Time periods in Cardano: Epochs, slots, and nominations
The Cardano network has time periods called Epochs that last 432000 slots, and each slot lasts 1 second. That means an epoch lasts 5 days. On average, a pool node is expected to be nominated for block production every 20 seconds, with roughly 21600 nominations per epoch. The active slot coefficient determines this is currently at 5%, meaning that out of all the slots, only 5% will, at most, be eligible for the pool to produce blocks. This is also why the network health is sometimes reported in chain density, and ideally, this number is close to 5%.
For each successful nomination, there is a chance for a block to be produced on the network. Due to randomization and aso pool block production issues, each epoch is usually never 21600 blocks, as can be seen on Cardano blockchain explorers (https://explorer.cardano.org/en where the average hovers around 21000 blocks per epoch. Delays in block production can cause this due to latency issues, wrongly configured time synchronization, or hardware resource issues such as too low specs on memory or CPU power to calculate and report the block on the blockchain in time.
Timing and the delegation process: Delegation certificate, Snapshot, Active stake, and Live stake, rewards calculation, and reward distribution
Delegation certificate
So let us say that we are currently in epoch N — for example, epoch 307 — and you decide to delegate your ADA to a staking pool such as ADA North Pool. Your wallet will generate a staking key with a delegation certificate at the cost of a transaction and a deposit of what is currently 2 ADA.
Snapshot, active, and live stake
Assuming you create a delegation certificate in epoch N, the snapshot of your wallet ADA amount will be taken at the start of epoch N+1 with the value held at the last block of epoch N (in the example, this will be epoch 308). It then becomes the active stake in epoch N+2. The live stake is the amount at any given snapshot you hold in your wallet and becomes the active stake in the next epoch after the snapshot. That means that if you move funds out of your wallet and back in again before the last slot of the current epoch, you will still register with the same amount, or for example, if you buy more ada your live stake will increase and will be registered in the snapshot in the next epoch and become the active stake in the epoch after this.
Reward calculation
Rewards are calculated in epoch N+3, in the example, this would be epoch 310. That means rewards are always calculated for the previous epoch. It will be based on such factors as blocks produced by the pool during epoch N+2 (the active stake period). The overall reward pool that is distributed will also be influenced by factors such as transaction fees collected during the epoch on the network. The pool will also collect fees before rewards are distributed. It is important here to know that there is a minimum fee of 340 (pools can choose to increase this but never under the minimum fee parameter) ADA is a cost spread out over all delegators of a pool, and also there is a % fee that each pool will deduct from each delegators reward.
Reward distribution
Rewards are distributed at the start of the epoch after rewards calculation (technically at the end of the last block of the rewards calculation epoch), so N+4 or. This means, at most, you will wait 20 days from delegating stake to your first rewards. In this example, this would mean epoch 311. Keep in mind these are the rewards for the stake that was active in epoch N+2 (in this example, epoch 309). These rewards are automatically part of the delegation of the wallet, but you will need to claim the rewards in a transaction to send them from your wallet. At this point, you will keep receiving rewards every epoch as long as you have an active stake amount.
This text is intended to inform and is not an investment recommendation.
As a seasoned Cardano enthusiast with a deep understanding of the intricacies of its blockchain protocol, I can provide a comprehensive breakdown of the concepts discussed in the article on time periods in Cardano, specifically focusing on epochs, slots, and nominations.
Epochs and Slots: Cardano operates on a time structure defined by epochs, each lasting 432,000 slots, with each slot lasting 1 second. Consequently, one epoch spans five days. This time division is fundamental to the functioning of the Cardano network.
Nominations and Active Slot Coefficient: Pool nodes on the Cardano network are expected to be nominated for block production approximately every 20 seconds, resulting in around 21,600 nominations per epoch. The active slot coefficient, currently at 5%, determines the maximum eligibility of a pool to produce blocks within all slots. The network health, represented by chain density, ideally hovers around 5%.
Block Production Challenges: Despite the theoretical nomination frequency, the actual number of blocks produced in an epoch can deviate due to randomization, latency issues, misconfigured time synchronization, or hardware resource constraints such as insufficient memory or CPU power.
Moving on to the delegation process, several key concepts play a crucial role:
Delegation Certificate: When delegating ADA to a staking pool like ADA North Pool, a wallet generates a staking key with a delegation certificate, incurring a transaction cost and a deposit of 2 ADA.
Snapshot, Active Stake, and Live Stake: The snapshot of the wallet's ADA amount is taken at the start of epoch N+1, using the value held at the last block of epoch N. This becomes the active stake in epoch N+2. Live stake, on the other hand, is the amount at any given snapshot in the wallet and becomes the active stake in the next epoch after the snapshot.
Reward Calculation: Rewards are calculated in epoch N+3, based on factors such as blocks produced by the pool during epoch N+2 and the overall reward pool, influenced by transaction fees collected during the epoch. A minimum fee of 340 ADA is spread across all delegators, and pools deduct a percentage fee from each delegator's reward.
Reward Distribution: Rewards are distributed at the start of the epoch after rewards calculation (N+4). Claiming rewards requires a transaction, and these rewards continue to be received every epoch as long as there is an active stake amount.
In conclusion, the Cardano blockchain operates on a sophisticated time structure, and understanding the nuances of epochs, slots, nominations, and the delegation process is crucial for effective participation and maximizing rewards within the ecosystem. This information is intended for informative purposes and not as investment advice.
