@Ahmad_Alkilani. Hope you are well. I have a question. For clarification, the costs for staking have a percent associated. I don’t mean the 340, but the actual percent. The number that I’ve seen is between 3.4 add high as 28%. Does that figure into the return, or cost to stake? Not sure if that’s clear, but on the Yuori Wallet you have the pool listing. Below has the pool size, costs, and pledge. Under costs there is a precent. The one I’m looking at is 3.43%. Then below that it’s has in parentheses (2.5% + 340). I understand that the parenthesis is 340 plus they take 2.5% for themselves. But what’s the 3.43%? Thanks for the replies. I’ve tried to look other places, but can’t seem to find the answer. Sorry if it’s repeat.
Hmm… I think what you’re referring to is what ADA Pools has (or used to have, because I don’t see it anymore) as an estimate of total cost. I believe ADAPools.org is also used for Yoroi’s wallet so even if you’re not explicitly looking at adapools.org, what you’re seeing in Yoroi comes from there.
OK, now that that’s out of the way, I believe adapools were trying to estimate total “cost” based on stakepool parameters and past performance to give delegators an easier way to estimate which pools might be better performers for them. Depending on the length of time adapools used to estimate this cost, it either helped or hurt and so I’m guessing that’s why they removed it (assuming they really did remove it and I’m not simply in need of more caffeine
)
Anyway, the gist of this is as follows (and is mainly due to the fixed 340 ADA cost that stakepools can’t change to a lower value yet):
For a pool with very lower delegation numbers, that 340 fixed cost ADA starts to hurt. Think of it this way, let’s say a pool called FOO with 10 delegates, each with 1K ADA, and another pool called BAR with 100 delegates each with 1K ADA. First Pool FOO mints 1 block. Second pool BAR mints 10 blocks. So each pool is making exactly the same number of blocks proportional to their total stake. All good so far. With an estimated block reward set to 1K, the first pool reward for 1 block is 1K ada minus the 340 fixed cost, that leaves 660 assuming 0% margin then everyone gets 660 / 10 delegates (because in this contrived example each delegate is delegating the exact same amount so we can just distribute evenly) then each delegate gets 66 ADA reward.
For pool BAR, the calculation turns out as follows:
1K block reward * 10 blocks = 10K ADA - 340 fixed cost = 9,660 ADA / 100 delegators = 96.6 ADA per delegate (again with even distribution here)…
So why the difference even though proportionally each pool has the same numbers (also assuming perfect performance, luck, and not taking into account the effect of pool pledge because it’s minimal today (i.e., a0) you’d think over the long run both pools would fair out the same. That is true except the fixed cost 340 is relatively high compared to rewards for smaller pools that are only able to mint a block or 2 every epoch. So that eats up from the total reward and as a result, finally, leads to an estimated “cost” that is higher, basically summarizing this for you. So the cost of delegating to the first Pool (FOO) in this example is indeed higher than delegating to the second pool (BAR) with all else being equal. and this is primarily due to the fixed cost.
With all that said, I believe that cost number also incorporated other things such as past performance. It’s rather unfortunate that these metrics have a way to sway people away from smaller pools because in most cases, these “smaller pools” perform quite decently and are run professionally… they just need a break and some delegates to help them out and will return nice rewards.
There’s a lot of discussion around changing the cost parameters and how cost/rewards are handled. Some pool owners like myself (CPX CardanoProxy.com ) are hoping delegator perks, running on green energy, and donations to charity help sway delegates to delegate with us.
Others are giving back some of that 340 manually today, and planning on using smart contracts in the future. There is also discussion as mentioned earlier on how these costs are unfairly hindering small pool operators and the equation should apply differently, for example a percentage of 340 until you reach a certain # of delegation then the full 340 applies. Other equations are being proposed.
Apologies for the long reply, but this is a bit of a complex subject to accurately reflect different angles of in a small thread. Hope this helps, and shameless plug here
, we’d love to see you delegating with us at CPX Pool (Cardanoproxy.com)