Cardano Foundation announces its delegation methodology

Cardano Foundation announces its delegation methodology

CFLogo

ZUG, 7 OCTOBER 2020. The Cardano Foundation is pleased to share its delegation methodology in accordance with our transparency principles, and in line with our promise to communicate to the wider community during each part of the delegation process.

As an independent Swiss foundation, it is the Cardano Foundation’s job to ensure that the Cardano blockchain achieves sufficient decentralization, to increase stake pool operator engagement and empower individual stake pools, and to support the staking and delegation infrastructure delivered through Shelley.

Since the delivery of Shelley, the Cardano blockchain and its ecosystem partners have achieved more than 1,300 active stake pools, operated and maintained by dedicated and talented individual stake pool operators (SPOs)—who collectively, have enabled over 50% of the total ada (₳) circulating supply to be staked.

This tremendous feat has made Cardano one of the most decentralized blockchains to date in an incredibly short space of time, and it is a true testament to the strength and participation of our valued community. It is also indicative of the wealth of technical talent we have within our community—particularly promising ahead of the launch of native tokens, smart contracts, and decentralized applications.

The Cardano Foundation has supported the community with various initiatives, such as the Stake Pool School, a resounding success with over 3,000 participants successfully completing the course.

In the spirit of transparency in which the Cardano Foundation was founded, we are now pleased to publicly share our delegation methodology. Our delegation preferences and methodology has been carefully designed to support the ongoing decentralization of the Shelley mainnet, by supporting and involving new individual stake pools.

We will support stake pools of all sizes and regularly engage in a dialogue with our SPO community through our Community Management team. Our methodology will further evolve and develop over time.

The Cardano Foundation’s delegation methodology

For stake pools to be eligible for delegation from the Cardano Foundation, they must fall within the following criteria (data sourced from a self-hosted passive node):

  • Hold between ₳25,000 and ₳2mn as a pledge,
  • Operated by a stakepool operator that only runs one pool (difficult to verify but best effort attempt),
  • Have a normal operating cost of less than 5% variable rate, and a fixed rate of around ₳340,
  • Does not have a high number of ada already staked (less than 5% saturation),
  • Have validated blocks successfully in the past,
  • Have not been delegated to by the Cardano Foundation in the last four rounds.

To randomly select stake pools to delegate to, the Cardano Foundation will use a third party randomizer to choose from eligible pools according to the criteria listed above. As and when Daedalus implements non-myopic rankings, we shall implement this approach to stake pool selection.

Going forward re-delegation shall occur approximately every three epochs. Should an epoch end on a weekend, re-delegation shall be completed the following week.

In total, the Cardano Foundation has multiple wallets from which we will delegate our ada assets. Our ada assets are equally distributed across our wallets. Single wallets will be used to delegate to one pool at a time.

The first 10 stake pools the Cardano Foundation re-delegated to are, in alphabetical order:

  • ADAU,
  • AGIO,
  • AZTEC,
  • BEAVR,
  • CASP,
  • COSD,
  • LOOT,
  • WAAUS,
  • ZETIC,
  • ZONE.

As we test and gain access to more secure custody solutions, we shall add more wallet addresses and delegate our stake to a wider number of stake pools. We will be communicating our updated delegation preferences every three epochs.

Together, we can make Cardano more decentralized

As an ecosystem, we should be immensely proud of how much we have already achieved. Our official ‘Operating a Stake Pool’ Forum community, and the ‘Cardano Shelley & Stake Pool Best Practice’ Telegram group which has almost 4,300 users, are two of the busiest and most engaged segments of our community.

Here and across other channels, we are delighted to see and participate in regular deep technical discussions, and gather welcome feedback from our stake pool operators.

However, we are always looking to improve. We want to understand how we can attract more stake pool operators, simplify and enhance the onboarding journey, and make the operation of stake pools more attractive to a wider audience.

If you have suggestions and feedback on how this process could be enhanced, join the discussions on our Forum, and help us build a solid foundation for decentralization on Cardano, and contact our Community Management team.

Likewise, we encourage each and every Cardano ecosystem participant with the skills and desire to become a stake pool operator to read our guide to becoming a stake pool operator, and sign up to the stake pool school.


Learn more about staking, delegation, and consensus on the Cardano blockchain in the following articles:

44 Likes

This is good start, but how does this support 40-50% of pools that haven’t produced blocks if even CF isn’t supporting them?

4 Likes

Appreciate the support of our smaller community pools! Two questions:

  1. Some smaller pools have temporarily lowered their variable rate to 0% to overcome the low stake reward barrier with the 340 min fee. These pools have announced that they will raise their rates to below 5% when the pool has enough stake to provide rewards which is currently around 600K. Will these 0% pools be disqualified from this delegation rotation?

  2. Why not split the delegation up into smaller chunks, 64M for a few epochs is great but you could spread that out even more and cover 30 smaller pools instead of 10 per round.

Either way, thanks for supporting this community!

3 Likes

My exact thoughts. Some pools (including my own) have been up since launch, 99.98% uptime, all updates applied, 400k (down to 40k and now up again to 150k) stake without minting a single block.
Not including these pools will eventually burn them out of the ecosystem since VERY few delegators will take their chances with such a small pool. Maybe not include them in any subsequent draw if they do miss their slots?

4 Likes

Or maybe have 0 block pools “demo” their pool setup in the testnet so they can be included? This way you also give an incentive for these smaller pools to play in testnet.

2 Likes

This is a good start, and a nice strategy in encouraging decentralization. The transparency is much appreciated.

Cheers!

6 Likes

It’s a start, maybe.

However, “Have validated blocks successfully in the past” is perplexing. Using this as a SP metric concurrent with deploying resources to effect material support of underrepresented SP’s may, “achieve(s) sufficient decentralization”, but how does it address the ready, willing, and able SP’s left behind, who haven’t had the luck of ‘shLot’ ?

I believe what’s happening with the SPOs is just another symptom of a significant underlying problem with the character of Cardano’s rule. How many invisible SPO’s could present a cogent pretense argument with the existing decentralization contradiction presented by a certain pool owner with, what is in my opinion, an egregious conflict of interest?

Cardano’s Rule:
There exists the condition’s of legal structure and operational ‘distance’ which must be met as required by law, and then there’s reality, and I don’t think - I could be wrong - there are many who actually believe the CF, for all intents and purposes, is independent of Charles.

Character:
The reason I believe character is vital is because you can’t trust a persons abilities, without also trusting their principles and ethics. What’s the value in the promise of Voltaire with Charles in charge, now? The Guardians enabled change for the better. I don’t think it will take anything less now.

1 Like

Finally an initiative from the foundation, happy with it. But still have some feedback I would increase rule of of the last four rounds to n rounds, so everyone gets a turn before pools get delegated twice.

And as a requirement I would also add that a relayer is required, this is a security measure and should be upheld by the foundation to secure the network. Stake is not everything.

2 Likes

There are pools with slightly higher pledge but not much live stake, which is discouraging. How about skipping the constraint with the max pledge?
I think the small pools are covered with the 5% saturation limit.

Anyway, thanks for supporting the community!

2 Likes

Yes. How was chosen this 2M amount ? Why not 3M ? Part of ada price is the result of holders, holding coins despite 85% loss sometimes.

3 Likes

thank you :pray:t4: Hopefully we get picked soon. spo life haha

This is great news!

It is very important that you made this public, there will be tips and requests for improvements, but that is something that can be tweaked in the future and will change for sure. BIG thank you for this.

I also have a question, we have registered 3 pools, the reason was to reserve its tickers at the beginning of mainnet. Two of those pools are not pledged and have almost no stake. Does it mean that our primary pool [MOON1] can not be supported (because technically we run 3 pools)?

Thank you one more time for doing this :smiley:

1 Like

Really great initiative Cardano Foundation! Personally I am also thrilled about the specific criteria You selected.

I think these criteria create an extremely fair playing field for the purpose You want (distributing Stake in a fair way that helps bootstrap serious new/small polls). Obviously a lot of though has gone into this. Well done!

Some people seem to disagree with the “produced a block” criteria. I think this is a fair gate to establish for two reasons:

  1. it shows that the pool has (at least in the past) been correctly set up.
  2. it means that a young pool will have to stick around for a while. Persistence and permanence are two qualities I personally want to see in network operators so it’s a good measure in my book.*
  • SPEC just minted it’s first block, i’ve been live sine 208 and this was the first slot leader I got. Sure hanging around for two months just to see if your setup is valid is a bit rough but it also display the long term mentality we should aim for in our community! (My personal 2c)
2 Likes

Excellent strategy supporting decentralization with full transparency. Great job, thank you!

2 Likes

One question about the Pool Fixed fee criterion:

It says “should be around 340Ada” SPEC runs a fixed fee of 350Ada. Does this count as “around”?

Yes, that does mean MOON1 will not take part in the golden ticket lottery. CF wants to incentivize decentralization.

I am part of the Cardano Single Pool Alliance. This is the main part of our manifesto:
“I champion decentralization: I commit to only ever own or represent a single Cardano stake pool.”

1 Like

Please remove the 2M pledge cap from your eligibility requirements! This incentivizes pools with more pledge to actually split it up and surreptitiously become multi-poolers and hurts the goal of centralization!

I would assume 3% more counts as “around” yes.

1 Like

I disagree, a pool with more than 2M pledge will get regular blocks from the pledge alone so it does not need further bootstrap from CF. A pool with this much pledge which decides it is worthwhile to split up its pledge only to take part in the CF golden ticket lottery has other issues IMHO.

2 Likes