Let’s take a look at an example scenario (since we don’t have the rewards stats yet) - consider the following;
In the above example, 75,677 ADA is the total generated rewards (after all the fees are applied).
Let’s say you are staking 50,000 ADA at a big pool that is producing lots of blocks, it will likely have a 100s of delegators for example and let’s presume the pool has an live stake of 231.88 Million ADA like this:
Your relative stake percent of 50,000 ADA at this pool is: 231.88 Million / 50,000 ADA = 0.00022%
So given one epoch example reward is 75,677 ADA and your share of that reward is 0.00021562877% - you will get total rewards of 16.65 ADA (for 1 epoch - based on my example scenario above).
Now consider staking only at a smaller pool with a live stake of say 5 Million ADA , now your 50,000 ADA relative stake percent is 0.01% . Let’s say this pool generates 10 blocks, yielding total reward of 437 ADA after all the fees applied.
Now, your 0.01% reward slice is 4.37 ADA - I know, it’s not great compared to staking at a big pool.
Here’s a thought experiment - what if you only staked 10% of your balance at a small pool and the remaining 90% at the big pool?
For the above scenarios:
Big pool rewards = (40,000 / 231,880,000) * 75,677 = 13.05 ADA
Small pool rewards = (10,000 / 5,000,000) * 437 = 0.874 ADA
Total combined rewards = 13.924 ADA
So you would loose about 2.726 ADA doing the above split delegation (90% at big pool, 10% at small pool).
Now why would you want to do this? Well, if more people did this - we’d elevate the live stake levels at small competent stake pools and giving them a chance to produce blocks and march towards decentralisation, as opposed to what is happening now -
Most of the small stake pools are setup well; they are secure and stable and just as good as any big pool. Only difference right now is their notoriety.
I will put this out to you ADA holders - would you take a loss of 2.726 ADA per epoch (in the above example) in the pursuit of decentralisation by staking at a small pool?
Not all stake pools are created equal; when choosing a small pool - it would be mighty awesome of you if you could look into some of these factors:
- Whose running the stake pool operation? Are they competent? Are they transparent?
- Have they put sufficient pledge towards the stake pool to show their commitment?
- Do they have excellent uptime record? Preferably monitored by a independent third party.
- Is the pool well equipped and setup securely on par with the big pools?
Do a little bit of research before committing to a pool, lots of good small pools out there waiting for a chance to prove their worth. Only you the delegators can give them the opportunity to shine.