The price of the ADA cryptocurrency has rallied in 2020, becoming one of the top coins on the market. However, the latest cryptocurrencies news show that the Cardano holders are actually disappointed after IOHK’s decision to give them only 4.6% as staking rewards per annum.
Determined by several factors, the amount of staking reward takes into account the number of staking pools in operation, the saturation of a delegated pool, the block production efficiency and other factors. At present, all of these elements are undetermined.
Still, based on the default estimates by the IOHK, users will receive 4.6% per annum which is why many Cardano holders are disappointed now. Knowing that the promises were to give rewards from the Incentivized Testnet (ITN) which will vary between 6% and 8% depending on the staking pools, the sub-five reward on the ADA mainnet is a blow for many.
One user took it to Twitter and wrote that while many were predicting 6% to 10%, going under 5% with the staking rewards is definitely an understatement, and it is “better to sell and buy property.”
Most people were predicting 6-10% and even Charles said in one of his AMAs it would be similar to the ITN. I’m happy with 6% but under 5.. better to sell and buy property.
— jim (@jim06304785) July 15, 2020
Another user said that this figure is notional. What is more, 4.6% is still a better rate than any bank is offering. The Cardano staking rewards go live from August 18th, 2020, three weeks after the rollout of the Shelley testnet.
Dr. Lars Brunjes who is the Education Director at IOHK, gave an overview of the Cardano staking process and a walkthrough of the staking calculator.
“How are rewards calculated? That happens on an epoch by epoch base. Every epoch, which lasts for five days, rewards are determined and paid to all participants,” he said.
Each stake pool will receive a reward determined by different factors such as the ADA pledge of the pool, the margin operational costs of it, performance in terms of block production efficiency and the amount that is staked with the pool.
Cardano holders are disappointed and the entire ADA community has reacted unfavorably towards the staking returns. While 4.6% is not a bad figure, it is much lower than rewards from other staking protocols. For instance, Matic Network pays 53% based on 18% of Matic staked, while Tezos pays a staking reward of 5.48%.
The Cardano news today also show that the price of ADA fell by 4.44% as a result of this and is now trading at $0.1244.
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