Summary: Governance Hour – Deep Dive Into Parameter Change PCP00006 (Reduce minPoolCost to 75 ada)
In this episode of the Governance Hour, host Nicolas Cerny (Governance Lead at the Cardano Foundation) speaks with Ryan Wiley (also known as Cerkoryn), member of the Cardano incentives working group and author of parameter change proposal PCP00006. Airing on Cardano’s 9th birthday, the session examines the proposal to reduce Cardano’s minimum fixed pool fee (minPoolCost) from 170 ada to 75 ada - a reduction of approximately 55.9%.
The Problem: Declining Block Rewards and the Small Pool Penalty
In Cardano’s reward sharing scheme, transaction fees and block emissions are collected into a shared pool each epoch (a five-day period) . After deducting the treasury cut, remaining rewards are distributed based on active stake and blocks produced. Stake pool operators set a variable percentage fee and a fixed fee, but the protocol enforces minPoolCost as the absolute floor for the fixed fee.
With block rewards currently sitting at roughly 293 to 300 ada per block, a small pool producing only one block per epoch sees 170 ada-about 55%-of its total block reward deducted by the fixed fee before delegators receive their share. In contrast, a saturated pool producing 10 blocks (earning 3,000 ada) pays the same 170 ada fixed fee across its total rewards, resulting in a negligible fee deduction for its delegators. This structural mechanism heavily penalizes delegators who support smaller, low-saturation pools, pushing stake toward large incumbent operators and undermining network decentralization.
Why 75 ada as an Interim Adjustment
As block emissions naturally decrease over time, block rewards are projected to drop below 170 ada by February 2028. If minPoolCost remains unchanged, delegators in single-block pools would receive zero rewards for their delegation, forcing small operators out of business entirely. Reducing minPoolCost to 75 ada serves as an essential stopgap . It brings the delegator penalty back down to roughly 25%, restoring the historical baseline established during the Shelley launch (when minPoolCost was 340 ada against a 1,400 ada block reward) and when it was previously halved to 170 ada in October 2023 (epoch 445).
Dispelling the “Race to the Bottom”
Addressing concerns that lowering minPoolCost will spark a destructive “race to the bottom” among operators, Ryan Wiley pointed to historical evidence . When minPoolCost was halved from 340 ada to 170 ada in October 2023, the vast majority of stake pool operators maintained their fees well above the minimum floor. Furthermore, high fixed fees do not guarantee superior performance or security; small community operators running modest hardware frequently achieve flawless block production, whereas large institutional pools have experienced extended outages.
Long-Term Incentive Roadmap
Lowering minPoolCost is the first step in a broader, multi-stage overhaul of Cardano’s economic incentive structure. minPoolCost will ultimately be rendered obsolete by CIP-0023 (minPoolMargin), which introduces a minimum percentage fee that applies equally to small and large pools alike and is scheduled for implementation in an intra-era hard fork following the Dystra era. This transition will be accompanied by future adjustments to the stake pool target number (k), pledge requirements under CIP-0050, and timebound delegation models (CIP-0163) to foster a healthy, competitive stake pool ecosystem.
Top Five Q&A (FAQ) about Reducing minPoolCost to 75 ada
Question 1: What is the main objective of parameter change PCP00006?
Answer: The proposal seeks to lower the protocol parameter minPoolCost from 170 ada to 75 ada, representing a 55.9% reduction . Its primary objective is to eliminate the disproportionate fee penalty imposed on delegators of smaller stake pools, making low-saturation pools financially attractive and encouraging stake decentralization across the network`.
Question 2: Why does the current 170 ada minPoolCost disadvantage smaller stake pools? Answer: The fixed fee is charged once per epoch on the first block a stake pool produces. Because current block rewards are roughly 300 ada, a single-block pool loses 170 ada (55%) of its total rewards to the fixed fee before delegators split the remainder`. Saturated pools spread that exact same 170 ada cost across dozens of blocks, resulting in a tiny percentage deduction for their delegators.
Question 3: Will reducing minPoolCost cause a “race to the bottom” for operator fees? Answer: On-chain data indicates that a race to the bottom is unlikely. When minPoolCost was previously cut from 340 ada to 170 ada in October 2023 (epoch 445), most stake pool operators chose not to lower their fees to the new minimum, with many continuing to charge 340 ada or higher.
Question 4: What will happen if minPoolCost remains at 170 ada as block rewards decline? Answer: As protocol emissions decrease, block rewards are projected to drop below 170 ada per block by February 2028. If minPoolCost stays at 170 ada, delegators in pools producing only one block per epoch would receive zero ada in rewards, effectively starving small pools of delegation and entrenching large incumbents.
Question 5: How does this proposal relate to CIP-0023 (minPoolMargin)?
Answer: Lowering minPoolCost to 75 ada is an interim stopgap. In an intra-era hard fork after the Dystra era, CIP-0023 will introduce minPoolMargin (a minimum percentage fee), which replaces the fixed minimum fee structure entirely and treats small and large pools with complete economic parity.
Wednesday, 23 September 2026
15:00–15:30 UTC