Cardano: what it is and how it works with Trezor

Cardano is a proof-of-stake blockchain, and ADA is its native coin. ADA holders secure the network by staking, and they decide how the network changes by voting.

To stake your ADA, claim your rewards, or change your voting preference, see our guide Stake Cardano (ADA) in Trezor Suite.

How Cardano works

Cardano uses an extended UTXO model, or eUTXO. Like Bitcoin, your balance isn't a single number in an account: it's a set of separate outputs, each one the unspent remainder of a transaction you received. When you spend, your wallet consumes some of those outputs and creates new ones, including change back to you.

One result of this design is that a transaction's fee and its outcome are both fixed when the transaction is built. The fee can't rise while the transaction waits to be included, which is what happens on networks where users bid against each other for space in a block.

Staking doesn't touch your unspent outputs. Your account has a separate stake key, and staking means signing a certificate that points that key at a pool. The pool then counts the ADA sitting in your outputs when blocks are assigned, while the coins themselves stay where they are and stay spendable.

Time on Cardano is divided into epochs of 5 days. Within an epoch, a pool is picked at random about every 20 seconds to produce the next block, and the more ADA staked with a pool, the more often it's picked.

ADA, tokens, and fees

ADA is Cardano's own coin. You pay fees in it, earn staking rewards in it, and put it up for the refundable deposits the network asks for.

Other tokens on Cardano are native tokens, which means the ledger tracks them in the same way it tracks ADA. On Ethereum, every token needs its own smart contract. On Cardano, a token moves in an ordinary transaction.

Fees are worked out from the size and complexity of the transaction rather than bid for, so Trezor Suite can show you the exact fee before you confirm anything on your device.

What Cardano is used for

Cardano runs smart contracts, which support lending, exchanges, and other decentralized applications. It's also used for payments, for native tokens, and for governance votes on its own protocol rules.

What staking ADA means

Staking ADA points your account's balance at a stake pool, which adds your ADA to the weight that pool carries when blocks are assigned. Your ADA never leaves your account: it isn't locked or transferred, and the pool can't spend it.

A stake pool is a node run by an operator with the uptime and setup to produce blocks reliably. You don't need to run one. You stake with an existing pool and share in what it earns.

Registering your stake key costs a refundable 2 ADA deposit, which returns to you when you unstake.

Where staking rewards come from

Rewards come from transaction fees and from a reserve of ADA set aside when Cardano launched. Each epoch, the protocol calculates what each pool earned and splits it between the pool operator and everyone staked with it, in proportion to their stake.

What a pool earns depends on how much stake it holds and how reliably it produces the blocks it's assigned, not on how many transactions it processes. Reward rates move with network conditions and pool performance, so the APY Trezor Suite shows will change.

Rewards are paid every epoch and added to your staked balance, so they compound without any action from you.

Why your first rewards take 15 to 20 days

Cardano takes a snapshot of who is staking with which pool, then waits for that stake to become active before it counts. That produces a four-epoch delay between staking and your first payout:

• Epoch 0: you stake your ADA. The epoch is already underway.
• Epoch 1: your ADA becomes part of the pool's live stake.
• Epoch 2: your ADA counts towards the pool's chance of producing blocks.
• Epoch 3: rewards for the blocks produced in Epoch 2 are calculated.
• Epoch 4: those rewards are paid out.

After that, you receive rewards every epoch, based on blocks produced two epochs earlier. Switching pools follows the same timing. The pool you leave keeps paying you for three more epochs, and the first rewards from the new pool arrive at the start of the fourth.

How Cardano governance works

Cardano's protocol rules are changed by on-chain vote. ADA holders vote on governance actions such as protocol parameter changes, treasury spending, and hard forks. The rules for this came in with CIP-1694 and went live in the Chang hard fork.

Rather than vote on every proposal yourself, you can hand your voting power to a Delegated Representative, or DRep: someone registered on-chain who votes on governance actions, with weight equal to all the ADA delegated to them. Anyone can register as a DRep, and you can always vote yourself instead.

Voting power and staking power are separate. Your stake pool produces blocks; your DRep votes on proposals. You choose them independently, you can change either whenever you want, and neither can touch your ADA.

Alongside registered DReps, Cardano offers two predefined choices. Abstain marks your stake as deliberately taking no side, and leaves it out of the active voting stake that proposals are measured against. No confidence counts as a yes on every no-confidence action and a no on everything else.

Why claiming rewards needs a voting preference

Since the Plomin hard fork, Cardano doesn't let you withdraw staking rewards unless your stake key has a voting preference set. Rewards keep accruing either way, but claiming them is blocked until you delegate your vote to a DRep or choose Abstain or No confidence.

If you staked years ago and haven't touched your account since, this is usually why claiming fails. Your rewards are safe, and they become claimable as soon as you set a voting preference.

How Cardano works with Trezor

Your ADA lives on the Cardano blockchain, not on your Trezor. What the device holds is the private key that authorizes anything your account does, and that key never leaves it.

Sending ADA or tokens, staking, changing your voting preference, claiming rewards, and unstaking are all Cardano transactions, so you confirm each one on your Trezor screen. Without that confirmation the transaction isn't signed and can't be broadcast.

Cardano is supported on Trezor Safe 7, Trezor Safe 5, Trezor Safe 3, and Trezor Model T. Trezor Model One doesn't support Cardano.

Key takeaways

Cardano uses an eUTXO ledger, where your balance is a set of unspent outputs and a transaction's fee is known before you sign it.

Tokens on Cardano are tracked by the ledger itself rather than by a smart contract, and they move in ordinary transactions.

Staking never moves or locks your ADA. It stays in your account, spendable, with a refundable 2 ADA deposit registering your stake key, and your first rewards arrive four epochs later.

Cardano governance runs on-chain, and you need a voting preference on your stake key before you can claim rewards.