I was wondering, why would one choose to delegate the stake instead of staking it themselves,
He/She already owns a VM that runs 24/7
He/She does not mind to get their hands dirty and setup the Cardano node themselves.
What are the consequences, if the VM was down at the slotted time and could not produce a block in time, will the address lose all the staked tokens or a percentage? If not are there any other consequences for not signing the block when you are supposed to?
therein you will also find some youtube videos and summaries from official researchers presentation.
To answer at least one of your questions here: when on choose to not delegate but run his own node and stake, this very probably will by a way smaller stake then all other pools can achieve. This means that probability to get elected is way lower. Reward will be higher when elected because it must not been divided up to all participants, but it will happen very seldom. like 0-2 times each year.
solo nodes are good for more decentralization but too much of them will create a lot of overhead/synch traffic and negatively effect throughput. I would also say they will not have such a reliability, uptime and performance as professional configured and maintained pool nodes.
There are 21’600 slots per epoch (5 days), and there are 73 epochs per year. It gives us 1’576’800 slots per year. To have a chance to win on average at least one slot each year a node needs to stake 1/1'576'800 share of total stake in the system. If we assume the total stake to be ~20 billion ADA (might be reasonable, knowing the details of how transition to Shelley is planned to be performed) then a node would need (1/1'576'800)*20'000'000'000 ~= 12'683.92 ADA.
~12 thousand ADA coins to have an average chance to win a slot per year, and average means that ~50% of the time there wouldn’t be a slot for more than a year. And each slot would give you, maybe, like a 500 to 1000 ADA.
With the same assumptions to have an average chance to win a slot each epoch - node would need to stake ~925’925.92, so roughly a million.
I think it’s fair to think that anyone with less than a million of ADA would rather delegate it to someone, cuz it’s easier to pay a small margin to the pool operator than run your own server at a loss.
If we assume that someone has a zero-cost server than difference between running a node and delegating would be the scarcity of the payouts. Pool would give you stable stream of small revenue, while running a node with a small stake would make payouts extremely rare and scarce.
Anyone with an ability and will to run a Cardano node at a loss is welcomed to do so. Anyone who does not have such an ability or does not want to - is equally welcomed to delegate.
Node does not receive the rewards for missed block
If a node controls multiple slots in the same epoch - missing one of them might cost him more than a cost of a single slot. Meaning that producing 5 blocks will give you 5X the reward, but producing 4 blocks and missing one might give you in the result 3.8X or something like this (work in progress).
If a node misses all the slots in an epoch and also have missed last N slots - node address will get completely excluded from the staking in the future epochs (blocked). This is a protection from suddenly dead and unresponsive nodes with a remained stake. Exact N is work in progress.
If pool was missing all slots for more than a single epoch and didn’t lose all the delegates already - then something is going wrong )
But basically - yes. If your server failed and you didn’t fix it for 10 days or so - your address gets blocked from staking (only), but funds are still freely transferable and all the delegation is withdrawable. So if you want to make the pool live again - you just create new staking address and hope anyone still wants to delegate to you.