As we wrote in a previous article we planned to update our estimates for rewards to our customers after recent protocol changes and with data on staking rewards.
Historically the staking pool Ada North Pool has had a return of over 4% over time, however, this has trended downwards as it has for all other staking pools on Cardano. For Ada North Pool, explorer data from cexplorer.io suggest a current historical return of 3.64 (at the time of writing this article) due to the return in recent times being around the 3% range for annual rewards calculations drawing the average down. We believe currently this is not likely to change much for 2024. For this reason and other data points like it, we are changing our estimate for customers to around 3% for yearly rewards from securing the protocol going forward. This estimate will include a planned increase in platform fee for staking from 5% to 10% which will come into effect in February 2024.
A cause of this is the actual inflation rate compared with fees gathered by the protocol as well as the overall protocol giving out less than optimal scenario rewards. Cexplorer has an article on the topic you can read here. The one good thing about the less-than-optimal rewards by the protocol is that the reserve is actually higher than expected and this means there is a longer time for the reserves to be depleted on Cardano. (0.3% of the reserve is used as rewards each epoch on Cardano).
We will revisit these numbers if protocol parameter changes or any other of the factors influencing protocol rewards changes such as fees collected or reserve depletion rate, and we see over time this affects the reward rates. We hope for understanding that these are moving variables and not under the control of NBX so any rewards we suggest are always estimates.
