Your Cardano coins (ADA) are already safely stored in your own wallet and you are ready to delegate. You look at the list of stake pools in Daedalus but do not understand all the variables. Well, you’re in luck as today we’ve made a quick and easy summary for choosing a Cardano stake pool.
There are lots of statistics and factors that can be considered but we want to make it simpler for new delegators so we stuck to the basics.
There are really only 2 major reasons for people to select stake pools: 1. To make money and/or 2. To help a cause. Read on as we look at how you can select based on these reasons:
1. To Make Money
This is probably the main reason that most people have in mind when selecting a stake pool. Of course you want to make money! The quickest way to select a pool based on this motivation is to look at the return statistics of the pool you are looking at. This is either called ROI (Return on investment), ROA (Return on ADA) or ROS (Return on Stake). I like to call these the Return variables. You can find them in most popular Cardano explorers like Adapools.org and Pooltool.io. Bottom line is, all these statistics point to how much you are estimated to earn. Assuming there are no major changes to the stake pool (e.g. sudden increase/decrease in delegation), this number is a good indicator of how much you are expected to earn. All the other statistics like fee, pledge and saturation are additional factors which we can discuss in future blogs but if you are just interested in knowing how much you will earn, just look at the return variables.
Most people can just stop here. But is earning money for yourself the only reason for investing? What if it was possible to earn money while supporting a cause you believe in? That is described in the next section.
2. To Supoort A Cause
Seldom do Cardano holders buy ADA with the intention of supporting a cause. Nevertheless, there are a number of stake pools out there that support various charities from educational scholarships to environmental causes. Some of these mission driven pools are already successful with millions of delegators so you won’t even lose out on rewards if you stake with them.
Unfortunately, a lot of these mission driven pools are small and could not attract and maintain delegators due to their size so you may have little or no rewards if you delegate to them.
If you have a large wallet however, it would really make a difference if you delegate to a small pool. Not only can you get potentially greater rewards, your large delegation will attract others to delegate to the pool— potentially making it into another successful pool.
You now know how to choose a pool that can maximise your earning potential. You can stick to that strategy but I suggest you add delegation to mission based pools in your portfolio. If you’re afraid of losing out on rewards due to inconsistency, make a new wallet with part of your funds and use that to delegate to cause based pools. If you do this, you will be helping a good cause, helping to decentralise the network, and reaping rewards at the same time!
If you like this article, please consider delegating your ADA to WISH Pool. You will be earning interest rewards while indirectly helping the lives of disadvantaged children. This is because at WISH Pool, you get 100% of your usual rewards while we pledge to give at least 10% of our own profit to educational charities. In this way, successful students will be able to take their families out of poverty.