Be wary of 0% pools

The temptation is to choose a pool with the lowest fee and the highest return right? So I tried a 0% pool that had a good history and high ROI on adapools.org. Then, and as soon as I did, the pool stopped making blocks. And then I thought “duh” of course, they have no incentive to even keep their computer turned on. So I lost a lot of ADA messing around trying to maximize returns. Life lesson learned. Now I’m stuck in the 2 day turnaround to another pool. Additionally, a pool can look great on Tuesday, but by Thursday when you have finally become part of the pool, the pool could be overrun with depositors and the rewards plummet. So, I know it is a testnet, and we will work through this, but just want to let the community know my experience.

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Sorry for your bad experience.
There are scenarios that a pool would elect to have a 0% fee and still be incentivized to keep their computer on, it is possible they want to stake the ADA they hold and not lose any ADA to fees staking on another pool, or they want to develop some trust among people staking and give them a no cost entry to become familiar with them, there are many other reason’s someone might offer 0% maybe they just want to support the community and give them options (I know I read someone does do that) anyhow again sorry for your experience but not all pools are created equal and a 0% pool could be a good option.

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Thanks for sharing your experiences, and sad to hear it’s not been an optimal one.
Yes, (continuous) due diligence is required, but this is a good thing. As you mention yourself, keeping an eye on things helped you spot the rights from wrongs, but a lot of people will not. “Set and forget” mentality.
Pool desirability and other statistics important to the pool’s reputation will play a bigger role going forward. On mainnet the settings for an epoch will also be 5 days (with 2 epochs turnaround being 10, and so on), so choose wisely ;)!

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Agreed, you are both correct. I am glad to be a part of this community forum to express my feelings, both positive and negative :grinning:

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Love the “choose wisely” from Raiders of the lost ark I assume? awesome

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I don’t know why other pools offer 0% because I don’t know how those pools operate. Their strategy might be to reach Saturation point as early as possible…I just can’t say. As for my pool, we charge 8%. We charge 8% because we have diligently invested our time, (some sleepless nights), our experience, and resilient node infrastructure. All of these resources come at a cost. It makes no sense to us give all this away for free. We charge 8% to insure our pool’s longevity, stability, and fairness to the pool operators.

I think 0% pools are trading pool longevity and stability for instant Saturation. Such strategy is shortsighted. Here’s why. Once 0% pools are Saturated quickly, the pools rewards drops. Out of sudden the none 0% pools will start to look attractive because they are not saturated and their rewards are higher. In addition, as Cardano blockchain grows long term, it will demand more hardware infrastructure. At 0% fees, how are these pools going to pay for infrastructure growth and readiness. Lastly, If you charge 0% fees, there’s only one direction fees can go in the future and that is up. If a delegate values your work at 0%, why would he/she stay with your pool when your fee goes up? My opinion and insight. I may be wrong.

Have a look at this primer on reddit. It tries to clarify some of the misconceptions in staking.

In the testnet (and likely mainnet also), there are no “set it and forget it” options.

Your pool can become saturated at any time. In general, it’s a good idea to find a pool that is far from being saturated. At some point they will change k (the saturation point) from 100 to something higher, like 200. At 200, any pool with more than 0.5% of the total stake will be saturated. As such, if you’re more of a passive delegator meaning you check your stake once a week or so, then it’s probably a good idea to delegate to smaller pool, less than 5 million ADA or so.

I run a small stakepool (ALOHA), so I am obviously bias toward mine. Of course, since we are small, (1.4 mil ADA currently), I would love for more people to delegate to us, so we can prove that we can run with the big boys. However, if I wasn’t running a stakepool, and was going to delegate to a smaller stakepool, I would head over the Telegram channel and see which stakepool operators in there are the most active and/or most helpful.

The people in there will be the ones on top of any new problems that arise and make appropriate changes relatively quickly. I’ve learned a lot from the people in there and in general the most active people are very nice, helpful, and dedicated to the vision. Additionally, getting in touch with them is probably much easier. For example, you can direct message me and I usually answer unless I’m asleep.

I’m not sure if anyone has seen this, but I’ve posted it a few times in the Cardano Telegram, and someone else posted it to reddit:

Happy New Year everyone.

Crypto Gambler (Aloha Cardano)

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What does make you think it’s 100 right now? Is there any official place at IOHK where this is shown and updated?

From the data I would say that the saturation point right now is somewhere around 0.6%, so k somewhere around 170-180. Why? If you check adapools.org for the maximum total rewards, it’s around 34.5k ADA right now.
maxrew
Now let’s look for the smallest pool that get’s the maximum amount. This one should be right above the saturation point:

Yes, I know that the live stake (epoch n) is not necessarily the stake that was locked (at the end of epoch n-3) for staking at the last epoch (n-1), where the rewards in the list come from. An extra column for stake at the end of epoch n-3 would be helpful here.

But the data shows the same picture for the saturation since at least a week. If someone has a better idea to check for the actual saturation point, it would be very interesting to see.

It has been confirmed as 100 meaning 1% total stake saturation point, in the Telegram channels by Ambassadors. I don’t have the links to the documentation on hand, but you can ask in the Telegram channel and I’m sure someone more knowledgeable than me can link you the github repo. I believe someone also mentioned that it exists in the genesis.yaml as well.

To explain your example of “HODL”, it is likely that the reward for actual stake for the last epoch of 19 was closer to the 1% saturation point of 90 million or so. People move their stake all the time and it’s kind of difficult to track, although https://pooltool.io/ tries to.

Or, it is also possible that this pool simply got lucky and was awarded as many blocks as a 90 million ADA pool would have received. Along the same reasoning, a small pool of 200k can receive a block to produce, even though the chances of that happening are only 10%. It might even receive 2 blocks in one epoch, or two blocks in a row – which is unlikely, but not impossible.

Or, for another real world example, my small pool (ALOHA) only has 1.3 million staked, but I was awarded 2 blocks to produce this epoch — but then I wasn’t given any blocks to produce the previous 4 epochs (with the same amount of stake). Fluctuations occur, but in the end, things average out.

Just to clarify, I’m not an expert, this is just from my own knowledge. The Telegram channels are a wealth of knowledge if you have the time to read through them.