Cardano Foundation Updates Delegation Strategy

English News and Announcements
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Over the past two years our delegation strategy has seen significant growth and engagement. During this period, we conducted seven delegation rounds, showcasing our commitment to the continuous development and decentralization of the ecosystem. We received 1731 valid applications from various pools, with 454 of these shortlisted, and an average of 65 pools making it to the shortlist per round. Most notably, over the course of these seven rounds, we delegated to 351 pools and of this number, 161 were unique pools. This indicates the high standards and competitiveness that underpin our selection process.

We want to continue to encourage people to build something that the community needs, is open-source, and helps the ecosystem thrive. However, the requirements of a protocol constantly evolve as the full technology stack gets deployed. Therefore, the Cardano Foundation frequently revisits and updates its delegation methodology in order to better support the Cardano community and, as such, we are announcing some changes to our delegation methodology.

Each of the following changes are aimed at further improving the quality and effectiveness of our delegation approach:

  1. Delegation Duration: Instead of a short delegation period of about three months we will move to an extended period of approximately 12 months. An extended delegation period will benefit operators, allowing them to really focus on their contributions.
  2. Delegation Packages: We will reduce the number of pools we delegate to, which will increase the size of the packages. This, combined with extended delegation duration, will help enhance the overall quality of our selections plus allow pools to flourish and establish themselves more effectively.
  3. Delegation Criteria: We will remove the single pool requirement which will ensure greater flexibility in our selection process. This new approach aims at greater inclusivity.
  4. Selection Process: Our team will now handpick pools based on the data and insights we’ve gathered. This ensures that our delegation strategy is driven by experience and thorough understanding.
  5. Expectations: We understand that greater delegation may tempt pools to raise fees, however, we want to clarify that if pools increase costs or raise fees, we may withdraw delegation. Also, we will closely monitor pools and engage with them on a regular basis to understand how they are actively contributing to the ecosystem.
  6. Application Process: As the regular delegation rounds will be replaced with the extended delegation, we will change the application format to a single form. If you are a new pool or undertaking a novel initiative that you believe merits attention, you can use this form to submit your pool for consideration.

Additionally, the Cardano Foundation launched its own stake pool [CAG]. Maintaining and running a stake pool for a fraction of our own assets means the Foundation will obtain a genuine understanding of topologies, building from source, pre-releases, hard fork preparations, server-resources and network bandwidth. This firsthand knowledge is essential for refining our decisions and offering more nuanced support to our community.

To support this project, we will rebalance the ada across our wallet addresses. A number of our existing wallets will now contribute to funding the CAG stake pool. Meanwhile, the Foundation will continue to use one of its wallets to keep the one year delegation to WRFGS, the Switzerland for UNHCR pool. We continue to work with pool.pm to showcase our wallets and current delegation packages. The Cardano Foundation expects the next redelegation round in accordance with this new delegation strategy to happen around mid October.

Remarks/Footnotes: (from discussions below)

We want to support the people who create value on Cardano; who build the tools that others can use to build on Cardano; that contribute to projects like the Developer Portal ; who create Cardano Improvement Proposals (CIP) ; and participate in the discussions to define new standards.
We want to encourage people who are active in the Cardano Stack Exchange (CSE) and the Cardano Forum.
We want to encourage people to build what that community needs, create open-source solutions, and help the ecosystem thrive.

  • While developers are a key component of this strategy, the support is not limited only to them; it extends to any entity that contributes meaningfully to the ecosystem rather than merely enriching themselves or solely promoting their own brand.
  • Removing the “single pool”-requirement does not in any way mean that the Cardano Foundation is suddenly delegating to large pool clusters. And especially the Foundation will not delegate to a pool which is part of the top 50% stake owner. This ensures the delegation does not worsen the chain’s minimum attack vector.

Minimal technical requirements for pools.

We currently require that pools have the following setup so that they can get delegation:

  • At least two relays registered on chain. Separate IP not just different port numbers. You can check this through dbsync or for example https://cardanoscan.io or https://adastat.net has a nice interface for that.
  • The relays should be running an up-to-date version of cardano-node. This can be verified with cardano-cli ping ’s query command.

In the future we are thinking about (these are considerations that are not yet implemented) requiring:

  • at least one relay runs with p2p enabled. This can also be verified with cardano-cli ping.
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Nice to see!

However id like to ask, why the Cardano Foundation thinks its worth to support multi pool operators with its delegation strategy? If someone is operating multiple pools, the chance that this operater is already earning good money with his pools is pretty high. This makes in my opinion not that much sense.

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Is there maybe supposed to be a link to this form?

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These measures seem to support centralisation rather than decentralisation.
:poop:

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Please lets be constructive here. What makes you think so @Dettox and what would you change?

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Doesnt look good guys. Fewer pools, MPOs are eligible and the stake will sit with them for longer… oh and you could just handpick SPOs ran by friends and family?

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Delegation Criteria: We will remove the single pool requirement which will ensure greater flexibility in our selection process. This new approach aims at greater inclusivity.

Why support multi pool operator? it doesn’t make sense :frowning:

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Hi Fabian,

  • Extend delegation to 12 month:
    They can delegate to their pals much more comfortably now without having to go back & forth every 3 months trying to find a friend of a friend.

  • Delegation to multi pool operators now possible:
    That doesn’t bode well for decentralisation.

  • Reducing number of pools they delegate to:
    This doesn’t help decentralisation either.

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This is an understandable concern. Removing this requirement does not somehow mean we are now delegating to big pool clusters or even exchanges. I don’t want to bring examples here, but we are just going for “quality” (in terms of contributions to the delegation strategy), without such a limiting factor. We don’t want to exclude high contributors by the fact that they have, for example, two pools. And an increase of k would magnify this problem in the future.

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Yes, thank you for the catch. I forgot to add the link. It will be Delegation Application Form (the form points to the old typeform at the moment, this will be updated soon)

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Okay i understand, however if someone is running 2 pools, the operator should already earn decent money, so why would you want to support them, even if they are doing just fine without your support?

By delegating to someone who is already able to earn a decent amount of money with his pool, you are missing the chance to support another builder who isnt able to do so with his pool.

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It very much depends on what shall be financed with the gains from that pool(s). For funding, e.g., the backend infrastructure of a wallet app or a chain API and a medium-sized development team, the proceeds of a single saturated pool are hardly enough.

Moreover, the saturation is kind of arbitrary … and might just be halved in a couple of months if the “k=1000” faction gets their will. So, I can understand the stance that running only one pool should not be a hard criterion.

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Good point yep.

I dont agree with that. You could simply adjust your margin.

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Please do not misinterpret the delegation strategy explained in this post. The Foundation is not trying to artificially create decentralization by delegating to pools that would not survive without delegation. That would be against the principles of how Cardano works and would have little to do with decentralization.

I would even argue that when you think the decentralization aspect through and also consider operational resilience (from a network perspective), you want to have pools that are strong and that are close to the point of saturation, because this is how the system works.

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Hey, Rob from Zeitgeist Pool here. The form is not working yet?

We have been here since day 1 and never got any delegation. It would be awesome if we were chosen at last.

We have been building many things on Cardano for the past two years. Mandrillz NFT and its Cardano based features was our most successful so far.

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I think the distinction you make doesn’t have a significant effect in practice.

With ada at 0.24c you need multiple fully saturated pools to just finance one freelance dev. Unless you do ISPO like 100% fee pools there really isn’t a significant short term upside here.

The delegation of either CF or IO right now is a great way to fund a pool operation and allow the operator to grow pledge maybe but the few 100$ profit that delegation brings towards running infra for a dApp, etc. But it won’t make a dent in dev expenses.

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Nah, that doesn’t sit right with me.

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You say pools are handpicked based on insights and data. Wouldn’t it be more transparent and fair for SPO’s to explian WHAT criteria there are?
And why handpick SPO’s, if it based on data why not automate it?

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@Marco_Meerman there is no deviation from the core strategy of “Supporting the Architects of the Future”: https://forum.cardano.org/t/cardano-foundations-new-delegation-methodology-supporting-the-architects-of-the-future/79594. For example:

We want to support the people who create value on Cardano; who build the tools that others can use to build on Cardano; that contribute to projects like the Developer Portal ; who create Cardano Improvement Proposals (CIP) ; and participate in the discussions to define new standards.
We want to encourage people that are active in the Cardano Stack Exchange (CSE) and the Cardano Forum.
We want to encourage people to build what that community needs, create open-source solutions, and help the ecosystem thrive.

You can not automate this. Humans need to look at these contributions.

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CERP would like to focus on running multiple testing pools - answering the call about there not being enough.

BUT costs money. Chicken and egg scenario.

The chances of being funded beforehand are very low; and it would be a year before the opportunity to get delegation rolls around again, correct? Funding multiple test pools out of pocket for a year the only option to MAYBE get delegation next year?

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