Cardano (ADA) is a third-generation open-source PoS (Proof of Stake) blockchain to build and run smart contracts and other decentralized protocols. It was launched in 2017 by Charles Hoskinson who is also the co-founder of Ethereum. Cardano addresses the scalability, interoperability, and sustainability issues of Ethereum just like Polkadot, Cosmos, Polygon, etc. Cardano team has followed the strategy of peer-reviewing by industry experts (academic scholars) at each stage of development. If you want to know more about the basics of Cardano, please check out this guide by 
In this blog, we will look at the key components of Cardano Blockchain and how it works. Let's get started!
Cardano Blockchain works on a Proof of Stake (POS) consensus protocol called Ouroboros. As compared to Proof of Work (POW), POS is environment-friendly and provides fast transactions at a small cost. Ouroboros was custom-made from scratch by Cardano's development team. It uses mathematics based on peer-reviewed research to provide a provably secure protocol that is permissionless and aids the distribution process on a global level.
The goal of every blockchain is to create blocks that contain verified transactions. Cardano blockchain currently uses the Ouroboros Praos protocol which has been developed over time since the project's inception.
Ouroboros divides time into Epochs. Each epoch lasts 5 days and consists of a number of slots. Each slot lasts for one second. Hence there are 432,000 (5d x 24h x 60m x 60s) slots per epoch. On average, one Cardano node (block producer) is expected to be nominated every 20 seconds which gives a total of 21,600 nominations per epoch. Out of these nominations, a slot leader will be selected randomly and their blocks will be added to the chain. The rest of the block producers will be rejected.
Cardano network has a number of stake pools that control ADA owned and staked by various different stakeholders. Any ADA stakeholder can also delegate their staked ADA to another stakeholder since you cannot expect everyone to be online all the time to produce blocks continuously. Please note that you can remove the delegation anytime since you still hold the rights to your stake. Delegating it to other stake pools will only let them use it on your behalf.
Stake pools ensure the availability of the network round the clock since they commit to producing blocks and are available online most of the time. As we know that Ouroboros is a proof of stake protocol, the probability of getting selected as the slot leader is proportional to the ADA stake owned by a particular node in their stake pool.
Slot leader's job is to check the validity of each transaction based on the data provided by the sender. Each transaction costs a minimal fee and if the sender has sent enough funds to cover it, the transaction will get included by the slot leader in their next block once all parameters are met.
Unlike PoW which uses hashing power, Ouroboros uses the power of stake that promotes decentralization in a better manner and also provides mathematical security in choosing block producers. It's efficient, scalable, sustainable, and environment-friendly too as compared to Bitcoin and Ethereum.
Cardano鈥檚 blockchain architecture has two main components in the form of layers. Both of these have different purposes:
These layers are kept separated from each other to account for more flexibility in case there is a need for development in the future.
Cardano staking comes with an amazing feature where you can delegate your ADA stake to "Stake Pools" and earn a passive income in the form of ADA coins. As explained in the above section, StakePools are reliable nodes that participate in block production and helps stabilize the network. The best part about delegating your stake is that you still have full ownership of your funds and delegation can be removed from stake pools anytime.
The staking feature on Cardano was launched in July 2020, there were ~13.8 billion ADA reserved as stake incentives. Each epoch (5 days) the protocol distributes 0.3% of this total reserve pool between all active Cardano Stakeholders. These rewards also auto compound and grow the stake exponentially over time. You can also stake Cardano on exchanges and other DeFi platforms. In this blog, I will discuss how to Stake Cardano using Daedalus Wallet.
Yoroi Wallet is an open source software wallet for Cardano. It is available only as a PC (Microsoft Windows/Linux) and Apple Mac application. There is no mobile application available. There is another wallet called Daedalus which is a full node wallet. It downloads the full copy of blockchain in your system and can be used to create Stake Pools. Yoroi is a lighter version of Daedalus and hence we are going to explore how we can easily delegate ADA to Stake Pools using Yoroi wallet:
Step 1: Download Yoroi's browser extension from Chrome Web Store, install and open. Once your are done with the initial setup, you will see the below screen:
Step 2: Click on "Create Wallet" and setup your spending password. In the next screen you will see your seed phrase. This will be used to recover your wallet account. Don't lose it ever! Once you are done, the first screen you are going to see is of your Dashboard which gives you the information about the Total ADA you hold in your wallet or delegated to StakePools and also the total rewards. Right now you are seeing zero because I haven't transferred any ADA to my wallet. Less than you expected? ;)
Step 3: Go to "Recieve" tab to access your wallet address where you can send your ADA from exchanges like Binance and Coinbase. Or maybe ask anyone to send you ADA ;)
Step 4: Once you have ADA in your wallet, go to Delegation List Tab to see the available stake pools where you can delegate to earn rewards. Please note that some stake pools charge fees to receive delegation. The fees varies from pool to pool.
Private keys associated with users wallets are stored only on a users computer and they are encrypted with the wallet password. They are not stored on centrally hosted servers. ADA staking is pretty simple and straightforward. The only risk is that you might lose your keys but that is the case with all cryptos. Not your keys, Not your crypto! I hope this blog helped everyone understand how Cardano Blockchain works and how to stake Cardano. Please let me know your thoughts in the comment section below.
@crypto-guides?It's an initiative by 
You can earn crypto (LEO) by contributing to the latest guides about crypto. Learn more: @forexbrokr/introducing-leofinance-crypto-guides
