Binance is the last problem we should be focusing on here. If you want to fix Binance, get people to self custody. The issues here are about pools that people have delegated to.
1 Like
We should be focusing on metrics that robustly improve decentralisation. Binance is the current example which depicts how and where we are least decentralised. Smart contract staking might lead to the next.
The pledge formula is an entirely different beast because it’s not a parameter, it would require a hard fork as well as going through the scientific process to make sure that all the right properties are present in the new formula. In my mind this is a case of not letting perfect be the enemy of good, we have the opportunity now to make two parameter changes that don’t involve the huge amount of overhead that comes with changing the pledge formula and can take us to a much better state than where we are currently.
Another thing to keep in mind is that if there was something done to make pledge more attractive, then those pools that have high pledge would have an advantage they could leverage to draw delegators in. In the case of the minimum fee, lowering it doesn’t give an advantage it levels the playing field. This makes it more important for the fixed fee to be lowered in tandem with the k increase because the system has been in a skewed state and we want to force delegators to consider their choice when the system enters a more balanced state.
2 Likes
I totally agree with @prometheus-pool last post. I think Colin’s proposed changes are probably the best way forward for now.
Agreed… very good perspective by @prometheus-pool we can ask for the world and get nothing or improve what we can for now and tackle the next fight the next time. All very good input here and all concerns have a time and place, but obsessing over building something perfect could keep us from doing anything at all. Seems to be very broad support for adjusting K up and decreasing fixed fee.
Yeah, that’s the whole point of pledge!
3 Likes
Yeah, not saying this is a bad thing, just contrasting it to the min fixed fee.
A deep bow to this comprehensive post and i agree with virtually everything you have mentioned
1 Like
I know people in the same situation (some multiple times), but the blocks were not produced by a tiny pools. I don’t understand why you think these are small-pool problems. Small pools can be well connected and have accurate clocks. Large pools can be badly connected and have drifting clocks. I don’t subscribe to the idea that small pools are badly run at large pools are well run (I’ve seen reports of large pools from well-known operators that have apparently lost their keys with no backups).
If a small pool performs badly or does bad things, call them out, but don’t assume that all small pools are bad (or that big pools can’t do the same).
1 Like
I have had a small pool for a year. I could not find any blocks during this time. 28GB ram + 10 core CPU + up time 99% X 3 .
now I think this has not helped the network at all. i see about 800 pool not find any block yet.
Is my stay beneficial for the network?
Really good points. I could not agree more.
I am completely in favor of fee changes but at the same time acknowledge the importance that any change to k and min fee should also imply changes to other parameters. Reward formula must disincentivize further centralization and must harden the network from Sybil attacks. I do not understand why the shift now toward “min fee” when “a0” has always been positioned as the key element against these attacks.
I would argue, is a network with 500 individuals running pools with 5-500 ADA each more secure than 500 pools run by 10 operators with 1M each? I understand everyone has different opinions on this but in my view both scenarios are not desirable. There must be a balance, and a focus on reliability and security.
Getting back to “k” topic. It has become quite evident this would not provide the desired outcome by itself, rather the opposite. To make matters worse this behavior would eventually become more accentuated by the fact that smart contract staking functionality (still in its infancy).
Any change must be taken very thoroughly, regardless of how quick the fix is, and contemplate not only short term gains but also long term implications. Some unforeseen damaging situations may not be easily reversible.
1 Like
With respect to concern about a “race to the bottom,” while I have not had the chance to read all replies to the original post, upon reflection an aspect that seems to have been missing from the SPO call where the proposal to reduce the fixed fee and increase K was most recently presented relates to acknowledging a belief that the market value of ADA will continue to increase over time. If ADA trades at $10 USD, as Charles H. said he believes it will at the 2021 Summit, compared to the current market value of about $1 USD today, are SPOs still complaining about a 30 ADA fixed fee? I believe that the value of ADA will grow to $10, and beyond, over time.
Cardano is a beautiful and complex creation by some really smart folks. In the SPO calls and discussions, I hope SPOs may become better at listening and learning than snapping to rash, and usually negative, judgements that tend to derail the meeting agenda and devolve the conversation into black and white oversimplifications.
Let’s try to remain grateful for being able to be a part of the Cardano experiment that somehow seems to manage to embody the best of human values into an amazing technology. Let’s have a little trust that we’re all interested in what’s best for Cardano, even though we may disagree at times about how to achieve that, because we care.
Let’s remember to enjoy the ride.
I also support the changes to reduce the minimum fixed fee and adjusting “k” to 750 or 1000. I think these changes are going to benefit smaller pools. I also think that setting a minimum variable fee is another step in the right direction even though it will require more work to change. I think starting with the first two parameter changes now is great and we can make further changes as the year progresses.
Personal opinion, changing the fees and only changing K at this point just continues moving the chains forward. These changes and solutions were supposed to have been under review for well over a year now. We know the outcome from previous K changes, pools continue to split the same as before (they have already started mentioning it). If you want an alternative outcome you must do what is required to change the code. This is an incentive based system there is no incentive for pools not to split until there is we end at the same solution assuming otherwise is foolish.
Unfortunately IOG has to make the change, here we are 12+ months later no changes.
The fee should’ve been set to a variable % floor from the start if it was supposed to stop the race to the bottom. If the network is meant to distribute evenly based on incentive then there must be a method that rewards this without rewarding the bad actors such as the curve CIP or others that have been suggested. Yes it might actually require work to do but that was where the talks left off a year ago on the intention the data would be collect and suggestions would be offered as a resolution to the issue…
2 Likes
So, Pledge should matter, that was the promise before Shelley launch. And i don’t talk about fully pledged Pools, because this are Private Pools. Currently when you Pledge f.e. 1M Ada compared to someone who runs a Pool with 1 ADA Pledge there is basically no difference in the rewards. We said this over and over and over again, that before raising k higher, there should be an incentive for larger pools with more Plegde to NOT split into more Pools. Raising k to 750 or 1000 will not change anything for the new and tiny Pools, its an illusion. Business is Business, nothing is different here with Stakepools compared to other Businesses. Some are doing better Promo, some are not.
About the minFeeCosts:
1.) I don’t like the Idea at all to “expose your real costs” to customers, and than you can charge on top. No business is doing it like that. Have you ever seen another company that tells you: “yea well, it costs us $15,- but we will charge you $250 for that because we wanna make money”. This is an illusion of Mathematical Theory compared with “The real world”.
2.) As we have seen in the ITN, race to the bottom is on the Agenda. Why should it be different than in the ITN? Your ITN rewards counted for the MainNet, as soon as that was the case the race began and it never stopped before the Mainnet launch. So thinking that SPOs will withstand a change to the supposed 30ADA minFee for a long time is wrong imo.
3.) What should these 30ADA represent? Stakepools should make there Infrastructure better not worse. Running 2x Relay-Servers and 1x BlockProducer-Server with around $180,- per month including all the Work/Maintenance is a joke. “But you can set your numbers how you feel it is ok for you…” Does not count in my eyes, if you wanna compete with others especially the Tiny Pools, they can’t do that without loosing the rest of there delegators.
4.) I am in regular contact with many Tiny/Small Pooloperators in the lower Million Stake range. They are telling me that if 30ADA will be the new norm, they have to shut down, because they make at least one block per epoch right now. A drastic change like -90% in the minCost would cost them too much to keep up there Pool.
5.) Without an Incentive to keep the PoolCount for BiggerPools low, this will result in more PoolSplits than we have seen ever before.
In general, i am part of the early ITN Testing Group. Also Friend & Family, Alonzo Blue, etc. etc. I am in regular contact with a lot of IOG/CF internals. The “Announcement” strategy of IOG/CF is freaking me out. Long time always the same answer: “We are looking into it, but we had no time because of Plutus/Alonzo/SC-Launch”. And than throwing some numbers into our face is just wrong. We saw it with the Shelley Launch, we see it now, it repeats.
Yes i am an Ambassador, but i am also a PoolOperator and a OperatorSupporter thru my channels/scripts/etc. So i see both sides.
Best regards,
Martin
6 Likes
I agree that there are well run small pools. I run one.
However, what I point out is that the protocol does advantage small pools when there is a single block fork or slot battle. Therefore if a large pool has poor block propagation for whatever reason it is likely to lose fork battles to smaller pools. On the other hand if a small pool has poor block propagation then this perversely costs larger pools because the smaller pool will win the fork battles.
Large pools are producing blocks often so they need to remain connected or they miss their blocks. On the other hand, small pools can disconnect for long periods and then reconnect and not miss any of their blocks so long as they run their leader logs to know when to be connected. I am not saying all or even most small pools do this but the point is that they can and it won’t cost them. The protocol doesn’t penalise them for disconnectedness if they are not producing blocks, which is often if they are a small pool.
The reason I raise this issue in this discussion is because many people assume that more small pools is better. I say that more small pools is likely to result in longer block propagation delays on average and consequently more forks. On the other hand, more small pools does increase decentralisation to a degree. I am pointing out that this trade-off warrants consideration.
I agree completely Martin but would like to add I feel foolish for believing pledge was going to count, this I still don’t understand either it does or doesn’t. Currently there is no reason pools should keep their pledge and with the mentioned changes this continues.
Without something that replaces pledge or makes it functional the splitting and expansion of multi pools continues when k changes.
We were told to run businesses and invest in those with pledge it would matter, were told to create youtube channels, were told to market, were told to find charities / causes, told to create projects or incentives.
This was supposed to be handled by the original design in the incentive model to create a cascade of delegation from saturated pools and spread delegation not let it consolidate at the “top”. Without pledge having a meaning this is the result we are left with.
3 Likes
I just really want to go after the idea that the min pool fee should cover the economic cost of a pool is just wrong. It represents a fundamental misunderstanding of what this parameter does and how it works.
The minimum pool fee is a mechanism that ensures that pools have to be larger than a certain size to be economically attractive to delegators. That’s it.
There should be nothing there that should be about exposing your true cost to customers; there should be nothing there about covering the true cost of the pool at all.
Once you tie the full economic cost to the minimum wage, if the supply of SPOs is greater than the demand (which it is), the costs will fall to the minimum wage. This has removed any form of market consensus pricing - relying on a centrally controlled parameter to determine prices.
Not only are static fee not stable over time as the reserves get drawn down, not stable as the price of the asset changes, not stable as the real-world costs change: they also represent a huge challenge for decentralizing the network - by making a centralized decision for how the compensation for pools should be set - rather than having lots of individuals make individual decisions on the pools.
Having a centralized vote on a centralized parameter that makes a one-size-fits-all decision for everyone doesn’t magically make for decentralization.
Let me be really clear on my point:
The entire compensation for a pool should come from the variable fee.
The fixed pool cost should be considered as a security feature that prevents a hypothetical attacker from spinning up lots of zero-pledge, zero-fee pools and being able to attract delegation by having a good return. It requires them to fund each pool to a certain size - which puts an much greater economic cost on the attack.
The linkage between pool costs and the minimum fixed fee has been widely talked about in the past - but it’s wrong.
(disclaimer: this is my personal viewpoint and understanding. That understanding has evolved and changed over time and while I like to think it is a fairly informed and widely held view, this is not intended as a general statement on behalf of IO, the CF, etc. These are large, diverse teams with a multitude of opinions beyond mine.)
6 Likes
This is the discussion we need to have. Trying to run a pool with almost no stake is nonsensical and no choice of parameters will change that because no parameter set would make it possible for anyone to run a pool with guaranteed returns at no risk.
Yet why do we have hundreds of pools expecting exactly that? Because running a pool even with close to no stake becomes insanely profitable once you find enough people delegating to it.
It is easy to either
- delegate your ADA and cede a percentage of your rewards to the SPO
- or run your own pool provided you have enough funds to sustain it
What about the middle ground? Why can’t we have pledge markets where people can pool together their pledge and share the cost to pay an operator to run the hardware and software? Not with a share of the total rewards of course but with a share of the actual cost of running the pool.
The way forward could be
- Make pledge matter such that pledget pools have higher rewards
- Credit pledge rewards to the Owner instead of the Pool reward address
1 Like
Thats only a technical thing on how to handle rewards on the Operator side, its currently fine because you can split/redistribute your rewards however you like to do so. But only a short sidenote, not really the main issue currently.