It is not easy to predict how much any of the stakeholders will earn. We have some guesses based on the information we have, the current state of the platform, and our previous staking experience, and we can share that here.
First of all, it heavily depends on whether the staking pool you joined is competitive with the other pools or not. A staking pool needs more stakeholders to have a higher chance of winning rewards. Let’s see an example from the Cardano network.
Due to that fairness factor for choosing worker nodes, a staking pool shouldn’t have too many coins in it. It shouldn’t have more than 1% of the total coins staked on the network, simply to avoid becoming “saturated”. It’s a constraint imposed by the Cardano network protocol. The original authors of the protocol didn’t want a single pool to have a majority of the network coins staked in it, because that would again make the network centralized. Instead, staking pools that have more than 1% of the total network coins staked in it, automatically get chosen less often for work and rewards. From our point of view, we need to run a stake pool with enough coins to make it competitive with others, but monitor the situation and expand our operations to other pools as needed, to avoid becoming saturated.
An important factor in earnings calculation is the amount of coins that you stake from your wallet. As of Q3/2020, the average reward rate for staking in the Cardano network is around 5-7% of your stake per year. We have a currently valid example.
If you have 1000 coins staked, you should get an average of 50-70 reward coins in a year. If you have 10.000 coins staked, then you get 500-700 new coins per year, proportionally. The interesting factor here is the growing price of these coins on the market.
The happy example
As a very lucky (and real) example, let’s imagine that the coin’s market price is $0.01. You could get 100 coins for $1. If you stake all of them into the network to gain rewards, and assuming a lucky 10% interest rate in one year, you would have 110 coins by the end of the year.
But what if the coin price jumped from $0.01 to $0.5 during that year? That’s a 50x increase over the initial investment price. With crypto-currencies, and especially with Cardano’s Ada coin, this is very much possible (and it has happened before). It’s difficult to predict, and very lucky, yes… but absolutely possible, as the all time high price was 1,33$. Now, assuming that this happens, if you decide to withdraw your coin after one year, you would have: 110 coins × $0.5 = $55. Compared to your $1 investment, you get to take home 54 times more money. Now imagine you staked $100! And not only that, but you also helped the blockchain network run for a year, building our decentralized future.
Remember: with Cardano, you can always pull your stake and sell your coins. From the perspective of simply joining a staking pool, there is zero risk, there is no huge electricity bill to pay at the end of the month. Your coin is always available to you, and we don’t impose any upper limits on earnings in our pools. Just make sure to check the coin price regularly and account for market fluctuations, your investment will be fine.