Only 8 operators might be controlling 88% of the network

There’s this ongoing discussion some of us SPO’s are having over at the SPOCRA discord chat.

One fellow SPO shared the following finding which shows that 88% of the entire Cardano network right now is very likely under the control of only 8 entities.

This is a lot worse than Bitcoin. And definitely very far from IOHK’s (or Charles’ at least) rhetoric on decentralization and “pushing power to the edges”. If this is going to be any different from our existing financial and power structures, it’s only the different shape or faces. But it’s fundamentally the same crap.

Charles, in his videos, talk about the need for effort on the part of the SPO’s to attract their own delegators. This is no problem alright. Many of us at least, if not most, already bust our butts on this endeavor.

But all this effort will still be futile if the system is rigged against the small or startup operations.

There’s already plenty of materials here in this forum and elsewhere that explains how the system actually doesn’t promote decentralization with the way it is configured right now. So it’s not worth repeating it here. This is just to hopefully bring to the attention of some more people in the community and IOHK, this yet another proof observed in the pool and stake data, that shows that the system doesn’t work as advertised.

If this is not changed quickly, this is not going to be a network that will last a decade. Let alone 50 or 100 years.

And we know who currently has the direct power to apply those changes.

13 Likes

Just found out there’s this existing thread about this same thing [here].

A step in the right direction!

Starting epoch 234 (Dec 6, 2020), the saturation of stake pools will be lowered from 210M ADA down to only 64M ADA. If the current big pools will just not create many more new pools (which is no guarantee at all), this should give some delegators some reason to reconsider their delegation choices and check out better opportunities with smaller pools.

1 Like

I sure hope people stop delegating to SPO’s that have more than 1 or 2 pools.

5 Likes

We can only “hope” for this at this point. But if there’s no force or motivation to nudge people to do the better thing, delegators will stay the same.

Actions like increasing the k parameter will contribute… but it won’t be enough on its own… we still have lots to do. But its good to see an action like this on the part of IOHK.

1 Like

Thanks for sharing this data. You are absolutely right, this is worse than Bitcoin and seems somewhat counter to the analysis and game theory published.

When K increases we will likely just see the big pools spin up more instances…and delegators logically will stick with what they know.

In my view there may have been insufficient ranking weight applied to pledge in Daedalus as that provides a counter to running multiple pools. However the problem with this is that it still disadvantages smaller entrants to the system…

There is supposed to be the a0 parameter in the protocol that encourages stake pool operators to focus their pledge in only one stake pool. This parameter is supposed to increase the chances of a pool to produce blocks if their pledge is higher.

But that doesn’t seem to be generating its intended effect. I’ve even seen at least one other SPO who went as far as taking their registered pledge to literally zero just to prove this point. And I saw his pool minting blocks with his zero pledge.

(Update: I just found out that this pool I’m talking about, has been retired. This SPO eventually got tired and can’t take the BS from IOG anymore.)

The proponents of the current parameters have elaborate technical explanations for how the status quo is for the best. But from my perspective, they are totally ignoring what’s really, actually happening in the network right now.

As to the rankings in Daedalus, I’ve seen explanations from the devs talking about the long-term returns being considered to rank the stake pools. But I can’t understand how that will help both the delegators and the stake pools… especially seeing that the smaller ones are effectively censored by not giving them corresponding ranks anymore.

There will be no “long-term” returns if instead of decentralization, we will achieve centralization in a matter of less than a year.

The amount of rewards we get from staking won’t mean anything if no one will trust the network enough to actually use it for anything important… all because the 10,000 or 1,000,000 nodes or however many there will be - are actually controlled by just less than 10 entities.

There is supposed to be the a0 parameter in the protocol that encourages stake pool operators to focus their pledge in only one stake pool. This parameter is supposed to increase the chances of a pool to produce blocks if their pledge is higher.

I wasn’t aware of the impact of a0, as you say that would precisely counter the effect we are seeing. Can someone from IOHK or the foundation comment on this and provide an official view? If not that has to be the next AMA question for Charles…

You might think that officials should routinely monitor the forum, specially discussions such as this, but the fact is they don’t (generally speaking, IMO). If you want a specific comment you need to tag one or more individuals.

So I don’t claim to know enough about crypto or stake pooling, I only got into this I call it punting because it is in a way, this year because I was bored and staying at home too much. So being a novice I want to understand as much as I can but when this stake pooling came along it took me awhile to understand how to participate or why I should. I still haven’t grasped the language or what is happening and I still have friends who have not staked there ADA because they do not understand the point to it. It would be really beneficial if someone could write up something in plan language not technical language explaining what the point to staking is, how to go about staking, how to choice a stake pool, what the benefit of staking in smaller pools are. Really it would be good if someone could write a book about crypto currency and all the bit and add-ons that are happening so fast in the community. It needs to be a book that’s Idiot proof explaining the language and meaning of all these new bits like the cards, tokens, staking; there’s more and yes I have gone to IOHK’s sight and tried reading as much as I can and listened to Charles and all the other guru’s on utube but it doesn’t help if you haven’t got the gist of the conversation right back at the start of time.
So I put it to you where do I find something that explains what, why and how and what is the purpose of crypto currency?

Here’s an article I wrote for my delegators a couple months ago:

It’s meant for those who don’t yet have any idea what this staking and pooling is about. So it’s a good start for you.

As to books, and the rest of your questions - there’s really already an ocean of materials available online and on print. You just have to go to Google and type in your questions. If you’d like printed books, Amazon is your friend… especially if you’re in the US.

Lastly, your questions are not really relevant to the topic of this thread. Going forward, you may want to start your own thread under the relevant categories in this forum, to ask your questions. That is, if you are unable to find an already existing thread that is already discussing your subject. The search bar at the top of the page is quite handy. :blush:

Thanks I will read your article but I guess the problem with books is knowing what to look for

This is a lot worse than Bitcoin.

That is not true. Contrast with:

From the IOG blog:

We shall also be retiring all but one of our public IOG pools and encouraging delegators to switch their ada to community pools, while developing our own delegation strategy.

Hi, Thanks for the posts good stuff. I definitely think IOG is motivated to create a system with true decentralization. I know a lot of game theory went into the development and I believe they have people dedicated to monitoring the progress of this issue. To some extent we need to give it some time as well. The system is only a couple of months old.

Did you even read that piece? I actually visited that link and took a quick read. Not too far into the article, the author said this:

It says they have 20 major pools with China having only 81% of all the hashing power.

So, yeah true. The Cardano network is worse than Bitcoin right now.

And if we are going to continue in this direction, none of all those scientific papers and hard work will matter.

Let me clarify also that I’m not just criticizing Cardano and IOG just for the heck of it. I’m invested in this project myself.

But I don’t want to just blindly agree with the marketing stuff while watching this project we all love, actually deviate from its stated goals. This is why we should readily point out its bad as much as we passionately tout its good.

Yep, I’m well aware of this too. Also aware that this is long overdue. And this is why some community pools have just retired their pools. They got tired of waiting.

Thanks for chiming in @Donnybaseball. Heard all of that before. That game theory thing is even what sold me Cardano in the first place.

The system may be just a couple months old, but like I mentioned, there is never going to be true decentralization in the “long term” if at the start, we tend towards consolidating into centralization, very fast.

I feel right now that at best, IOG is erring on the wrong side of caution. And at worst, that their actions are deliberate.

I think the best option should have been that while the k parameter was still this low, staking pool operators were only allowed to operate only a single pool. Restriction to be lifted after achieving a certain desirable level of decentralisation like 500

This probably would have been good if there was a way to ensure compliance. But this is an open system and we are not required to identify ourselves when we register a stake pool in the network.