During the debate on Contingent Staking, an interesting point was made that stakers are customers of staking pools. Is this really the case? Let’s use this question to explain the basic principles of economic incentives and the rewarding mechanism in staking. This allows us to find out who is running what business and who the customer is.
TLDR
Delegating ADA coins is a similar mechanism to voting in a democratic election.
Stakers delegate coins to the pool and continue to have full control over the coins.
Cardano can be perceived as an employer paying for the services of its employees.
Both SPOs and stakers are running a business.
SPOs are active participants when it comes to the production of blocks, while stakers are passive ones.
Stakers are probably something like co-owners or shareholders of pools.
If a Lovelace is delegated to a pool, this means that the pool mints the block on behalf of the staker.
@Jaromir argues in an interesting article that concludes that delegators are not customers of SPs.
One point I would also add is that without SPs and delegators the Cardano protocol would not work.
This could be argued that SPs and delegators have an employer - employee relationship. Yet, since delegators conduct no effort to enable SPs to produce blocks, this is untrue as well. Where do the rewards for delegators and SPs come from? Not from SPs being paid to conduct a service, but from the Cardano Community Treasury, which collects fees for transactions, and then redistributes to all participating stakeholders.
I’ve been tussling with CS. Someone please let me know where I’ve gone wrong thank you🙏🏽 So country A is censuring country B; country B now bands together with all the other countries to censure country A.
So…Nothing can ever stop country A produce staking rewards within in its own borders ?
Any ADA staking rewards generated in country A is freely transactable with any ADA wallet from the opposing “cenesuring” B side? So no ADA can be earmarked as a second class asset?
BTW if you’re paying a fee to receive your staked yield it means someone’s getting paid for their expertise. Feels like a service to me, isn’t that what you do though as a customer; you’re willing to pay a fee. The beauty of ADA is that we thought it was permissionless. CS affect permissionlessness?
That’s not quite right @Suvasish, although it could end up that way in the future if CS is enacted.
It’s more like, country A states that running a stake pool is a business venture. That is, it is only done because there is a profit motive.
Country B recognises that without people running stake pools, Cardano (or any other PoS blockchain) can not exist. Therefore, a stake pool is a common good, like a public service.
When people in country B, and any other country including country A, delegate ADA to the stake pool in country B it is for the common good, no matter how many ADA staked.
But in country A, they believe that no one does anything for the common good, all people want to profit and that is the only reason to run a stake pool or delegate to it. So people running a stake pool in country A must use a contract (terms of service) and delegators must sign/agree to it. Also, there my be the possibility that delegators need to provide some personal information in the future if we choose this course.
Honestly, I don’t know.
It would more likely be a wallet address that may be blacklisted for one reason or another, as has happened previously on BTC network.
The address (with ADA or other tokens) can be blacklisted. What does this mean? Someone can force acceptance of the blacklist, i.e. censor transactions that will contain blacklisted addresses.
If 100% of all pools do not accept the blacklist, the transaction will eventually make it to the block. All it takes is one operator that is not “compliant” and transaction censorship will not work.