What is Staking?
Ada held on the Cardano network represents a stake in the network, with the size of the stake proportional to the amount of ada held. The ability to delegate or pledge a stake is fundamental to how Cardano works.
Funds are never risked when staking with a pool. Unlike other proof of stake networks, your ADA is never locked and rewards are automatically paid out by the protocol after staking for +2 epochs. Rewards are sent directly to your stake wallet – no need for payout insurance or no need to worry about if a pool is going to pay you or not.
There are two ways an ada holder can earn rewards: by delegating their stake to a stake pool run by someone else, or by running their own stake pool.
The amount of stake delegated to a given stake pool is the primary way the Ouroboros protocol chooses who should add the next block to the blockchain, and receive a monetary reward for doing so.
The more stake is delegated to a stake pool (up to a certain point), the more likely it is to make the next block – and the rewards that it earns are shared between everyone who delegated their stake to that stake pool.