Category: Pool

How to stake your ADA: Daedalus

Daedalus Wallet Setup

For your Daedalus Wallet setup, we recommend that you watch the official IOG video seen above.

An outline of the steps shown in the video are as follow:

(1) Download and Install Daedalus wallet

It is important to only download Daedalus from the official IOG Daedalus website.

For FAQ on installation and other matters, you can visit the IOG helpdesk.

(2) Start and Sync Daedalus

The blockchain will start to verify and sync the entire blockchain. Depending on the specifications of your machine, the sync will take a few minutes or more.

Concurrently, you can select either:

  • Create a new wallet, or
  • Restore an existing Daedalus, Yoroi or Paper wallet

If this is the first time you are using Daedalus, please create a new wallet.

If you have a legacy Byron wallet, you will need to first restore the Byron wallet, and then create a new Shelley wallet to transfer all your funds over. This is because staking to earn ADA rewards can only be done using a Shelley wallet.

(3) Create a Shelley wallet

Remember to keep your 24 seed words safe. You should never divulge your seed words on social media or potential phishing sites.

(4) Transfer your funds from Byron to Shelley wallet

Note that small fee of ~0.19 ADA will be deducted for this transfer as a transaction fee.

Now you are ready to delegate to your favorite stake pool.

 

Delegate to KOPI

(1) Select “Stake pools”

Go to second icon on the leftmost panel, and then select “Stake pools” tab on top.

You will see all stake pools that are available for delegation on the dashboard.

(2) Search for KOPI

Go to “Search stake pools” and type in “KOPI”.

Click on KOPI to see our stake pool details.

For optimal rewards, always select a pool with low “Cost per epoch” (fixed fee), low “Pool margin” (variable fee), and high “Pledge.

Note that in the first few epochs, the rankings will be randomised. The rankings will only reflect performance (relative to costs and pledge) after pools make blocks for a few epochs.

(3) Delegate to KOPI

Select “Delegate to this pool” for KOPI.

Choose your Shelley wallet and confirm your delegation to KOPI.

Note that your first delegation deducts a 2 ADA deposit for staking rights, while all delegations require a transaction fee of ~0.18 ADA.

It is also important to know that delegations will only take effect 2 epochs after current epoch.

For example:

  • Epoch 0: You delegate
  • Start of Epoch 1: Snapshot taken
  • Epoch 2: Delegation takes effect and Pool makes Blocks
  • Epoch 3: Rewards are calculated
  • Start of Epoch 4: Rewards are delivered
Please refer to the official Delegation Cycle flowchart below
***Note that the starting Epoch for block-making and rewards calculation/delivery has been postponed for one epoch. Now the first date of block-making will be 13 Aug, rewards calculation will be made on 18 Aug, and the first rewards delivery will be 23 Aug.

Shelley Hardfork Day

Short recap of HF day: An SPO's perspective

It’s 5am in Singapore.

Bleary-eyed from just 2 hours of fitful sleep, I trudged to my laptop and tuned into The Cardano Effect’s live show.

Yes, it’s Shelley Hardfork day.

It was good hearing from Charles, and even better to match faces to some of the most diligent and generous stake pool operators from Telegram and Twitter.

Then the countdown came and went. Nothing. The system didn’t blow up. There was an overwhelming sense of emptiness to it. And that is precisely what made the hardfork combinator such an admirable feat of engineering.

Cardano has done it.

Now the mad race to get registered is on!

Earlier I had updated the Cardano build and synced up the databases for KOPI nodes. It took quite a while, roughly 1.5-2h per node. The initial database bootstrap was perhaps the only time raw CPU power came into play for staking. I had also downloaded Daedalus 2.0.0, synced up the chain, and restored my Byron wallet beforehand.

KOPI was primed to go the moment Shelley went live.

From the get go I created a new Shelley wallet, and swiftly transferred over my Byron funds. Then I steeled myself for the ultimate heart-stopping process, the transfer of pool pledge to the CLI wallet.

Why heart-stopping? This is because pledging is not available from Daedalus, Yoroi or any hardware wallets. It can only be performed through a CLI wallet, which is not a HD wallet with seed mnemonics. Just imagine transferring a big pledge to a random string of letters!

(*Tip: Do a trial transfer with a small amount of ADA first, before committing your full pledge)

As a security precaution, the creation of wallet and pool keys were performed offline and subsequently encrypted and stored in dedicated thumbdrives.

The final act of the morning was to submit the pool registration. To be honest, my fingers were shaking a little when pressing enter to submit. This is the culmination of 2 months of practice runs from testnet v1.13.0 to mainnet v1.18.0. Not to mention the many more hours spent reading and learning about everything Cardano.

My relief was palpable when the pool registration went through without a hitch. And switching to Daedalus, it was gratifying to see KOPI registered as the #46 pool in Cardano’s history.

My mantra for the day was “Proceed slowly and deliberately, with extreme caution”. This really kept me in good stead.

Sweaty palms, wobbly fingers and dazed eyes notwithstanding.

Shelley Hardfork Initiated

We are go for the 29th

“We are Cardano. And if you would permit us, we would like to change the world.” – Charles Hoskinson, 24 July 2020.

After going through a pretty long checklist in the final go/no-go meeting with the core team, Charles has made the announcement everyone has been waiting to hear:

“Rocket is on the pad. We are go for the 29th.”

So, barring any weekend testing catastrophe, the long-awaited Shelley hardfork will happen around 2145 UTC on 29 July 2020. A final abort can happen sometime on Monday latest, but this looks incredibly improbable.

Thank you to Charles and the IOHK team for your dedication and hard work. My appreciation also goes out to the Cardano Foundation and Emurgo, and the wonderful Cardano community members and developers who have contributed to the project in one form or another.

The best is yet to be!

Value Proposition

Why Delegate to KOPI

As a pool operator, KOPI’s responsibility to our delegators is to provide consistent rewards.

KOPI would also like to provide the best bang for buck setup to maximize your rewards.

To do so, KOPI needs to:

  • Provide an optimal pledge
  • Minimize operating costs to provide low fixed fees
  • Set a margin that preserves delegators’ rewards

Let’s address these three points in details:

(1) Pledge

The size of our pledge reflects our commitment to both the stake pool and the Cardano eco-system.

In an ideal world, all the stake pools will have as large a pledge as possible, so that the delegators can receive maximum reward.  This is because the larger the pledge, the larger the rewards, while keeping all other parameters constant.

However, this is impractical due to two points:

  • To have a large pledge, the operator must buy the required amount of ADA. Not all operators can afford these purchases. To this end, the Cardano eco-system ends up with fewer small-size operators and more large-scale multi-pool operators. This is unfortunately against the spirit of decentralization and the promotion of small-business operations.
  • The marginal increase in rewards tapers off dramatically with increasing pledge. As an example, the  extra rewards generated by a 2m pledge vs a 200k pledge is visible, but not significant.
Hence, with the KOPI philosophy of decentralization, our stake pool will commit to a comfortable pledge to secure rewards for delegators.
 

(2) Fixed Fees

Fixed fees should ideally reflect the operating costs of the stake pool.

Operating costs include the costs of hardware, cloud-hosting, web-hosting, electricity, broadband, etc.

In the interest of delegators, it is the operator’s responsiblity to minimize costs without compromising on performance.

It will be fun for a stake pool to run the fastest CPU, with the fanciest GPU, until you realize these enhancements add substiantial costs and only contribute minimally to pool performance.

Similarly, it will be technically awesome to run a pool with fifteen relays on all six continents, until you realize it comes with both financial costs and computing costs. And again, its contribution to pool performance is minimal.

Remember that Cardano does not require a computing arms race unlike BTC.

The Chinese saying “不管黑猫白猫，捉到老鼠就是好猫” is particularly relevant here. It does not matter if it’s a black cat or a white cat, as long as it catches mice, it is a great cat!

As long as performance is not compromised, KOPI will use the 80-20 rule to minimize our operating costs and maximize your rewards.

(3) Margin

Margin is the variable fees allocated to operators before rewards are split among delegators.
 
For the delegators, you should want to see minimal margin.
 
For the operators, you can, but won’t, set sky high margins, because free market will decide your pool’s attractiveness.
 
KOPI believes that margin should be a fair reward to operators to compensate for their dedication in running, monitoring, diagnosing, and upgrading their pools. Without stake pool operators, there will not be a secure Cardano eco-system.
 
Moreover, time and efforts are required to write up blog posts, send tweets and in general, keep the public up to date about happenings within the Cardano sphere.
 
KOPI will set a fair and competitive margin to maximize your rewards.

Staking Calculator

Worthwhile to Operate Stake Pool?

IOG has just released its Shelley Testnet staking calculator.

At first glance, we see that reward yield for delegators has gone down quite drastically from ~10% during ITN to ~4.6% for Shelley mainnet.

Although this is widely expected, it will still be pretty disappointing for investors looking for high returns in the crypto space. For perspective, one should note that bank yields globally hover around 0%.

There is no free lunch in the world. The lower returns also make the Cardano eco-sytem more sustainable for the long-term.

One heartening point is that marginal rewards from increasing pledge tapers off quite dramatically (using the start of mainnet settings). Putting up a 200k vs 2m ADA pledge results in a visible, but not too significant yield difference.

While taking into account the issue of Sybil attacks with the introduction of pledges, this does not preclude small pool operators from taking part. I feel that this is important as it’s in line with the spirit of decentralization.

We probably do not want to see FAANG among pool operators!

For more details on the reward parameters settings, please read the blog post “Iterating for growth with IOHK research“.

1.15.1 Shelley Testnet

1.15.1 Shelley Testnet

KOPI has updated its Shelley testnet version to 1.15.1.

Mainnet candidate is currently on hold as the wallet backend will only be available later this week, so it is more productive for us to revert to STN to familiarize ourselves with the new bech32 address format and updated CLI commands.

We are now much more conversant with the process of Cardano build update and pool registration, after building and testing various versions since 1.13.0.

Watching the network topology spreads its reach and interconnects across the world is an amazing thing. The two KOPI relays are represented as red dots in the topology map above, which is rather symbolic since Singapore is also known as the little red dot!

KOPI Software

Software and Infrastructure Configuration

KOPI pool operation is based upon this software configuration:

  • Ubuntu 20.04 LTS
  • Cardano build 1.16.x
  • 1 block-producer node with 2-3 relays (global topology, see diagram below)
  • Firewall for block-producing port
  • Cold keys encryption
  • Grafana dashboard for monitoring & alerts

KOPI Hardware

Hardware Configuration

KOPI pool runs a base-metal server for brewing blocks.

For stake pool operation, the two most crucial components are the RAM and Internet connection. As such, we have apportioned our budget accordingly.

This is our hardware setup, and it costs roughly USD700.

(Please note that as an Amazon Associate I earn from qualifying purchases.)

This hardware configuration is a future-proof setup and should ensure reliable and consistent stake pool operation 24/7.

KOPI Philosophy

Focus on Decentralization

What is the KOPI Philosophy for operating a Cardano stake pool?

This is an important question that determines why and how do we operate a stake pool.

Why we run KOPI

The answer is one word: decentralization.
 

The goal of blockchain technology is to shift the concentration of power and wealth from centralized entities to a network of distributed nodes. Cardano aims to solve many of the world’s teething problems by becoming a new global monetary system.

This is an idealism that KOPI can identify with, and strive for.

Operating a small-business Cardano stake pool ensures that we aid decentralization by being one small but consistent participant in a giant global network of nodes.

To register a stake pool, KOPI is committed to a pledge of ADA. This pledge achieves two important causes:

  • it confirms our beliefs in the technology and potential of Cardano
  • it helps to secure the Cardano network by preventing Sybil attacks
Moreover, Proof-of-Stake protocol ensures that this Cardano global system is ran on the power requirement equivalent to that of a small village.
 
KOPI believes in doing our small part for environmental conservation.

How we run KOPI

With the focus on decentralization, KOPI has decided to run a base-metal stake pool operation.

This means that the stake pool hardware is located physically in Singapore, and not on the cloud or using any form of virtualization.

To do so, we incur the cost of server hardware and forgo the convenience of working on-the-go.

But we maintain the integrity of decentralization. KOPI will continue operating even after cloud hosts and data centers stops working.

The power of a base-metal server, coupled with high speed fiber broadband, means that KOPI ensures optimal performance and 24/7 reliability of our stake pool.