Checkout my other CIP RobinHood (CIP RobinHood - Tune parameters minPoolCost and K). It defines a tipping point, which is when a pool starts to offer decent rewards. With a minPoolCost of 30, the tipping point is about 3MM. An operator would need about 3MM pledge to buy-in to decent rewards. Contrary to my own CIP, decent rewards aren’t good enough. Rewards need to be better for delegators to consider switching pools. A new pool would need about 5MM pledge to offer better rewards than a saturated pool with no pledge.
This means any pledge less than 5MM is worthless unless the pool can FIRST become popular. Any pools with < 5MM pledge that fails to become popular will add to the statistic that pledge does not offer better rewards. These statistics are part of the reason pledge is currently believed to be meaningless or ineffective.
A minPoolCost, especially one so high, makes running almost any low stake pool profitable. If you are running a low stake pool as a n+1 pool, then ANY pool with > 0 delegated stake is profitable. A pool only needs to be online for a couple seconds to mint its scheduled block. If it can piggy back on another’s pool’s infrastructure (to remain on tip and hold peers) than the cost per additional pool is 0, but the reward is minimum 340 ADA/block. Removing the min reward per first block probably won’t cause many already live pools to close, since they can farm lost wallets indefinitely at no additional cost, but it should stop new pools from starting and gathering stake for this purpose.
Not enough people know this. Cardano was designed with a preferred level of centralization, k pools.