Choose pool to delegate. Practical concepts

First of all, staking implies the responsibility to choose which pool operator to trust with your money, which has power in the consensus, you give your vote to have more strength to validate blocks.

If you want Cardano to remain safe and profitable, for you and for everyone, delegating is the only alternative. It suits you, and it suits all of us.

Delegating from your non-custodial wallet, be it Yoroi, Daedalus or AdaLite, is the right alternative, because you can choose any pool, and you keep your ADAs in your possession. Exchanges that allow you to delegate do not give you the keys, they are the owners and choose which pool (usually their own). If you have more cryptocurrencies, leave them in multi-crypto wallets, or in their official ones, but your ADAs, you know.

Small stake pools are as safe as any of the big ones, nobody is going to touch or do anything with your ADAs, ever. You hold the keys and can change or even spend your funds at any time. There are no deadlines or staking locks on funds.

You will not become wealthier by delegating to a large pool.

The difference in return (ROS) after months, are minimal or non-existent, most pools tend to 5.5% per year, (unless the pool never signs blocks).

The difference in ROS is felt in each epoch, large pools charge stable rewards, and small pools charge variable rewards, as in some epochs they are higher than average.

Changing pools often looking for better rewards is not a good idea, because you will lose the “peaks” of rewards of the small pool, (it is like changing the cashier’s line, and see that the one you were in, now, advances faster, and you change again, and so you lose rewards).

The big stake pools are the ones that usually have their delegation saturated, or close to it (you will get less rewards in that case), and usually divide their consensus and delegators, creating another new stake pool to avoid being saturated. What do you gain from it? Nothing, because if you chose to delegate to small pools you would not be worried about saturation, and you would have to be alert to change pools.

Pool operators who are well known (influencers), bring nothing but notoriety and the ego to allow you to say “oh, I delegate to the best known pool in the world”.

The best stake pool to delegate to is the one that lets you “sleep easy”, medium or small, not saturated or close to it. The good pool operator is the one that has frequent contact with its delegating community through its social networks, attends to your personal doubts, issues communications on the status of the node, information on the technology used to connect, if it keeps the necessary software versions updated in the node, the number of relays used (connection with cloud servers), among other issues.


This statement is unfortunately not true at all.

Assuming 0% margin for better comparison, you have the same (fix) cost for all polls. For a small pool that makes 1 block p.e. the cost to the delegator will be > 30%. For a large pool, the same cost (i.e. 340 ADA) is shared among many blocks. A more detailed explanation is here.

You can also use this calculator to explore owner reward vs. delegator reward for various size pools. You will notice how delegator reward changes quite significantly depending on pool size.

I said “most pools…” not all pools. Thanks for your observation!

The difference in return (ROS) after months is significant, namely between 1-30% depending on pool size. At least that is what the math is saying. There may still be good reasons to delegate to a smaller pool, but that’s another story.

1 Like

Right. This article, whith its “practical concepts”, is for average delegators. Deeper details would not be of interest to them. Although, it is correct that these particularities exist.

It’s pretty simple really. If a delegator wants the absolute highest and most sustainable rewards there is only one way:

  • select a pool that is minting for months
  • a pool around 40m of active stake
  • a pool with minimal fixed fees (340) and lowest margin fees

If you choose such a pool THERE WILL BE NO other pool that can ever beat these returns except if they pay it from their own pockets which is either not sustainable or not trustworthy.

If you however also like to help the community or a cause (like improving decentralization or helping the needful) by accepting lower returns then their are many good other options like small pools.

There may be a little conundrum with this …

On the one hand we have a set of more or less “fixed” constraints, like 340 ADA Fix, VPS rental, domain, power, network, etc. Looking at these alone, one could be tempted to make absolute statements on sustainability, real cost etc. For example, not too long ago it was believed that an SPO needs not only those 340 ADA for the first block but also some additional margin to be able to run a pool securely.

On the other hand, we have a high variability in ADA value. What was true yesterday, may be non-sensical tomorrow. For example, given 6 x 340 => 2040 ADA p.m. fix and an ADA value of $2, it cannot possibly be claimed any more that this is really “needed”. No one actually needs $4080 p.m. to run two simple servers let alone a 2% margin on top. With an even further increase in ADA value, which I guess non of us would doubt, the above claim (i.e. an SPO needs …) becomes ever more funny - who can then still sell this to a delegator with a straight face - and who would?

I’d say, this is nearly impossible already - I mean with a straight face :wink:

Some factors are fixed, others are not - the redistribution of pool rewards needs to become a little more flexible too - and it will of course. With Alonzo, we will get a programmable blockchain. Creativity will get unleashed and far more choice for the delegator will emerge.

Daedalus might not show it, but other communication channels will. The concept of effective cost per block might become an important metric for the delegator.

Agreed on what you said, some operators just need to mint at least 2 block a month… With 2 blocks a month you have (340 * 2) * 12 which give you 8160 ada a year…

1 Like

I often wonder what folks are actually asking/hoping for …