Is it smart to change the incentive model of the Cardano?

CIP-69 proposes to reduce the minPoolCost parameter to 0. You can find enough good arguments for and against. Let’s see what a possible reduction of this parameter to 0 would mean and what it should be compensated with.


  • Pool operators can set 3 parameters that affect rewards. There are 2 protocol parameters that have a major effect on the rewards.
  • We should focus mainly on the quality of network security and the reward system is a tool to achieve it. Economic incentives influence the behaviour of actors and their behaviour must not compromise network security.
  • Operating a pool must remain an attractive and profitable business.
  • If we allowed pools to be operated without getting at least a minimal reward, we might help smaller and upstart pools, but we risk a race to the bottom.
  • The desirability of the pool can currently be achieved by the popularity of the pool operator or by attractive parameter settings.
  • It is possible to set minPoolCost to 0, but we should introduce the minMargin parameter and set it to at least 2%.

This article was prepared by Cardanians with support from Cexplorer.

Read the article: Is it smart to change the incentive model of the Cardano? | Cardano Explorer

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It’s a difficult choice. It takes a lot of money (delegation) to get regular blocks and I’m guessing if the delegation is below 2 million ADA it doesn’t seem worth it. For example, if I want to help someone get started, I would have to put in 2 mil into the pool and the operator would get half of the rewards at that level. If I were to pull out the pool wouldn’t get any. It’s almost impossible to get started unless you are an influencer on YouTube.

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What does a minMargin percent of 2% avg out to if you produce one block per epoch?

As far as I know blocks are roughly 640 ADA at the moment. 2% would be 12.8 ADA per epoch, 934.4 ADA per year, 77.86 ADA per month.

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Which is like 35 bucks at the moment
If you host on cloud 400% chance you will never break even.