1

You surely have heard a lot about staking pools and delegation

Let's take BitCoin for example. It relies on a consensus mechanism called Proof Of Work (POW) in order to secure the network, this specific method requires a lot of calculus in order to be able to write a block (or let's say page) in the ledger's record, this is due to the mathematical problems each node validating transactions has to do in order to be able to write the next block in the blockchain. It is an expensive but yet effective method to deter malicious players into infiltrating the network, but this creates a new sort of problems, such as centralization of the nodes responsible for writing the new blocks of transactions, where only the big players can participate in the network and with all of this big calculus rigs comes energy consumption. As you can find in this article about this energy consumption issue:

The PoW mechanism requires a vast amount of computing resources, which consume a significant amount of electricity. Bitcoin's energy consumption can power an entire country.

In the wild, there are a lot of mechanisms for proving that a block is written in the right way so that malicious players cannot tamper with the transactions to their advantage, such as (the famous double-spending attack).
Cardano, on the other hand, uses another consensus mechanism, called Proof of Stake (POS) . This consensus method doesn't require huge amounts of calculus in order to prove that a transaction is valid, the code embedded in the protocol used by it (Ouroboros) determines who will write the next block of transactions through a pseudo-random selection (I say pseudo-random for simplicity of explanation, if you want to know in depth, go check the protocol's papers) favouring the nodes that have "staked" something, in other words, the node has put the skin in the game, the more the node has something at stake the more likely it will be chosen to write the next block of transactions.

The node operators put at stake the equipment, the know-how in order to maintain their rigs, and a pledge, which are some funds belonging to the node operator, these funds are blocked for the purpose of putting more skin in the game but... That's not enough in order to make them eligible for writing blocks to the distributed ledger. They need rights to vote!!! Power given by the masses! That's where delegation comes in...

2

And now... Delegation

When someone delegates their ADA, THEY ARE NOT GIVING AWAY THEIR MONEY, delegation is not about trusting your funds to someone else, this is your one responsibility, I want to make that very clear to you. And I also want to make very clear that YOU MUST NOT ACCEPT ANY MESSAGE THAT CLAIMS ANY RELATION WITH THIS POOL EXHORTING YOU TO SEND YOUR FUNDS TO A WALLET OR TO SEND FUNDS TO POOL OR TO ME, THAT'S A FAKE MESSAGE FROM SOMEONE WHO WANTS TO STEAL YOUR FUNDS.

In the Cardano network each and every ADA is a ticket, like a lottery ticket, each "coin" has not only it's monetary value but it has also a vote power, when you delegate your ADA you are not blocking your funds, you can still use your funds as you please, what you are doing is like saying:

"Hey I'm betting that this operator will be a chosen node, one that will get elected to write the next blocks, so I'm supporting this guys/guys/company/corporation.

I'm giving my vote power to them, if they win the elections, they will write the next block or blocks of transactions and I'll get some rewards out of that".

And what happens if the pool you chose wins the elections? Well, as happens with any other cryptocurrency that the operator (aka miner, minter) receive a compensation from fees out of transactions, if a pool gets to be chosen to create a new block (hence mint) when the block is registered, the pool will be rewarded with all of the transaction fees of that block or group of blocks, then a fee will be applied to that total reward's amount, the result of that last fee will go to the node operator, which is usually a low fee, ranging from 0% to 6% most of the times, this fee will serve as reward for the pool operator with that he can cover the costs related to the operation of the node. The remaining 94% - 100% of the rewards (depending on the operator's fees) after the pool operator fixed fee will be distributed among all of the people that gave their vote power (or delegated) their ADA to the pool following some rules established by the protocol, I cannot explain everything here because is complex as there are a lot of factors involved for determining how much will go to the delegators, but I know a fraction will go to the Cardano treasury and this funds will serve for funding development, more or less the Return Of Investment so to speak will go around 5% per year to delegators, more or less.

You might be thinking, if you inject a lot of resources (equipment, advertising, prestige) as a pool operator, wouldn't end up as for BitCoin? Wouldn't end up that a few people run and dominate the network? Yes, it could, but the protocol has its way to prevent this from happening, each node has a "saturation point" where the rewards will be capped if they get "saturated", which means that for that saturated node the rewards won't be as high as for the pool with few delegators that won the lottery for writing the next block or blocks. This is made this way to incentivise decentralisation, otherwise the Cardano network will be another BitCoin or Ethereum so to speak. This should keep the greed out the whales and let everyone else participate.

3

What are staking pools

Staking pool are us, the nodes, each node or as I would call them, a cell. Are the server(s) that keep track of transactions. Why I say servers? Well, it's because a node is not just a single computer but at least two of them. Usually. One is the relay node which is the one with which your wallet software and other nodes communicate and behind that there is the block producing node. This one really needs to be protected, the risk here is for the operator not for the delegators, delegators don't put their money at risk, the node operator does, operators put a pledge, some funds that come from the operator's pockets are to be frozen, it's not necessary to have a pledge in order to run a node, but seeing a node with a pledge amount declared, it's a message to everyone letting know that the node is in there for real business and not a spun up node by a bot or some malicious agent wanting to harm the community.

4

What motivated me to set up a node?

Before stumbling with Cardano I became interested on BitCoin and studied it for about a year or so, I think it was the end of 2019, it's the first and proven cryptocurrency technology, so I wanted to know what it was all about, how did it work (up to some extent), moved by curiosity, why people where using it as store of value and all that stuff, is has been around for more than a decade and is still around, it has gained a lot popularity lately, mostly after the first round of the pandemic and the consequential money printing that governments made in order to make up for the monetary loses to the economy, I started to play around, buying some, making transactions and learning first hand how it worked from the user's point of view. Then I became interested in the network, the decentralisation part of it, but I couldn't start with BitCoin because in order to be a useful player you need a lot of resources up front, then I stumbled upon Monero and been for a while online with my personal computer, if was fun and I was contributing to the network too but my computer later on was getting behind the network, blocks weren't syncing, and I never mined a single block! But I learned a lot!

I wanted to participate in a project where you could help the community but without all of the power required in Proof of Work consensus mechanisms, Ethereum was starting to launch its Proof of Stake but you needed to have 32ETH.

Does the average Joe carry around 32ETH to spend just like that? I dont know, what I do know is that don't have not even close to 1ETH, so I quit the idea... Very disappointing though. That's when I learnt about Cardano. I documented myself on the cryptocurrency and I became very interested on the creator's claims that talked about the nodes entanglement. This entanglement would allow the network to process transactions faster. Cardano didn't need all of the computational power that other cryptos required and I so decided to jump in so I finally could contribute to the community and help speed up the network.

5

Why choose Tapioca for delegation?

This pool is set up and maintained by an IT guy with experience in SysAdmin, DevOps and programming. That wasn't a joke at the at the beginning of the page, this in one man show, this is not run by a company, nor some organization. I've put a lot of work and dedication to this, and I enjoyed the journey, but I can't say that it was a piece of cake..

So if you can help the pool with your vote, we'll help each other at the end, as a small percentage of the pool's rewards (2,5%) will serve for keeping the node running and the remaining percentage of the rewards (the 97,5%) will be divided following the protocol's rules benefiting the people who bet on this pool. The network at the same time gains strength and speed.

I see it as a win for all. Cheers and thanks for stopping by!