Why are Cardano staking rewards decreasing, slowly going down

A lot of Cardano delegators are wondering why their rewards are not where they used to be, but are getting lower and lower over the years, months, epochs…

That is why we wrote this article explaining the reason and logic behind this.

Your instincts are correct. This is how Cardano protocol is designed. But why is that?? Well the reason lies in the supply and demand.

Fixed supply

Therefore there is only 45B tokens and that is the law. The supply will never change (immutable).

So how are the Cardano rewards paid out? Well there is a predefined fixed part of that supply that is reserved for the rewards. We could call that the rewards pot.

*This is roughly true although the rewards pot can get some Cardano from the fees paid from the transactions. Given that this is such a small part of the pot we could neglect that variable for now and just say that the pot for rewards is fixed.

You could say why not just get all the rewards from the fees? Well it turns out having a predefined fixed rewards pot is a nice way to boost the adoption at the beginning, start of the adoption curve.

The reward pot

Halvening

Cardanos’ half life

What is the advantage here is that it is not as shocking and is more predictable for the users.

One minor disadvantage is that the users do not know this and maybe don’t even notice it in a small period of time, but notice it on a larger scale. That can result in thinking their selected pool is not working as it should.

Of course with discrete rewards halving you will notice this right away and probably google what happened.

The demand size of the equation

About

Providing secure staking rewards for institutions and individuals. Delegate & Forget.

Let us know if you find any mistakes.

Happy staking,

AdaPointPool
https://adapointpool.com
info@adapointpool.com

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