FAQ regarding staking
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No, your Ada does not need to be moved. By staking you are allocating your vote/stake to a pool. Your Ada stays in your wallet.
There is no minimum amount of Ada needed to stake. Technically you do need about 2 Ada as a deposit to register your staking address but it is refundable if you decide to close it.
There are no lockup periods or penalties with staking. You can still move and use your Ada as before. If you move Ada out of your wallet the amount of Ada will result in a slight reduction of your rewards based on how much is left in the wallet (rewards are about 5% APY).
There is no risk to you and there is no chance of your Ada being lost. Again, your Ada does not move out of your wallet at any point. The only "risk" would be selecting a pool that does not mint any blocks and as a result, you would miss the opportunity to gain rewards.
To get the most rewards it is advised to stake all of your Ada. Seeing as there is no risk of losing your Ada or cost for moving it once it is staked there is also no downside to staking.
You can split your Ada into multiple wallets if you want to stake with multiple pools however it is unlikely to produce more rewards. This will however spread your risk associated with picking pools that may miss a block. Currently, this is a bit of a chore but there are plans to add multipool staking in the future (date TBD).
Staking with a larger pool (more saturated) pool will produce fewer rewards but at a more frequent interval. With a smaller pool, you will receive more rewards at a time but less frequently (sometimes it can be weeks/months before you get rewards).
ANVIL pool is currently a small pool so when looking at our rewards you will notice we have yet to mint a block. Currently, our chance of getting a block is about 9-10% per epoch. Once we mint a block though our rewards proportion will be significantly more than the bigger pools that mint blocks more frequently.
On average the current return is approximately 5 - 6% per year.
This only holds true however if the chosen stake pool is not oversaturated. The more over-saturated a pool is the fewer rewards the pool will produce.
See the below question regarding saturation.
The saturation of a pool is equal to the total amount of Ada staked to the pool divided by the saturation point of pools. This saturation point is determined by a parameter in the protocol (the k parameter). This parameter determines the ideal amount of stake pools for the network. Currently, the k parameter is 500. As this parameter is increased the saturation point for pools decreases proportionately.
With the current k parameter, the saturation point for pools is about 64 million Ada.
The more over-saturated a pool is the fewer rewards it will produce. This is a feature built into the network in order to prevent anyone pool from becoming too influential and obtaining too much stake.
Basically, this means DONT stake with a pool that is over-saturated. It will result in less return on your stake.
An epoch is the length of time between blocks. The current epoch length is set to 5 days.
It is true that exchanges tend to provide higher staking rewards when compared with staking through a private wallet. There are some big downsides however that most people do not take into effect:
Exchanges usually require a mandatory lockup period.
This allows exchanges to use your Ada to generate profits in the short term (usually through trading / providing liquidity). That does mean if you were to decide to sell your Ada if the market swings a certain way you would be out of luck until your lockup period is done.
Ada on an exchange it is technically not yours. The old saying "not your keys, not your coins" holds true in this case.
If your exchange is compromised/hacked your coins could be at risk of being stolen.
Keeping your coins on an exchange allows them to use it as they see fit. This can result in the Cardano network being compromised as exchanges hold significant amounts of Ada which is used not just in staking but also voting.
By far the biggest downside to keeping your Ada on an exchange is that it cant be used to allocate to a private stake pool. To keep the Cardano network healthy it is important to keep it decentralized by keeping as much of the Ada available allocated to as many pools as possible. This keeps any one individual or entity from having too much control at any one time
The biggest misconception I found people have is that using one wallet prohibits you from accessing your Ada from another wallet. Your Ada is not stored in the wallet at all. It is "stored" on the blockchain in a wallet address.
"Wallets" is a bit of a mislabel of what these programs are. In essence, they are functioning as an interface to access Cardano network / blockchain.
This is similar to accessing the internet in a way. You can use multiple different types of browsers (Chrome, Firefox, Opera, etc) but they all access the same internet. In this case, the wallets are like browsers and the internet is the blockchain.
Some wallets are different in the way they access the blockchain, however:
Desktop / Full-node wallet
Requires you to download a full copy of the blockchain (approximately 6GB)
Runs a full node and verifies transactions independently
Nodes help verify transactions in the network but require more system resources
Ex: Daedulus wallet
Lite wallets
Lite wallets usually run through a browser extension or through a webpage.
They do not require you to download the full blockchain or run a full node.
This means quick setup and use along with minimum system requirements
Basically, they connect you to a full node that is being run by a third party
