ADA Staking Risk

CARDANO (ADA)

STAKING ADA

The Cardano Network uses staking pool delegation, which is a voting and reputation system to secure the network and validate transactions. Staking pool delegation relies on stake pools to verify transactions included in each new block. Stake pools are incentivized with ADA rewards in exchange for verifying transactions. To ensure compliance with the protocol rules, validators must “stake” assets, thus risking loss of the staked rewards should the stake pool fail to comply with the rules of the blockchain.
Stake pool delegation allows for users to participate in staking without operating a node. Instead, holders may delegate the right to stake their assets to a stake pool. These staked assets do not leave the holder’s wallet as delegation only permits the stake pool to stake the owner’s assets on their behalf. As stake pools amass larger amounts of stake delegations from different token holders, this acts as “proof” to the network that the stake pools’ consensus votes are trustworthy. Once a stake pool verifies a block of transactions, subject to any fees charged by the stake pool, the stake pool and all of its delegators split the ADA reward proportionally to each delegator’s share of all assets delegated to the stake pool.
Satstreet provides staking functionality for users in respect of ADA, allowing users to delegate their ADA to approved validators and earn the applicable staking rewards. However, there are various risks associated with staking and such risks are in addition to the generalised risks pertaining to ADA described below, all of which continue to apply to ADA staked through the Satstreet platform.VALIDATOR REWARDS

Stake pools are node operators that verify the accuracy of data being recorded on the network. Stake pools are rewarded with newly issued ADA and the reward is based on the current inflation rate, the total number of ADA staked on the network and the blocks verified by the stake pool. Stake pools also charge a commission which is deducted before any rewards are distributed to the holders of staked ADA. Each time rewards are issued, the commission is deposited in the stake pools account and the remaining rewards are simultaneously deposited in all of the stake accounts that are delegated to that stake pool, proportionally to the amount of actively delegated stake in each account.

Supported Validators

Satstreet currently has a service agreement with NuFi AG, whereby NuFi acts as validator for the crypto assets stored in Satstreet’s custodial wallets. Headquartered in Switzerland, NuFi AG is one of the largest Cardano (ADA) infrastructure and services providers.
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Epochs

Each epoch lasts roughly five days.

Bonding and Unbonding Periods

When you delegate ADA, the delegated ADA is not eligible to earn staking rewards until the completion of the 5 epoch bonding period. ADA is not subject to an unboding period.

Staking Rewards and Fees

The Cardano networks computes and distributes staking rewards once per epoch. If a reward is accrued in a given epoch, it will be issued in the first block of the following epoch. Satstreet will provide statements to users indicating the amount of the rewards that the user is entitled to as well as the total rewards that were earned and any fees payable. For each epoch, your share of ADA rewards is proportional to the amount of ADA that you had staked when the epoch began.

Each crypto asset for which Satstreet provides staking services is subject to specific fees because of the unique nature of each blockchain network. These fees are calculated on a percentage basis in relation to the amount of rewards earned.With respect to any rewards earned on your staked ADA: (i) Satstreet’s Validator, NuFi, will be entitled to a fee and may pay a portion of that fee to any third-party service provider it selects to act as validator; (ii) any remaining portion of the rewards (the “Net Rewards”) will be delivered to one of Satstreet’s custodial wallets; (iii) Satstreet will be entitled to a fee of 30% in respect of the Net Rewards (the “Satstreet Service Fee”); and (iv) after the Satstreet Service Fee has been paid, your account will be credited with any remaining portion of the rewards, and, subject to any unbonding, lock-up or cooling-down period, you will be able to hold, sell or withdraw your rewards.

Last Updated: July 2023

Staking Risk Statements

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