Coinbase opens 23 new fully saturated Cardano Staking Pools bringing another 1.5 billion of previously unstaked ADA!

This post is about Multi-pools, Incentives, K-parameter and Decentralization.

Few days ago Twitter announced that there were 23 new stake pools created with full saturation, 0 pledge and 5% margin. They were able to connect those pools to Coinbase because they were all on Bison Trails servers that Coinbase acquired and their home page now points to Coinbase website. As seen on this Twitter thread:

Each pool has two delegators of about 30 million each, which probably means they are expecting K to hit 1000 soon. This way they can get another 23 pools funded with full saturation just by moving one delegation wallet. (Very efficient of them).

This has now appeared on Coinbase blog:
While it has been possible for individuals to stake Cardano on their own, or via a delegated staking service, the process can be confusing and complicated. With today’s launch, Coinbase is offering an easy, secure way for any retail user to actively participate in the Cardano network and earn rewards.
" The current estimated annual return for Cardano staking on Coinbase is ~3.75% APY"
Source: Coinbase Expands Staking Offerings to Include Cardano | by Coinbase | Mar, 2022 | The Coinbase Blog

While I’m very happy that they are bringing 1.5 Billion of previously unstaked ADA to staking. As well as creating competition for likes of Binance multi pools (so we don’t end up having only one dominant group of commercial multi pools). I find it odd that this narrative of “confusing” and “complicated” Cardano staking is becoming prevalent. People seem to be willing to take 3.75% instead of 4.5% to 5% just so someone else can take care of staking for them?

Do we need wallets with one-click staking? Or are 5% or lower rewards just irrelevant as incentives?

Why am I pointing this out?
Just to bring attention to K parameter increase. Single stake pools that are unsaturated will make even fewer blocks since number of fully saturated (multi) pools will increase while a single pool operators will still remain at the same number of pools.

I think revision of incentives on protocol level should be researched (most likely related to pledge and labor of running a stake pool). Otherwise we are going to end up with only commercial cartels running all the pools.

I did mention in one of previous discussions of adding something like Captcha test once per epoch signed with pledge wallet for all pools. This for single stake pool operators would take 5 minutes every 5 days. However, for multi pools at K 10,000 levels it would start becoming costly and time consuming. Not completing this would reduce rewards for those pools and distribute them to pools that completed it.

On delegator side there could be incentives for voting besides ADA. Let say any wallet that votes is eligible for extra drops from that pool (such as custom tokens or NFTs). Most of exchanges will not want to deal with all these unlisted assets, thus making self custody in private wallet instead of exchange a bit more attractive.

ISPOs can be linked to single stake pools AND wallets. For example: to be part of an ISPO you must delegate to a stake pool and enter into a Plutus contract. Exchanges will not do this for each individual customer.

Make Cardano wallets a lot more user friendly. Maybe start with very, VERY simple mode. ADA transactions and staking only (with tips and/or lessons). Then user has a button for one level up where it has voting and assets. Then another button to advanced for the rest.

Since we are just at the beginnings of Cardano network I think we should be very creative in testing new incentives and disincentives when it comes to decentralization issues. Because after Voltaire and when K hits 10,000 changes like this may become almost impossible to start/research/implement/test.


I’m drafting a CIP which you may find to be very relevant to your arguments.