Cardano provides new details on how users will earn Ada through staking pools

As Cardano transitions from Ouroboros Classic to its Ouroboros Genesis consensus algorithm, staking functionality will be enabled for general users, and with it, opportunities to earn interest on Ada holdings.

Cardano recently revealed more details about how its staking pools will work.

Read on to prepare for staking on Cardano before its implementation in the protocol's Shelley update.

Stake pools allow pool users to combine their staking powers and stake as a larger entity.

This allows stakers to minimize variance in receiving their rewards-so instead of randomly getting chosen every 10 days, for example, they can receive a steady stream of rewards instead. There is no minimum amount of ADA that users can stake, but if they wish to become stake pool owners they must have enough funds to pay for transaction charges.

Buying ADA increases user stakes, but even when staking power is delegated to a staking pool, users remain in possession of their ADA in their wallets.

This forces pool members to either find a new pool to invest with or create their own staking pools.

To help investors, Cardano has a built-in pool-sorting mechanism designed to aid investors in finding suitable staking pools.

The good thing though is that users can always re-delegate their stakes to another pool at any time-thus aligning the incentivizes for delegators, staking pools, and ultimately the network.

There is no specific release date for the update to staking pools on mainnet.