The graph I quoted above was about pledge saturation it was titled: “Reward Potential at various Pledge Fractions”.
Our original dispute arose because I claimed that pledge makes almost no difference at the lower end of the range and I stand by that claim. So let’s put some numbers on it.
Use this fantastic Cardano rewards calculator:
Update the figures for current Ada supply and total staked Ada:
- Current Ada supply = 33,752,565,071 Ada (messari.io)
- Total staked Ada = 24602095926 Ada (from my running node using Andrew Westberg’s leaderlog tool)
Using the calculator, leave K=500, set the total Stake to 67M Ada, leave fixed pool fee at 340 and set variable fee to 0%, leave other figures, Rho, Tau, a0 etc. unchanged. Then vary the pledge amount to see how the return for delegators changes.
At Pledge 0, total Stake 67M then return on Ada for delegators is: 4.46%
At Pledge 500K, total Stake 67M then return on Ada for delegators is: 4.46%
At Pledge 1M, total Stake 67M then return on Ada for delegators is: 4.48%
At Pledge 2M, total Stake 67M then return on Ada for delegators is: 4.5%
IE. 0.04% extra yield from 0 to 2M pledge. Very minimal indeed.
On the other hand if I pledge saturate a pool with 67M Ada then total pool return goes to: 5.82%
Wow. An extra 1.32% yield for those that can pledge saturate a pool. So WingRiders can now pay its users an extra say 0.5% yield, for locking up their Ada for 3 months, and pocket the additional 0.82% difference it is earning. This is a great deal for WingRiders and its users. But, not so much for the rest of the Cardano community because they are comparatively earning less.
And, it does reduce decentralisation because it shifts Ada from small stake pools to large entities like WingRiders. Furthermore, these large entities can keep spinning up more pools under their control to match the demand for this extra yield.
I say that this current pledge design is creating the wrong incentives. That is one of the reasons why I support @Michael.Liesenfelt CIP-0050.
By the way, I wasn’t aware that Eternl wallet was doing something similar to WingRiders. One part of me is disappointed to hear that, but, if the incentive models are designed as such, then…