Triweekly parameter committee meeting - 17 April, 2025
These are the minutes of the PCs (Parameter Committee) triweekly meeting. This is a summary based on automatically generated notes.
The purpose of the Parameter Committee is to provide technical advice and recommendations relating to protocol parameters. It discusses all parameters relating to the Cardano protocol including network, technical, economic and governance parameters.
Summary
Andrew Westberg, Alexander Moser, Kevin Hammond, Ryan (Cerkoryn), Markus Gufler, Neil Davies, Rich Manderino, and ShengNan Li discussed Markus Gufler’s analysis of Cardano pool fees post-halving, revealing stake redistribution from larger to smaller pools, though many smaller pools still experienced losses. Further analysis is needed, focusing on margin, relays, and pools maintaining the higher fee, along with exploring alternative hypotheses like marketing impacts. Next steps include further analysis by Markus Gufler and ShengNan Li’s presentation in three weeks, along with community engagement before submitting a governance proposal to increase memory unit limits and update Pluto’s cost model.
Details
- Meeting Opening and Introductions: The meeting began with introductions from Andrew Westberg, Alexander Moser, Kevin Hammond, Ryan (Cerkoryn), and Markus Gufler. Kevin Hammond noted it was Markus Gufler’s birthday.
- Agenda: The meeting agenda included a governance action with three parts (Bluetooth cost model V3, block execution limit, and transaction acquisition limit), and Markus Gufler’s presentation on pool fees. Several guests joined the meeting expressing interest via Twitter.
- Markus Gufler’s Presentation: Mint Pool Cost Analysis: Markus Gufler presented a comparison of stake pool data from epoch 446 (before the mint pool cost was halved) and epoch 546. They categorized pools based on their mint pool cost, noting a significant shift towards the new minimum value of 170 ADA after the halving. They observed that approximately 25% of active pools (those producing blocks) adopted the new minimum cost. However, they also highlighted that many non-producing pools also adopted the new minimum cost.
- Active Stake Analysis: Markus Gufler’s analysis showed a decrease in total active stake, but an increase in active stake for pools with the new minimum mint pool cost of 170 ADA. This increase, however, was partially due to staking rewards, leading to a more modest increase after accounting for those rewards. Pools retaining the old minimum cost of 340 ADA experienced a significant decrease in active stake.
- Stake Redistribution: The presentation suggested that the halving of the mint pool cost led to a redistribution of stake from larger pools to smaller pools. Markus Gufler noted that Binance, a large pool, experienced a significant stake reduction. Analysis revealed that while some smaller pools significantly gained stake, many pools that switched to the lower minimum cost still experienced a net loss of stake.
- Discussion and Alternative Hypotheses: Kevin Hammond summarized the findings as encouraging redistribution of stake to smaller pools. However, Neil Davies and others raised alternative hypotheses, suggesting that factors such as marketing campaigns or variable fees (not analyzed in detail) might have influenced stake movement. The possibility of other factors like successful ISPOs also came into discussion.
- Next Steps and Further Analysis: Markus Gufler proposed further analysis, including filtering by margin and number of relays, to explore the patterns in stake movement more deeply. Alexander Moser pointed out that the analysis primarily focused on pools that already adopted the 170 ADA minimum cost and that analysis of pools still at 340 ADA was also necessary to fully understand the effects of the change. Neil Davies concluded that the results suggested that the reduction of minimum pool fees did not lead to a net gain for most pools.
- Proposed Governance Actions: Alexander Moser proposed a future governance action to raise memory unit limits per transaction and block, along with a Pluto’s cost model update. The rationale for combining these into a single action was to simplify the complex process of sequencing governance actions and to account for potential issues arising from separate actions. The proposed 25% increase in transaction memory unit limit aims to improve ease of development for decentralized application developers. This discussion also included debate about the potential impacts on the number of saturated pools and the overall decentralization of the network, taking into account the power structures and voting dynamics within the Cardano community.
- Min Margin vs. Min Fee: Rich Manderino suggested that a min margin would be a fairer approach than a min fee, as it would equally affect all pools, regardless of block production. A potential follow-up action concerning a second halving or other adjustments based on the results was also mentioned. The impact of this on saturated pools was debated.
- Publication of Findings: Markus Gufler proposed publishing their findings in a dynamic, updated format, rather than a static report. They highlighted the need for ongoing data visualization given the constant nature of governance activities.
- Stake Stickiness: ShengNan Li suggested analyzing stake stickiness to better understand the effect of parameter changes. This analysis would compare historical data to the current data after the parameter change in an attempt to identify abnormal shifts.
- Community Engagement for Proposed Increase: The team discussed how to gauge community support for a proposed increase. They decided against further surveys and instead opted for a public proposal via channels like Twitter, aiming to solicit reasons against the increase before submitting a governance action. Neil Davies emphasized the importance of avoiding governance actions likely to fail, suggesting they should present the case to the community to assess support first.
- ShengNan Li’s Presentation: ShengNan Li’s contribution was discussed, with Neil Davies requesting more time to review it before the next meeting. Alexander Moser scheduled a presentation for ShengNan Li in three weeks. Kevin Hammond encouraged ShengNan Li to engage the community with their findings, suggesting they publish or blog the results and solicit feedback, acknowledging that community members may always request additional work.