In my opinion, you are making a few assumptions about the effects of the 340 ADA minPoolCost that I do not believe to be true. For example: It is not the minPoolCost that makes “popularity the basis for pool desirability”, but many other factors (such as the ineffective a0 parameter setting) and the way that staking in Cardano is designed in generell.
I do agree that the minPoolCost Parameter needs to be lowered significantly or even go to zero. However, I would set a minimum variable fee in return.
If we just lower minPoolCost to zero, without setting a minimum variable fee, pool fees will have a race to the bottom, because the majority of delegators want to maximize their returns. The outcome of very little fees collected by stake pools for their service, will be that there is going to be almost no economic incentive to run a stake pool in the future, which is not desirable for Cardano’s security.
From my perspective, as a SPO of a small stake pool (~1.9MM ADA stake currently), a minimum variable fee would preserve economic incentive to run a stake pool, but it would make it still more desirable to delegate to a small pool than how it is currently, because delegators do not have the heavy burden of the 340 ADA minPoolCost on small pools’ rewards pots any longer.
Lets make a quick example calc.:
My pool validates two blocks in one epoch. One block currently is around 620 ADA rewards worth.
→ 2 x 620 ADA = 1240 ADA in the rewards pot for my delegators.
→ 1240 ADA - 340 ADA minPoolCost (and usually also the variable fee, but mine is at 0% currently)
= 900 ADA distributed to my delegators (with 1.9MM stake)
The 340 ADA fixed fee eats away a huuuge chunk of rewards for my delegators and causes my annualized ROA to be much lower than the ROA of a large pool.
If we set a minimum variable fee instead of let’s say 5% and zero minPoolCost the calc would look like this:
→ 2 x 620 ADA = 1240 ADA in the rewards pot for my delegators.
→ 1240 ADA - 62 ADA (min variable fee of 5%)
= 1178 ADA distributed to my delegators (with 1.9MM stake)
A min variable fee will actually make Cardano more egalitarian, because my ROA will actually be a lot closer to a large pool than it is now. Of course, I will have much less income as a pool from fees, but at least my ROA becomes much more attractive, because the punishment of the 340 ADA fixed fee is gone.