When staking your ADA with a pool you might see some different numbers as far as your return on ADA (ROA) is concerned. There was a time, it felt, for a while where most people were talking about 4-5%. Then over time people seemed to say between 3% and 4%. A quick search on the interwebs today, looking at the first result, shows 2.87%. What gives? Why is it changing? It’s the percentage locked?

Let’s look into some of those questions.

Does ADA have a fixed return or not?

No. While many sites, pools, and exchanges will advertise a return of x percent, they don’t guarantee that and can’t.

Why does it change?

The short answer is that it depends entirely on if the pool you’re delegated to mints a block, how many they mint, and how often they can do that every epoch.

The long answer…

When you go to an explorer to see what kind of rewards a pool is giving, they usually don’t tell you how they calculated that number. I was looking at pooltool.io recently, and they seem to use a couple different calculations. When exploring the blocks for PREEB there are epochs that shows 0%, 1.4%, 4%, and so on. Each of those percentages are calculated as follows. We’ll take epoch 496 (which is pretty recent at the time I’m writing this). PREEB minted 2 blocks with a 1.2 million ADA stake – thanks to your beautiful souls for delegating – and was able grab 669 ADA in rewards for delegators. This is shown as 4.03% ROA. Basic math tells me that this is not true. This has been annualized and computed basing every epoch being the exact same, which it’s not.

The math is roughly 669 / 1,200,000 * 73 * 100. This is delegator rewards / total stake * number of epochs in a year * 100 … because math. So that 4.03% is kind of a lie estimate since we know that each epoch can be vastly different.

Oddly enough there was one epoch not long ago that PREEB shows as 392% ROA – epoch 450, where an incredibly lucky block was minted with just just 13,000 ADA in total stake.

All these contribute to how explorers list a pool’s lifetime ROA as well. The last dozen or so epochs has PREEB at 2.78%, which is a much more realistic number based on real rewards with a consistent stake level, epochs with zero blocks, 1 block, and so on. The great thing is that as we get PREEB closer to 3 million ADA in delegation, those zero block epochs kind of fizzle out and become much more rare and that 4% starts to become the norm.

What happens at 3 million in total stake?

Big plans are being laid for the day we can be consistently at 3 million stake. I’m building out a discord server, learning how to configure the Farmbot drip mechanism, working with more artists on an NFT collection for delegators, and figuring out how to put more ADA in your wallets.

Thank you

If you delegate to PREEB, I just want to say a great big thank you to you! Come by the discord server, get verified, and get rewards.