The mainnet poll took place in epochs 412-415 in May 2023 with the results supporting the option to Increase K to 1000 and halve minPoolCost to 170 ada. Now that the Parameter committee submitted a recommendation to reduce minPoolCost to 170 ada, we would like to request that the second part or the poll option to increase K to 1,000 also be officially recommended by the Parameters Committee.
AdaStat show the vote using 5 metrics. K=1,000 and min fee of 170 won the poll using each of the 5 metrics. See results below
While some have suggested if you combine answers you can make an argument for K=500. As I explain in my post here
Jun 8, 2023 | Voltaire era: Parameter committee intermediate state - #31 by earncoinpool which I will only highlight some main points here:
Even though Pools suggested in our calls with CF to have one parameter in options or to do rank choices, CF decided not to do this with this poll. So, one cannot assume that someone who selected K=500 and min fee of 340 would have a second choice of K=500 and min fee of 170. Or vice versa. While that might be true, it also very likely might not. There can be no way of knowing unless they included meta data with vote. So combining these results are based on assumptions that may be incorrect.
We cannot claim that votes are based on PROOF of stake but seem to want to count votes on things that can NOT be proven by the votes on-chain. For example, how can pools vote with their delegators stake? Delegators have delegated to their current pool in the past based on block delegation, the majority of which delegated before this poll was even announced. So how can we assume inaction to redelegate stake during redelegation equals support for the SPOs vote? The simple answer is we can’t, because we can’t point to anything on-chain that supports how a delegator wants their stake to be counted in the poll. So, if we want votes to be counted by Stake, then the only stake-based votes that are provable on-chain are the stake of a pool or votes by pledge metric.
Also as stated here The Cardano Foundation seems to suggest counting votes on total delegation is not valid due to lack of involvement by delegators: The Cardano Foundation’s Response to the Parameter Committee Recommendation in PCP-001 - English / News and Announcements - Cardano Forum
“A final analysis of the on-chain activities has shown quite clearly that delegators have not made significant use of this option , either in absolute or stake numbers. It is unclear whether confidence in the current pool or a certain passivity are the main reasons.”
Which seems to indicate that the metric of counting votes by “pool stake” isn’t a valid measurement. I would also point out this is the only metric in which if you did combine answerer, which as stated above we think it shouldn’t, shows K=500 winning, all other metrics still show K=1,000.
According to The Cardano Foundation team
“What is a k-parameter? The k-parameter determines the stake pool saturation point , ‘k’, which governs the rewards stake pools receive according to how much stake is delegated to them. The k-parameter plays an important factor in keeping the Cardano blockchain adequately decentralized and encourages ada holders to delegate to a wider number of pools.”
According to IOG:
"The k parameter determines the maximum stake in a pool that receives awards, in essence creating a ‘soft cap’ on pool size. This size changes over time and is defined as a percentage of the maximum supply of ada (45bn) minus any amount that remains in the reserve. As of epoch 370, that is 35bn ada.
Maximum pool size = (45bn - reserves) / k = ( 35bn / 500 ) = 70m
Within the Cardano documentation, a pool that reaches its maximum size is said to be saturated. A saturated pool offers the highest rewards to delegators and is most lucrative for its operators, while an over-saturated pool delivers lower rewards. The system thereby incentivizes delegators to move their stake to a pool containing less ada, in order to maintain their yield and thus encourages the decentralization of the network."
Or also stated by IOG:
“All about k
The parameter of the rewards scheme that sets this ‘soft-cap’ on the pool size is called k. The mechanism is designed so that, at equilibrium, assuming rational participants and no external factors, the stakeholders’ best response behavior converges to k pools of equal size delivering the same level of rewards per unit of stake to their delegates.”
According to IOG’s blog post:
“As of October 2022, the value of k is 500. Previously, IOG had suggested that this value could be safely raised to 1,000”
I think IOG said it best here:
“Encouraging sustainability through pool diversity
First and foremost, the rewards-sharing mechanism of Cardano aims to reward people fairly for supporting the platform in a sustainable way, not as a short-term windfall. One of the goals of staking has always been to encourage long-term holders of ada: the people who are committed to the success of the ecosystem.
In the longer term, the system can be successful only if it is widely decentralized. Philosophically, the design of the rewards scheme aims to encourage a wide and diverse set of stake pool operators. This secures the platform against attacks, spreads any available rewards evenly across the community, and makes the system more resilient to change.
Many economic systems have a tendency towards consolidation and a smaller number of strong players. On the other hand, blockchains can only be successful when control is decentralized. The rewards-sharing scheme ensures that smaller and medium pools can contribute meaningfully to the ecosystem without becoming subsumed into larger operators and consortia, as has happened with other blockchain systems, particularly Bitcoin.
One way to discourage a trend towards a few large pools that collectively control the system is to introduce a counter-incentive to a pool’s growth. The rewards-sharing scheme we designed is an example of this novel (in the cryptocurrency space) concept. As soon as stake delegation to a single pool increases above a threshold, the rewards automatically diminish, encouraging ada holders delegating to that pool to find a new home to improve their rewards. This mechanism limits the delegation that can be rationally made to any pool and spreads delegated stake more evenly across a larger number of pools.”
Should we slowly move K up or in one big increase?
Well according to IOG big moves less frequently is better:
“It is worth noting that the k-parameter is not amenable to small, gradual increases (unlike, for example, the d-parameter, which lends itself to a gradual reduction). Each increase in k requires pools and delegators to take action. For pool operators, this means a careful adjustment of their parameters and in particular their margin; for delegators, it means choosing new pools to delegate their ada to, especially if their current choice becomes oversaturated.
Therefore, the best strategy for an upwards adjustment of k is to move in larger, less frequent increments – and to move it as far and as fast as practical network dynamics and economics will allow. The ‘how much’ and ‘how soon’ has been a topic of intense debate and discussion within the team, made more complex by a number of technical factors. The best solution is one that minimizes disruption for successful pools and their delegators, while maximizing the opportunity for medium and smaller pools to mint blocks and attract more stake. Equally, it is crucial to be always focused on the longer-term strategic goal as a community to broaden decentralization as widely as possible.”
I hope the Parameter Committee will take this PCP up and recommend an increase to K=1,000. Thank you.
ADA Stats Poll Results: