that is accessible to the Cardano community via a Github repository overseen by the Cardano Foundation. In the current phase, the Cardano Foundation controls and implements Cardano core development. However, CIPs are used to propose new features, collect community input on an issue, and document the design decisions that go into building the protocol.
The Voltaire phase of development will enable network participants to propose CIPs. Cardano stakeholders will have the ability to vote on their implementation in alignment with the protocol’s staking and delegation process.
Funding proposals are in-development for off-chain governance of the Cardano treasury. Community members will be able to make proposals aimed at enhancing the Cardano ecosystem, such as developing new integrations or funding platform development. The proposals will be voted on by any ADA holder via a currently unreleased mobile application, with the most successful proposals receiving treasury funding.
Cardano is a proof of stake blockchain based on peer-reviewed research and focuses on security, scalability, and financial applications.
Cardano’s stake pool pledge and margin mechanics Stake pool operators can use the mechanics of Cardano’s pool pledge and margin to optimize rewards.
Guide to Cardano by Bison Trails Bison Trails supports participation in the Cardano Network, a technological platform with the goal of creating a financial operating system for the underbanked