In a live AMA session led Cardano’s senior product manager David Desser, the company’s team revealed that Shelley’s incentivized testnet staking/staking pools would begin soon, with cold wallet staking to follow the testnet.
Cardano is set to launch the incentivized testnet for Shelley. Unlike a traditional testnet, which is a closed-off sandbox environment, the Cardano incentivized testnet uses real incentives in the form of staking and delegation rewards to drive network stability/participation. EIn Shelley’s incentivized testnet, the company will be able to see how rewards are received by people on the network.
Esser explained, a snapshot of the entire Cardano blockchain will be taken in order to determine the number of users and the amount of ADA on it. Users who keep their ADA on hardware wallets can transfer their funds to either Daedalus or Yoroi wallets before the snapshot and then return them to cold storage after the snapshot is completed. This will enable all users who want to participate in the testnet to have all of the ADA they have in real life mirrored onto the testnet.
While the ADA mirrored onto the testnet won’t be spendable, all of the ADA users earn by either staking or delegating in the testnet can be pulled back into the mainnet. The rewards earned in the testnet won’t transfer to the mainnet automatically, but it is said that Cardano developers are already working on a procedure that would allow users to manually import their rewards.
This, Esser said, is the best way to motivate users to participate in the network.
Staking Pools, Incentive Model & Rewards, Cold Wallet Staking
IOHK, the company behind Cardano, the Cardano Foundation, and its venture arm Emurgo will all be running their own staking pools in Shelley’s testnet. While Esser said there was no specific plan set in place on how these large entities will delegate their ADA, their intent isn’t to compete with other stake pools on the network.
Cardano’s team explained that the size of the stake pool doesn’t matter in Shelley’s incentive model, as the incentives themselves are designed to achieve more decentralization. Namely, the testnet has a parameter in place that optimizes the rewards so that they don’t increase for large stake pools. This, Esser said, creates motivation for smaller, unsaturated stake pools to participate in the network. While the testnet can support around 1000 stake pools, the team said that a more realistic number is between 200 and 300.
The staking incentives the pool will get will not depend on the amount of ADA it has and the percentage return will be the same for everybody. While no exact percentage has been set yet, Esser said that it will most likely be close to 12 percent. This will allow Cardano to compete with other blockchains that offer staking. However, there will be no place for confusion as Cardano plans on introducing a projected performance calculator. What this means is that all users will be able to choose stake pools based on how well they’re expected to perform.
Users will also be able to delegate their ADA to more than one staking pool. Di Prima explained that this could be beneficial to people who hold large amounts of ADA, as they would be able to spread their funds and maximize their potential for profit. However, rewards will most likely diminish over time, Esser told a user but added that Cardano currently had no plans on how to do it.
When the Shelley testnet finishes, users will also be able to stake from their cold wallets (ledger nano s), Esser said. However, it won’t be possible during the testnet.
The team also confirmed that the phase 3 of the incentivized testnet will roll out next month, as IOHK founder Charles Hoskinson promised, and that a special version of crypto wallet Daedalus will be released for the testnet.