Just clarifying. It cannot completely eat up the rewards, since one block generates ~1000ADA, so max 1/3 may be used for operation cost. The rest goes to delegators (as correctly calculated in the initial post of the Thread creator)
My opinion on the topic (being a very new Pool Operator).
Currently I do not really see a chance to attract any Delegator to my fresh pool. Just any Tool out there (Daedulus, Adapools, Pooltool) is listing my pool right at the bottom because the ROS is zero and the percentual cost is inadequate compared to big pools. So there is absolutely no chance for me unless i have a very high pledge which already generates some stable rewards.
So for me it would be a good option to simple set the fees (fix and variable) to 0 for the first 3 months to reach a healthy amount of delegation. My favourite option would be having a contract to say my feeds are depending from the actual stake. Or like the austrian income tax where you have a lower tax on lower income and then step by step incresing. (like 0% for the first 1M ADA, then 1% everyting up to 3M ADA, …)
I think this would help growing the Pool initially.
The raised doubts regarding big operators destroying the market with conditions which no-one can compete with. Well I think this is already the case because they can provide the best conditions through high pledge anyways.
In the excel sheet below I calculated some Samples.
The last row outlines the % of Rewards which is hurting the ROS for small pools.
Identity solution! Reading threads a few days later, and I see this one crop up again in @Serotonin comment. Perhaps a worthy CIP? @Dubius seemed to support the proposal in principle in this comments thread How Cardano could fast-track financial inclusion in emerging economies - #17 by Asogan_Moodaly
Proposed solution: Digital IDs with biometrics (already proposed for Atala Prism under ‘Coming Soon’ on the website) for SPOs. Limit the number of pools per digital ID.
Becomes a fantastic marketing use case in terms of the big picture of Cardano roll out.
Even tough I like your intentions, 340 ADA is not a big deal. I like almost everything that can help small pools but for sure the min fee is not a big deal, even the 500 ADA for registering a new pool I can’t consider a problem.
The reason why cardano small pools starve is not because of fees, I can point some reasons:
The large pools, specially multiple operated has more chances to mine blocks therefore better performance overall.
Delegators are biased to bigger pools… I know it looks stupid but its a reason why Adalite have the 4th pool saturated nobody moves and stay there.
Ada pool ranking system is not good at all, if your pool is stable enough to run months with non stop it won’t be considered a good pool and that’s stupid. The tools are only considering the stake size as something and the performance to rank pools, not if its good maintained.
Influencers amassing multiple pools, they saturate one and create another.
Exchanges runs multiple pools and they don’t care, customers are used as milk cows and they don’t know about it.
Cardano calls this 90% decentralisation, it doesn’t help either:
I am against having any kind of minimum margin. Pools can simply send a transaction to return their “margin” that this CIP would force on people.
Moreover the tickers for 0 percent pools have already been created and 0 percent costs have already been advertised in pool descriptions.
Trying to charge a minimum margin places an undue burden after the fact change that forces pools to now have to achieve work arounds and appear to charging higher than they actually are.
Hi Shawn, I like very much your CIP. Thanks for your hard work aimed to improve decentralization and the health of Cardano network. I also think that would be better to have 0 fixed fee and min. margin fees.
Keep up with your support of Cardano ecosystems
Race to 0% on ITN was related to margin fees. There was not fixed fee. Having 340 fixed fee is preventing you from attracting stake, because the cost of delegators staking in a pool with lest than 6M is much higher than staking with big one. So naturally they will move their stake from the small pool to the bigge one wit much higher ROA. This takes smaller pools unable to produce blocks and go out of business. That takes Cardano network to centralization which is very bad for the project.
Hi Shawn, very good CIP. I think it s a move in the right direction. Like many others I am not sure to understand how a 0 minimum fixed pool would degrade the situation.
I do like your minimum variable pool fee as well. It would prevent to run 0% pool at lost. I don’t know if this scenario is the only game theory argument resulting in the 340 trap fee, I am not an expert, but it seems covered by your minimum variable pool fee.
Anyway, it is already possible to run a 0% pool by redistributing the 340 fee to delegators. Some SPO are already trying to do that, not to drive out competition, but to try to get their first delegators. And still, it is not working.
Interesting CIP Shawn!
Leaving this here for future reference . . .