Delegators earn rewards for participating in staking (either pledging or delegating), and these rewards are automatically distributed between the participants according to the rewards scheme. The rewards scheme in Cardano is designed to be decentralized, which means that there is no single controlling party.
Distributing ADA Rewards
During each epoch (5 days), rewards are distributed amongst all stakeholders who have delegated to a stake pool, either to their own stake pool, or another pool. These rewards are auto-generated by the protocol itself, and are not managed by the stake pool operators (SPOs).
After pool rewards have been calculated and adjusted for pool performance, they are distributed amongst the pool operator and the pool members, or people who delegated part, or all of their stake, to the pool. This happens in several steps:
- First, the declared costs are subtracted and given to the pool operator.
- Next, the declared margin is subtracted and given to the pool operator.
- Finally the remainder is split fairly (proportional to delegated stake), amongst all people who delegated to the pool, including the pool owners.