Is it worth it to start with a minimum 500?

Hello all!
I’m a 20+ year linux admin and developer. Not at all unfamiliar with crypto, but new to the vast world of crypto/PoS, and I also just started small time mining. Just been watching on sidelines for years until recently. I’m quickly realizing mining is not the best way for long term, but I like it, I’m a tech and I can do it in my garage on my own. I definitely want to work towards running my own staking pool here, I’m just not sure its worth it with a minimum stake of 500 ADA. I have many questions, but here’s a start.

The calculators I see don’t work if you put in 500. I need some minimum numbers so it makes sense to start a pool and build from there. The problem is, I’d run a google cloud server, and running this with 8G of ram is not going to be cheap. I don’t mind running on my own a few months, but it would need delegators (the money people) from what I understand. I’m not a marketing person. I run dev on web sites all the time, so that’s no issue, but being a social person and marketing my pool, that’s not me.

So I need help understanding rewards, just some low end ball park numbers here. Say I put in my 500 ADA. Then I manage to get a few delegators with say 500,000 ADA ea.

Each 5 days (about) I get a 340 ADA fee ? OR is that per year? (no way does that cover costs!)

But then there’s a block rewards with that 2x 500,000 ADA (plus my 500), which pays about 5% a year rate? Or 5% that block/epoch. (I realize that’s IF the pool wins lottery to do the work, so the pool may sit there for weeks with nothing)

Also, I know there’s a margin I can set on the pool. so maybe I have a 5% fee. Is that 5% per year? (5% / 12 then?)

Anyway, take the 1,000,500 ADA , we get a hit, and the reward is 5% of that, plus the 5% margin fee?

I wish there were a nice graphical explanation, not from a “investors” point of view. I’m not a finance person. But give me formulas and numbers, and I can calculate fine. I just need a good example from a small investment perspective, ignoring costs of my pool, which I generally know already.

All this brings me to my main thought though. Seems like in order to be profitable, you’d need many millions in ADA delegated. Why would anyone with that kind of money trust me, just some tech, to manage their pool? I do understand though, that a delegator keeps their wallet and funding so its not at risk of my pool downtime (which there will be on occasion for updates, for security). But why me? if I had $1m to stake I’d pick corporate managed pools, not one from some guy. And with out that, there not enough pay for running my pool.

Also, is there any way to see all the pools with small stake out there? Are there many of them? Whats the ratio of pools to delegators? If there’s lots of empty pools, there’s no point in me starting another.

Sorry my questions are probably confusing and all over the place, but I really appreciate any help.

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Looking at a stake pool, you’ll see many delegators, some of which contribute smaller amounts. Yes, you’ll need more delegators then and that’s where you’d need to market yourself. Maybe you can find a friend to help setting this up with you?

An example of a pool: Cardano PoolTool - The most comprehensive staking statistics for Cardano on the web.

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Hi comment! I personally think that how things are now, starting with 500ADA is not worth it just by itself, earlier in the game you could have better possibilities due to the fact that you could buy more ADA by USD, so you could pull the carriage load with your own horses. Nowadays, you need to rely on other people’s money, but that’s no easy task, because you have to tap on people’s feelings so to speak, so you have to reach to them by offering something special. Pools are more or less the same as they compete to get the most delegators, so to delegate to a pool is more or less like sympathizing to a specific political faction. You (a delegator) can be there just because of profit or just because you like the guys running the node, because they make funny videos on Youtube, or they give useful advice on how to setup your node and stuff like that, as DaedalusVoyage says this is the hardest part of the journey, marketing yourself. I’m in the same storm as you as well.

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Agree. also too many “players” in this forum trying to get users into their pool. This should be taken up by admins to stop this. The point is supporting cardano, not their pools. That is probally why big pey is not here.

Thanks for the replies. :slight_smile:

Basically, its just like any business competing with others. But looking at that pooltool.io site, which is very cool btw, I can see a few things that bug me just doing some estimations and counting…

  1. of roughly 1950 pools, about 40% have ZERO lifetime rewards.
  2. 53% have less than 10 lifetime rewards.
  3. 30% have 100 more more rewards.
  4. I also see pools like eToro in there, corporate ran pools.

I dunno… just looks like my chances of making money look fairly slim. I’m much better off just sticking to my hourly consulting and DCA into Bitcoin or other more long term things.

I wouldn’t be surprised if we see many more corporate ran pools filling up the space, they’d be a much safer bet for investors.

Don’t get me wrong, I very much like the idea of Cardano and blockchain tech, smart contracts, etc, its fascinating. It just seems like the PoS systems we have now is all about rewarding those with money in the first place.

Getting off topic , but one thing that I keep thinking. Couldn’t there be a smart contract created on the network that integrates payment of a pool creation and ongoing service? Something that connects people like me with delegators? And it could automate and protect the delegators and pool maintainers and utilize the same staking systems. Only it would provide one additional piece of the puzzle, initial funding and gets the maintainer a larger piece of the pie. Too bad there’s not something like this. Probably wouldn’t work, just thinking out loud.

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Well the good thing is there’s always possibility for this kind of change down the road. That’s why smaller guys should get in now, so we have a say and can propose changes later.

I’m in the exact same boat. I’m a 20 year admin, and I have the resources to do this… but not do it on AWS or Azure if there’s no profit. Additionally… they should incentivize people to run their own so we can decentralize away from the big providers! The whole idea here is to level the playing field and decentralize… but most of the staking pools are centralized on a few providers.

People like us NEED to ramp up servers. We should aim to stop this trend.

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i’m personally hoping the K parameter gets adjusted soon (heard something about this month maybe) so more pools will be desirable. There does seem to be a bit of consolidation of ADA at this point to a “lowish” # of pools.

Do you know how often changes are allowed to be proposed? I attempted to register for Fund3 but didn’t have enough ADA… I would like to have a say in the network’s future… any idea if pool operators get a say?

I don’t know the governance around proposed changes to the K parameter and as far as I know being a pool operator isn’t an automatic in. You have to have the appropriate amount to register.

Interesting. Yeah, so just learning what K param is, and a move to make it 1000 very soon. Making it even more difficult to get started.

Wouldn’t it make more sense to give ALL pools an equal chance to win the block solution, not just those with most stake? Those with most stake get more reward if only because they have more return from their %. Seems more of a benefit to spread out the reward chances over all pools. A small amount of stake will simply get less return. But an equal chance to get a reward would allow a small pool with minimal stake a chance to get some rewards. When I see 53% of pool only with 1 reward and 40% with 0 rewards, seems very wrong. Just and idea, probably not the right one. :slight_smile:

I agree with @SlimVision. And I would think anyone with millions in stake would very much prefer to have many pool operators active and profitable just to keep things decentralized as much as possible, which better secures their investments.

To the contrary, if the K parameter is increased it should lower the saturation point amount, meaning delegators in those bigger pools have a big incentive to move their assets elsewhere.

My hope is that they will consider the smaller pools at that point. My fear is that those bigger pool operators will just create multiple new nodes and have the delegators shift over to those new nodes, which defeats the purpose of true decentralization. The goal should be block confirmation from as many independent pool operators as possible.

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Also I wanted to mention another limiting factor for me. I can only build a pool on a cloud system (Azure, GC, DO, whatever) because my internet at home has very slow upload speed. I’ve got a great set of home servers, virtualization, RAID, lots of ECC memory, and I could easily popup a reliable pool here. I even have a static set of IP’s here. But with a very slow upload I probably cannot run a pool here. That limits me to running cloud servers and a much higher cost monthly.

@KrakenStaking - Makes sense, and I fear the same thing. If I’ve got millions of ADA to stake, I’ll pick large pools ran by well established companies with pools, even though my stake isn’t really at risk by someone running a small pool at home.

Also, if I’m understanding all of this, wouldn’t it not make much difference if someone runs a pool at home or on Azure? Except maybe that higher uptime is more likely. I’m not convinced a pool ran there is any more secure though (which is what all these pools advertise) because they are dependent on the operators ability to secure it. Not whether its on Azure. You are still running server on your own, Azure doesn’t run it. If I ran the server at home, I’d still provide the firewalls, all the login and OS security, etc, it would be the same.

@comment I haven’t dived too deep into the “horror” stories on this forum, but sounds like some have been compromised in a serious way and lost access to their addresses, but again I don’t have the details to expand more at this point. I guess that loss of server could result in a delegators missing a maximum return, depends on the attacker’s purpose.

To your other point it doesn’t really matter if you delegate with a “big guy” vs. a “little guy” as long as the reliability of the pool is the same and all things equal (i.e. the amount staked). The payout would be basically the same between two. I suppose if you have a lot of ADA to put up you’d feel better with a “big guy” because you’d assume that you wouldn’t want to miss a pay day. That mindset goes against the thoughts around decentralization, it is more aligned with a 1% mindset, the have and have nots if you will.

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At the first phase with your pool maybe you don’t need fast uoload speed, What is your speed at the monent?

I think it’s pretty hard to start with 500ADA, my suggestion will be try to find investor that have at least about 1,000,000 ~ 1,500,000 ADA to get “almost” guarantee that you will produce 1 block each epoch. That’s just pure my own opinion. Feel free to DYOR. Cheers…

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Are you an experienced SPO by now? I need a consult.

No I’m not a pool operator and have moved on from this. It’s not worth the effort.

I like Cardano, and I’m enjoying watching it succeed, and I have my tiny bit of ADA delegated on some pool but haven’t checked on it in weeks. Last I saw, there was a whole 1 ADA received from staking. At those levels, I could spend 10x my investment, and get 10 ADA. Like I said, I like Cardano and see it being a much better alternative to Eth. But to be honest, neither are looking very democratic. I’d much rather focus on projects that give more weight to more people, not just because they have more money. Even though PoW systems have some flaws, they at least give more to the people that want to participate. Just my opinion.

I hear you.
I suggest you reconsider. Do the math. . .
My felling is that once things are in full swing, a lot of the opportunities here now will not be there in the future. And the traffic on Cardano will be sick. That should help nodes be much more profitable! Once Dex’s and Dapps hit?
You think Eth mining looked any where near as profitable in the beginning? No. No they did not. In crypto tech, you have to take risks. And transactional passive income is Where-Its-At! Always.

Like having a pool . . barriers to entry and regulations. And other things too. I think there will be many "grandfather clauses and/or fines concerning pre-existing “stuff”. And there will likely be certifications and security measures needed for new pool operators as things grow. Particularly when congress and the SEC have absolute definitions for “brokers”.
Different, but applicable: remember when you could just jump on a plain and go anywhere?
. . . remember when KYC wasn’t a thing? I do. All you needed to open an account was an email, lol. Exploit this window of opportunity sir.
And if you want a pool built, let me know. I’ve put together a crew since my email to you.
Yep

500,000 staked would be closer to 50%