Shelley arrived on 29th July, at 21:44:51 UTC, with a hard fork. This is the moment when Shelley ‘comes alive’ on mainnet, introducing features such as stake pools, delegation and rewards, opening up a new era of decentralization for Cardano.
This is an incredibly exciting time. We know the delegators must be having a lot of questions around the hard fork, and what it might mean for them. Especially around staking, rewards, delegation, the safety and security of your funds, etc.
So we put here answers to some of the important questions as mentioned in the official cardano forum.
BACKGROUND…
Q: What is a ‘hard fork’? A: In simple terms, a hard fork is the introduction of any significant alteration to the core code of a blockchain protocol, rendering any transaction record before it incompatible with the hard forked coin. Now, if this is done carelessly or without planning, it can cause issues. However, Cardano is using technology specifically designed to smoothly run a managed hard fork, ensuring that no separate chain is created (the negative connotation with an unmanaged hard fork) and thus avoid compatibility issues.
Q: When will the Shelley hard fork take place? A: At 21:44:51 UTC on July 29th.
Q: Do I need to worry about the hard fork? A: No. The process is fully managed. Just keep your ada safely in your favorite official wallet in your exchange account through the process. There will be no chain split and no token swap or similar.
Q: Why are we doing this? A: Shelley is a very significant upgrade to Cardano, bringing a new architecture and entirely new features and functionalities. Any significant change to core blockchain protocols and components (which are not backwards compatible) requires a hard fork.
Q: Does the hard fork create a new coin/token swap or involve any kind of airdrop? A: No. This is a managed evolution and enhancement of the Cardano software platform, with no change to the existing coin. The chain will evolve seamlessly from Byron to Shelley, and beyond.
Q: So… if the Shelley Hardfork occurs on 29th July, when will this actually take effect on the network? A: Immediately afterwards. The outcome of the hard fork is that the Cardano mainnet will be running Shelley. This means that stake pools will be able to start to register on-chain and (shortly after) be visible to delegators, and that delegators will be able to delegate to registered stake pools. See the rewards section below for more on this. Due to the epochal nature of the Cardano blockchain, however, some information might not be immediately visible (e.g., certain stake pool attributes and performance metrics in Daedalus that require at least one epoch to be gathered and therefore displayed in the UI).
WHAT DO I NEED TO DO?
Q: As an ada holder, what do I need to do for the hard fork? A: The short answer is… nothing. However, the hard fork may temporarily affect your ability to deposit or withdraw ada if you are holding it on an exchange (don’t worry – your ada is perfectly safe and you do not need to withdraw it from the exchange before the hard fork and then deposit it again). If you are holding your funds on an exchange, your ada will become available as soon as your exchange has completed the upgrade process of their infrastructure to be Shelley-compatible. If you are currently keeping your funds in Daedalus, all you will need to do is download the new version of Daedalus for Shelley mainnet once we release it. Your existing ada funds will remain in your wallets. Those wallets will be marked as ‘legacy’ Byron wallets so you will need to create a new Shelley wallet and just move all of the funds there. The Daedalus user interface will guide you to do this using the migration feature. For Yoroi, please check official EMURGO social channels for the latest status update.
DELEGATION & REWARDS
Q: From the point of delegation, how soon afterwards will that stake be delegated to a pool?
A: The system takes a stake distribution snapshot at the beginning of every epoch (there is no delegated stake at the very start of epoch 0, of course, so the initial snapshot will be empty). After stake is delegated, it will be recorded in the next snapshot, and that snapshot will determine the leader schedule and rewards not for the epoch that is just starting, but for the one after that.
So, if you delegate in epoch 0, your delegation will be included in the stake snapshot that will be taken at the boundary between epochs 0 and 1. That snapshot will be used to determine the leader schedule and rewards for epoch 2, and so on. Here’s a pictorial view.
Q: How soon after will I receive any rewards?
A: The rewards for an epoch are calculated during the epoch after the stake delegation has been used, and then distributed at the start of the epoch after that. In the example in the visual on this page, where you delegate during epoch 0, the pool that you delegate to will use your stake to produce blocks during epoch 2, rewards will be calculated during epoch 3, and you will get rewards at the start of epoch 4. There will therefore be an initial delay before you receive your first rewards, but you will then receive rewards for every subsequent epoch (assuming the pools you have delegated to perform as they should).
DELEGATION & REWARDS
Q: When will I be able to start delegating and staking on the Cardano mainnet? A: Ada holders will be able to choose and delegate to a stake pool as soon as they are registered and become visible on-chain.
Q: What rewards can I expect from delegating and staking? A: The actual amount of ada received in rewards will vary, depending on a number of factors, including the actual stake pool performance. Changes to network parameters could also affect rewards. We’ve created a staking calculator that you can use to give an estimate of the rewards you might expect.
Q: If epochs remain at 120 hours (5 days), when will people start receiving mainnet rewards? A: Using the 29th July as the date for the hard fork;
People will be able to delegate during epoch 0 (July 29 - Aug 3). Please note that ITN rewards will not be available for delegation during epoch 0
The first stake distribution snapshot will be taken on Aug 3 (at the transition to epoch 1)
Blocks will be produced by pools during epoch 2 (Aug 8 - 13)
The rewards will be calculated during epoch 3 (Aug 14 - 18)
Rewards will be distributed at the end of epoch 3 (Aug 18)
By that time, four Shelley epochs (20 days) will have passed. This assumes that the transition happens on July 29 and that the update proposal has been posted, accepted, and endorsed prior to that.
Q: On the rollout plan, August 18th is listed as the ‘first-day staking rewards’ – is this the first day that ada holders can access rewards, or when they start accumulating? A: See the timetable in the visual. Assuming you start delegating at the earliest opportunity, your first rewards will be paid out on August 18th.
Q: If I get in ‘early’ with staking, will I earn a higher percentage of rewards? A: It doesn’t matter when you choose to delegate/re-delegate within an epoch. You just need to have delegated before the end of that epoch for your stake to be included in the next snapshot. You should make sure to delegate your ada, though – this is what maintains the health of the network – the sooner you delegate, the greater your rewards will be. There is no risk to this – your stake holding will never be reduced as a result of delegation, only increased as a result of successful delegation.
Q: What happens to any mainnet rewards that are unclaimed? Are these shared with delegators? A: Until very recently, unclaimed rewards would have gone to the treasury. When our models showed that there will likely be quite a few unclaimed rewards (at least early on), we decided that it was more transparent to instead put them back into the reserve. So yes, they are shared with delegators, but only indirectly and over the long term, by automatically putting them back into the reserves. This will help ensure long term viability for Cardano by releasing rewards gradually, and in proportion to the delegated stake.
WALLETS
Q: When can people create the new, Shelley-compatible wallet ready for staking for mainnet? A: As soon as the Shelley upgrade (“hard fork”) is complete, you will be able to create new, Shelley-compatible wallets. In Daedalus, Shelley-compatible wallets will use a 24-word wallet recovery phrase.
Q: Can wallet addresses created on ITN prior to snapshot and HTN wallet addresses be restored and used on mainnet? (not including test ada). A: Addresses from the ITN and HTN cannot be used on the mainnet. Cardano uses an address discrimination feature that prevents sending ada to an address in the wrong network, which would render the funds inaccessible.
Q: Can I stake with ledger Yoroi when staking commences on the mainnet? A: No. Ledger hardware wallet support will not be available immediately after the Shelley upgrade. Daedalus will support hardware wallet restoration as an option for users who do not want to wait for the hardware wallet support for Shelley.
Q: If my ADA is in Yoroi, do I have to do anything for the hardfork? A: You can choose to keep your ada in your Yoroi wallet and your ada will be perfectly safe. Delegation will be released on the Yoroi browser extension before being released on Yoroi Mobile, but Yoroi Mobile wallets are fully compatible with the browser extension. The Yoroi Extension might be unavailable for a few days (due to Google’s Chrome extension review period). Delegation features will be added shortly after. Follow EMURGO 109 on Twitter to hear the latest Shelley and Yoroi updates.
Q: Which wallets can I delegate my stake from? A: Only new Shelley mainnet wallets will support delegation features. Funds from legacy Byron wallets will need to be migrated to a new, Shelley-compatible wallet that supports delegation. ITN rewards will be automatically migrated to new Shelley wallets during the first Shelley epoch, and might then be combined with existing wallets. No Shelley testnet wallet can be used, including mainnet candidate wallets. Yoroi will support delegation, but not immediately at the time of the Shelley deployment to mainnet. If you really want to use your ada to delegate immediately after the hard fork, you can restore your Yoroi wallet in Daedalus.
Q: Can I spend my ada during staking/delegation? A: Yes, you can withdraw all the ada from a stake address at any point and unregister it. Note that any unregistered ada will no longer earn delegation rewards.
Q: Is my ada ‘locked’ when delegating, or do I need to wait until they are ‘unlocked’ or ‘undelegated’? A: No. Any ada used for delegation does not become locked.
Q: Do I need to keep my wallet ‘online’ or ‘running’ to be able to delegate? A: No. Once you register your delegation choices, you can close your wallet. The delegation will be recorded by the blockchain at the start of the next epoch, and become effective from the epoch after that. You only need to keep your wallet online when you want to check your balances, view your rewards, make new delegations, etc. Lots more handy information on wallets (and loads more) over at the Cardano official website.
So, that’s it. If you have any question on your mind please feel free to ask.
There’ll be lots more content coming from IOHK, EMURGO and the Cardano Foundation. So stay close and you’ll catch all the news you need to know.