Diminishing returns with increased pool size

[vantuz-subhuman]

@Razvan

But what if me and Bob have a pool and we have 0.98% of total ADA, let’s say. And thanks to rewards we increase our stake to beyond the mentioned 1%. What then? Do we have to break up the pool, or does anyone see a more elegant/optimal solution to this issue? Maybe it’s not even an issue at all – if that’s so, do talk me through it.

I think your delegates may solve this issue for you, since if your pool grows beyond 1/k - they start losing their profits See this comment for reference:

Suggestion : Bring ‘bonus reward’ system to encourage longer contribution to the pool

Totally. The other thing, tho, is that whatever happens - a single pool in Cardano cannot get more than 1% of total reward, so when a pool caps - it becomes import for them to get a proportional new stake only out of new stake in the system. Or otherwise it might cause actually an outflow of old stake. Example: There are 100 pools and a 1000 coins of total stake, so each pool contains 10 coins (exactly 1%) and the system is in equilibrium Imagine that each epoch there’s a total reward in …

And also this video:

IOHK | Research; Prof. Elias Koutsoupias, Why game theory?

The whole 1/k thing makes pool-system “liquid”. Pools will constantly see some stake fluctuations, not like it’s only gonna go up. At first those fluctuations will be really big, while people are figuring the whole thing out, and eventually it will converge to an equilibrium with constant slight fluctuations. So I don’t think pool owners have to worry about it this much - maybe just tone down marketing when your stake goes close to 1/k

@Razvan

And thanks to rewards we increase our stake to beyond the mentioned 1%

Btw, receiving the staking reward will hardly change your share in the total stake significantly. Because everyone receives them, and not only you and your delegates, so the overall share will remain fairly the same. Only stake shifting (between pools, or in and out of the system) changes share more or less significantly.