The Guide
Please follow tutorial below which will show you step-by-step how to participate to our staking pool. In few simple steps you should obtain ADA, create your own digital wallet and stake with Vivid Pools.
What is blockchain?
Don’t Trust, Verify
Blockchain is a decentralized, immutable database(ledger) that records transactions. All transactions can be transparently viewed by either having a personal node or by using blockchain explorers. The idea behind is that every transaction needs to be approved by the majority of network participants before adding into the blockchain.
The blockchain technology made it possible to create a Bitcoin cryptocurrency. The key role plays here blockchain immutability. This feature prevents anyone from amending the total number of circulating bitcoin without approval of the majority of the network participants. Otherwise a central authority would be capable of creating(print) more bitcoins ignoring opinions of all other network participants. Wait a minute is it not what FED is doing, right?
Let’s say that half of the country's population “A” thinks that the presidential election has been frauded. In the roots of this diversity lies a lack of trust for governments. This problem can be easily solved by using blockchain technology to create a voting mechanism. As the information saved into the blockchain is immutable, it would prevent any attempts of cheating as the majority have to decide which information is true.
This explanation is quite simplified. It was created to help you get familiar with the basics. For more information we strongly advise you to do your own research
What is a block?
Blocks are records, which together form a blockchain. Each block contains information about transactions which need to be executed. You can think of a block as a single ledger page while a ledger book is the blockchain.
What is a cryptocurrency?
Cryptocurrency is a digital asset designed to work as a medium of exchange wherein individual coin ownership records are stored in a blockchain using strong cryptography to secure transaction records, to control the creation of additional coins, and to verify the transfer of coin ownership. Cryptocurrencies typically use decentralized control(blockchain) as opposed to centralized digital currency and central banking systems.
What is a coin?
It is the native digital asset of the blockchain network.
- for Cardano blockchain native asset is ADA
- for Ethereum blockchain native asset is ETH
- for Polkadot blockchain native asset is DOT
- etc.
What is a token?
Tokens are the assets which are built on a top of other protocols. You can think of Cardano as a protocol and all different assets created on the Cardano network as tokens. Most of the protocols use smart contracts to create tokens.
What is a Proof of Work?
Proof of work (PoW) is a type of consensus mechanism used in blackchains. The nodes connected to the network have to solve a very complex cryptographic puzzle in order to add the block into the blockchain. The first node to successfully solve that puzzle receives a reward from the blockchain network. Because of this, nodes compete for the opportunity to become the first and receive the reward. The people who try to solve these puzzles are called miners. The example of a PoW blockchain is bitcoin.
What is a Proof-of-stake?
Proof of Stake (POS) is a type of consensus mechanism used in blackchains. It aims to replace proof of work and improve on some of its downsides. It allows network participants to stake their coins instead of committing computing power in order to add the block into blockchain. Next block creator is chosen randomly based on the amount of coin he/she stake. In contrast to proof of work (PoW) blockchain it doesn’t require a lot of energy to provide consensus between nodes.
What is a stake pool?
Stake pools are run by a reliable operator with the knowledge and resources to run the node on a consistent basis. Coin holders can delegate their coins into stake pools if they do not wish to operate a Cardano network node themselves. The more coins are delegated to a stake pool, the greater chance it has of being selected as a slot leader. Each time it is selected and produces a block that is accepted onto the blockchain, it is rewarded, and these rewards are shared between the stake pool operator and stake pool delegators. You can think of reward as an interest rate paid every 5 days. The stake pool operators take a little fee in order to run the stake pool. In our case it’s 2.9% from the reward paid for stake pool.