Hello Mates,
With new increased k value to 500. What could be the ideal delegation (number of ada) to a pool to maximize the chances of minting a block?
Hey @sreekd-VOLVO
Do you mean the limit before a pool gets saturated? That would be ~64M right now.
Cheers
Fabian
Hi @Zyroxa, Thank you for chiming inā¦
Well, My ask is āMinimum number of Ada(s)ā to mint a block.
There is no 100% chance to produce a block because its a lottery. If you are unlucky you may not even produce a block with 64M stake.
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Alright! Thank you Pal for your time and explanationā¦ Happy Holidays!
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You are welcome! Likewise.
Cheers
Fabian
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A better question would be: how much staked ADA is required such that a pool would produce a block each epoch on average?
Anyone know?
There are approximately 21,600 blocks per epoch, so youād need 1/21,600th of the total staked ADA to average 1 block per epoch. Currently, there is 21.37B ADA staked, so this would be just under 1M ADA. This calculation is slightly off because it assumes full decentralization (itās currently closer to 1.3M ADA). Note that this is completely independent of the k parameter (contrary to the implied assumption of OP).
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Very well said Serotonin - this bears itself out in my experience running Karma Pool - at about 1.3M ADA total live stake, I was estimated to get 1 block on average per epoch, and in most cases did. I am watching closely others with roughly the same size live stake, and I see their performance similar. I do notice that when you get to about 1.6-1.7M ADA live stake, you are estimated to get 2 blocks per epoch, so it is clearly not a linear scale. More research needed on my part. One important point for those delegating is that it is in your best interest to find a relatively small pool (but not too small) where the operator is highly likely to have āat leastā 1 block per epoch, and where your percentage of the live stake is larger - that way, when the āluckā of 1 or more blocks being minted occurs, you take home a larger share of the rewards for that epoch than you would for instance if you were staking with a large pool with say 60M ADA in it. You have a better chance of outperforming the averages in a small pool (but not smaller than about 1.3M ADA as noted). Then again, if you just want a more or less average, very consistent reward every single epoch, the larger the pool the more youāll achieve that. I hope on some level that helps.
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While I personally choose to delegate to small pools, I think it is a bit disingenuous to advertise them as being in the delegatorās best financial interest. While it is true that a small pool has a higher likelihood of creating (relatively) more blocks than expected, and hence greater rewards, the opposite is also true in that they are also more likely to produce (relatively) fewer blocks than expected. In other words, the average return is the same, assuming equal pledge, but the spread is greater for small pools (on a percentage basis) because they havenāt produced enough blocks to statistically converge to their average. This is the same reason why you perceive that pools with 1.6-1.7M ADA are estimated 2 blocks per epoch when in fact they should be producing ~1.25 blocks per epoch on average (they indeed have just been lucky).
From a strictly financial standpoint, what matters the most are pool fees/margin and pledge. Pool size only matters when considering how long you are willing to wait for your average reward to materialize, not how much your average reward is.
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Excellent insight and I cannot disagree in any way - it could be categorized I suppose as āgreater riskā for the delegator to a small pool, but also greater reward potentially. At least in the short term anyway. As time goes on and assuming live pool stake grows, the pool will further and further revert to the mean, or āconverge to their averageā as you say. Thanks again, your words are wise.
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