I’m a newbie and as I first connected to daedalus i just put my ada in the top-performing staking pool. I see lots of reasons now to support smaller pools. Is there a cost in reward to change delegation?
Nope, no cost. You pay a transaction fee when changing, but thats typically only around 0.17ADA. Should be clearly visible from daedalus before submitting.
No cost, the 2 ADA deposit is taken only for the first delegation.
If you are looking into small pools with a mission, I operate one. Ask if interested.
@Gaaike yes, there is a cost in reward. Lets say you delegate to a pool with 34m - that pool would mint 34 blocks / epoch. For each block the pool receives a total of 1k reward. The pool would therefore get 34k of rewards. First, the operator cost is deducted (i.e. 340 ADA) second the pool margin is deducted - lets assume that is 0%.
340 / 34k => 0,01
With such a pool, there would be 1% of rewards that cannot be distributed proportionally.
Now, you delegate to a small pool with 500k. That pool will make a block every other epoch. When it makes a block, it will also receive 1k of which 340 ADA are deducted. This is …
340 / 1k => 0,34
Now, instead of 1% there are 34% of the rewards that cannot be distributed to the delegators.
The larger the pool, the smaller that slice of pizza that gets deducted before proportional distribution.
The OP asked about the cost to change delegation, not about the costs of the pool.
To change delegation the only cost is the TX fee of about 0.17ADA.
Also your calculations are misleading and not correct (in your example a big pool yield is 7.3% which is not possible), IMHO. It looks like a big pool gives 34 times the rewards of a small one, which is not true.
A big pool yield is 5-5.5% APY. A small pool with less than 1.2M is about 4-4.5%. There is a difference, but is not as big as you imply.
He asked: “Is there a cost in reward to change delegation?”
IMHO, it is important to communicate the principal. The specific maths can be done when needed.
I apologize, I missed the word reward.
Lets do this properly, out of interest …
In epoch 251 there were 16,24m rewards distributed. That makes …
16.240.000 / 21.600 => 751.85 Reward / Block
Using our (simplified) example from above, the large pool would make …
73 x 34 x 751.85 => 1.866.096 p.a. -73 x 340 => -24.820 ----------------------------- 1.841.276
Lets say your stake is 20k out of that 34m, your annual delegator reward would be …
20k x 1.841.276 / 34.000k => 1.083 p.a. => 1.083 / 20k => 5,42% ROA
Now the small pool …
0,5 x 73 x 751.85 => 27.443 p.a -0,5 x 73 x 340 => -12.410 ---------------------------- 15.033
Your stake is again 20k out of 500k
20k x 15.033 / 500k => 601 p.a => 3.0%
The cost in reward would be:
1.083 - 601 => 482 p.a.
44.5% less than delegation to the large pool.
The math is ok. Where did you get the total rewards for E251? The rewards per block seems lower than the actual ones. From adapools I see 880ADA per block in epoch 251. With that number the APY are 6.3% vs 4.0% for big and small pools.
As of now, it is 0.17 ADA.
If you are looking for a stake pool, you can try delegating some of your ada to my stake pool, ticker is “JUDH”.
It’s a very small pool though, but i am actively trying to grow it. Small stake pools have less probability of creating a block, but if they do, the rewards are huge, both for the pool operator and the delegator
Wow, that’s an eleborate answer. I’ll probably still switch to a smaller pool. But it’s good to know.
Ur actual pool doesn’t offer rewards to u?
Sorry I read. ”switch from a smaller pool”
Congrats for ur decision… on long term you will receive the same ~5-5,5% rewards;
Support small pools, support the decentralisation!
Great choice. Support small and independent pools!
Hello Alexd1985, how much offer your pool for 10000 ADA delegated to your pool?
I can’t predict on short term because block assignment is like a lottery and differ from epoch to epoch ( for example 2 epochs ago I had 0 last epoch 7 and this epoch 4…) but on long term (1year) all pools BIG or small should provide the same ~5-6% rewards as long the pools creating blocks…
How many ADA per 10000ADA delegated per block in exact numbers per epoch? How I can delegate to u from Trezor Wallet Model T?
You can query the annualized performance of any pool like this
There is indeed what some would say “a considerable cost” in delegating to a smaller pool. A detailed calculation of this is over here.
Alex is right, the total award for a given stake is more or less constant for all pools. This is however only true, if you own the pool and can also keep the pool rewards - as a delegator you won’t. The pool rewards (i.e. what the owner can keep) comes in two parts. #1 a fix cost (i.e. 340 ADA) #2 a variable margin. Lets say you delegate to a pool with 0% margin, so we can ignore the latter.
The fix cost is the distinguishing factor here. For a constant block reward a pool will receive, lets say, 750 ADA / block. These 340 ADA will get subtracted from this for the first block in every epoch. Before the rest can get proportionally distributed to the delegators. If a pool only makes 1 block / epoch, delegators loose 340/750 => 45% of the rewards to the pool owner. For a saturated pool (i.e. 64m) this would be 340/(60*750) => 0.76%
In simple terms, the smaller the slice of the fix cost from the total reward, the larger the proportional delegator reward. There is currently lots of discussion around this fix cost, because 6x340 => 2040 ADA / month is way more than pool owner should need to run two simple servers.
If you want to maximize your reward, you’d want to delegate to a big pool - the bigger the better (but not saturated). If you’re looking for a purpose pool that does some good for the world and you’re willing to give a (small) cut for that, you would want to shop around a little. Alex’s pool is a good choice for that - he has won a reward with this (small) charity pool.
That’ correct and also sad at the same time. That’s why we decided to share our operator rewards with our biggest delegators as part of a virtual cooperative.
Yes, I also believe that 2040 ADA is way too much for healthy pool operations. ASTOR likes, to reward it’s loyal delegators through monthly dividends.
If u are looking to maximize your profit feel free to delegate with other pools