Hi there,
I’m noob with Cardano stakepool. On the question of the remuneration of the pools which do not mint blocks, it seems to me that this would be justice: of course, we do not bring to the community a contribution in currency (although there is a stake of 500 ADAs for each pool), but we make a contribution in kind (provision of an infrastructure and its maintenance). According to me, the community should have the means to assess this contribution. A SPO of a small pool does not ask to be paid as if he had minted blocks, but that would be fair to take into account his contribution to the community. The odd thing with Cardano system is that the maintenance fees are only paid if the pool is minting blocks. But pools that do not mint also bear these costs: something is wrong …
Formely, I ran some “securenodes” at Horizen for 3 years (with a stake of 42 zens each). We were small paid according to the actual availability of our nodes, but we were still paid! What surprises me about Cardano is that this parameter does not seem to be taken into account. Am I wrong ? I don’t undestand very well the concept of the Cardano’s chance, but what I understood is that I would probably not benefit from it!
What is likely to happen is that the SPOs of these small pools get discouraged and withdraw their pools. Aren’t we far from the objectives of decentralization and democracy defended by Georges Hoskinson? According to me, the Cardano community should be careful that its ecosystem does not become a sort of Ponzi scheme, where the latest arrivals pay for the formers …
As for advertising your pool, let’s be realistic, only pools that get rewards are eligible to receive delegations. There is really little chance that someone who has just bought ADAs will delegate them to a small pool without any reward, even if it displays environmental, humanitarian, charitable purposes. Only rich people will be able to afford this luxury! But small carriers will obviously be looking for a return on their investment. Visibly, Cardano managers were aware of this problem since they developed the concept of saturation …
What will make me regret leaving the Cardano community is that I found it very lively and active. Its forum offers excellent and very responsive technical support.
Thanks for your answer @Triton-pool,
In my opinion, the Cardano system should basically be able to assess the performance of each pool:
It would first be necessary to measure the machine availability time offered by the pool, for example over the duration of each epoch. Below a certain threshold to be set, the pool would be disqualified.
Next, the technical processing performance that the pool is likely to provide by subjecting it to regular and random tests should be assessed. Again, if the tested pool were classified below a certain standard, it would lose its right to remuneration. Indeed, from what I understand, the good processing performance of the Cardano network will represent one of the most convincing arguments when the confrontation is engaged with Ethereum (Alonzo hardfork)…
In my opinion, the resources to finance these lump sum payments could be taken from the block rewards, according to a certain percentage that should be determined and which would be taken automatically and distributed equitably among all the pools meeting the above requirements.
In the actual system the rich pools get richer and the poor pools stay poor.
In my opinion it is pretty simple to improve that and have a fairer system:
No pledge is required to run a pool.
Every pool has the same importance in the network and is paid with a fixed ADA value equivalent to an amount in USD that is attractive enough for the operator to keep the servers running at predetermined standards.
The more pools you have the more rewards you become and so a better decentralized cardano network.
The delegation to an pool is made automatically to the next available pool.
If a pool does not keep its promise, it will be ignored and delegators will be automatically assigned to another available pool.
I do see some issues there.
You incentivize creation of thousands or millions of new pools. All of them would be in Europe and US, because you can get the best vps or generally hosting deals there => it would kill the decentralisation
Then you want to guarantee profitability to all of them => kill the cardano ecosystem economically.
The system cannot handle tens of thousand pools => it would kill it also technically.
In my opinion, the question that needs to be decided is whether Cardano needs additional processing power to ensure its predictable growth.
If so, it seems necessary to attract new pools whose performances should be evaluated and fairly compensated as I suggest, while keeping the current system: staking, pledging, delegations, etc.
If not, if this need does not exist, and if the current workforce of the “large” staking pools (big live and active stakes) is capable of absorbing a significant increase in traffic, it is clear for me that what are called “small pools” have no place in the current system because they are not useful : it must be said clearly …
I think your proposal goes in the exact opposite way of what Cardano should do to remain robust and have good performance and decentralization:
No pledge: this would encourage people to start a pool just to make easy money, without any commitment
Fixed ADA incentive to all pools: this would generate millions of pools
Encourage multiple pool ownership: this would create even bigger pool groups that do not increase decentralization, because typically they’ll be on the same data centers, or even on the same machines
Automatic delegation: this would remove any incentive to do more than just run a pool. Now SPO create content, have mission with positive impact on society. If delegation is random, none of that would count
The problem I see is that when delegators don’t receive rewards, they leave, I think delegators should receive a rewards even is the pool does not mine, it’s ok if the pool does not receive rewards nor the pledged amount, just the delegator.
@Bees_Project,
you got two answers, both had reason, the writers evaluated the aspects of your proposal. You on the other hand showed them absolute ignorance.
I could be the third person to to give you a similar answer to each of your proposals, but I’ll not do it. Instead I’ll ask you a question that will hopefully lead you to realize it by yourself. Here the question. How many pools is optimal for You personally to run and operate to make the most profit for you, your bees and your delegators?
With the current fair POS system
With your proposed system of guaranteed fixed profit per pool.
This is probably the only proposal out there that doesnt turn everything upside down and destroy the fundamentals.
Judging by this forum the small SPOs just want the $$$, so they may even get offended by this kind of non monetary help.
Surprisingly there has been zero feedback so far. Could you guys and gals out there share your thought on this proposal?
Drop saturation down to 2 mil per pool should fix the problem would need about 20,000 pools. And don’t think it would be profitable for binance to make that many pools, so they may outsource to some community pools.
I’d say the opposite. The big guys would spin up the number of pools they need. With 21600 slots and 20000 pools you get an average around 1 block => 40% of rewards go to SPO through the 340 fixed- The common delegator reward drops to ~3%p.a. from current ~5%. Not an attractive proposition.
P = computing power for the optimal cardano blockchain network (more transactions the more P is needed in the futures) N = all active producer nodes R = maximal epoch rewards paid by cardano to N
Profitability = R / (P/N) Saturation = if P excede the necesary P
The nodes have to be all over the world to ensure P load balancing (so can saturation achieved if a geographic region have more nodes as P)
The question was to compare the two scenarios. Please go ahead and put some numbers on the table.
i.e.
Current status - Bees Project will run 72 pools beacuse it is optimal.
Proposed system - Bees project will run 15248 pools because it is optimal.
If you cannot do that, then please do not answer.
Stepping back to the high level and sharing my point of view about that. I’m also a small SPO.
There are stakepools which started early:
They had an advantage because prices were lower, correct
They also had a risk because nobody could tell it would be a success
Of course there is an early mover advantage here and it’s quite extreme here based on the value increase of ADA
But everybody of us could have done the same
It’s not unfair that those pools are established in the meanwhile. They also aquired their stake and they earned their position in the marked
And there are the new pools:
Struggling to find delegators with > 5k ADA, because nobody just invests that big amount of €
Just setting up a pool is not enough. It’s a highly competitive market now and earning a position is much harder now
There is a huge hurdle to ramp up a pool since nobody will be interested in a pool < 3-5M just because the ROA is not competitive
Now coming back to the question:
Is there something unfair about this? I would say no. Same rules for everyone.
Does something need to change? The initial hurdle of finding delegation is high. Also because of the 340 Operator fee which is much more than actually is needed to pay the infrastructure today. So I beliefe the value is not appropriate any more, this would decrease the initial hurdle.
On the other side: Should it really be the goal to make it easier to enter? If there are enough pools to manage the stake, why should it be incentiviced to generate more pools?
If you are a small SPO: Ask yourself the question how you would think about it when you were one of the established pools. Why should your stake be stolen by new pools which have not actively contributed to the success over the last 2 years? Nobody is in charge to make them successful except themselves.
The only thing which is critical in my opinion is that success for a new SPO is depending on a lot of luck factors. If you have luck with minting your first block, your ROA will look good which accelerates interest in your pool. If you win the delegation round your will overcome the initial hurdle much easier. What i want to say: Having a good concept does not guarantee to make a pool successful
Final thought: What happens if finally my small stakepool gets successful. Then network parameters will change to make it easier for the new SPOs to get successful. How would I feel?
Well, I compared Individual operators above, not Exchanges.
I do not like Exchanges and Big multi-pool operators.
The obvious reason is that they accumulate lots of stake and therefore reduce the chance for individual operators to find delegation.
And they are a risk for decentralization
On the other hand. Without exchanges nobody would be able to buy Cardano and nobody would ever stake to our pools. Many of the holders which stake at the Exchange directly may do it for one of those reasons:
It’s simply more comfortable: No need to move to your own wallet. No risk to loose your keys (I know many will disagree and say not your key not your crypto, but how often do we read about lost ADA here in the forum)
Subventionized Rewards on exchanges
It’s just a investment. Want to be out fast enough when a bear market comes in.
Not being aware that it is better for decentralization
Not knowing about the huge ecosystem and variety of good purposes of pools out there.
So for me as an SPO it would be better if Exchanges would just be allowed to do their work as exchange, not as a pool operator as well. But of course they are allowed to participate as a business in operating pools as all of us are. They have a big advantage which is the simplicity which we cannot compete with. So for now our only option is to educate and market our pool to increase the awareness.
would need about 20,000 pools. And don’t think it would be profitable for binance to make that many pools, so they may outsource to some community pools.