Though I am not averse to staking my ADA with an external Stakepool, I am wondering if there are any significant benefits to setting up my own pool for my own ADA. I have the hardware to establish a pool (an unused desktop and Linux) and though not a programmer, I’m not a complete numpty when it comes to working with tech (a irresolute statement if ever there was!) I have started messing around with setting up a node and though not completely successful just yet (syncing problems), I think that I will be able to achieve success. Though I may not achieve “commercial uptime” I reckon I can do a reasonable job. I understand that any downtime will result in a reduced return for my efforts. I don’t wish to offer my services to others, unless they for some unfathomable reason want to delegate to me without any benefit to themselves.
I enjoy the existential experience of a DIY attitude and so…
Some questions:
What margin of profit is there for Stakepool operators that I might be able to benefit from by staking for myself?
Is this enterprise more serious than I ken and should I just be content letting someone else “take care of business” i.e. would I be harming the ecosystem by having a go myself? I’m fine to defer if it is the case.
Is my intention somehow going against the communal / distributed ethos of the system?
I’d love advice on hardening my Linux distro before I go live. Any thoughts?
I’m sure there are more questions that pop up - possibly stemming from your input, so please, lay it on me.
I’m loving the excitement in the air regarding this pivotal moment in Cardano’s development.
I don’t know a lot about this but it became clear some time back that pool ops will have to have (access to) very substantial holdings and commit them to the pool to be profitable. I vaguely recall numbers being mentioned, you might be able to find the posts via forum search.
I’d have a go at answering some of the other questions but you need to be clear whether you’re talking about the testnet or mainnet. What I said above I think applies only to the mainnet, not sure.
Hi Rob, Thanks for the reply.
I had been considering long term on the mainnet and yes I do recall some numbers being thrown about a while ago. I recall too, the suggestion being that a large stake would be important.
It is not imperative, but something that I felt might be worth exploring.
Cheers,
D
What margin of profit is there for Stakepool operators that I might be able to benefit from by staking for myself?
Stake pool operators can set a margin (fee) freely from 0% to 100%. You will benefit from running your own pool exactly when:
expected profit > costs + time to run, update and secure a pool
Is this enterprise more serious than I ken and should I just be content letting someone else “take care of business” i.e. would I be harming the ecosystem by having a go myself? I’m fine to defer if it is the case.
Personally I think running a server should always taken serious. You usually have to dig into a lot of documents to keep everything up to date and secure. You can not harm the Cardano ecosystem tho.
Is my intention somehow going against the communal / distributed ethos of the system?
No, this would be fine. If you do it, always try to find best practices and stick to them. (Like never put funds into the pool address itself and such things.)
I’d love advice on hardening my Linux distro before I go live. Any thoughts?
Read a lot about Linux, it should be a dedicated machine just for this purpose, means no web servers, no mail services, no ftp services,etc., nothing else but jormungandr. Read a lot about networking, close all ports, open only the needed ones., don’t use ssh with passwords, go to the Telegram: Contact @CardanoStakePoolWorkgroup, read a lot about security. Listen to people like @oldcryptogeek, @kyleo and others that are running servers for many years.
I’m sure there are more questions that pop up - possibly stemming from your input, so please, lay it on me.
@Elurevad, I think you’ve posed some really exciting questions here that many others are also interested in.
@Elurevad In addition to the response mentioned by Adatainment, you might want to consider Stake Pool Saturation Point. Saturation Point is the point when a stake pool has a maximum amount of stakes that additional delegation of stakes deminishes the stake holder’s rewards. The more stakes a stake pool has, the more likely it is to write blocks and receive the rewards. This means that stake pools that are at Saturation Point will have better chance of writing blocks. In this regard, the question for you is “What is a private stake pool?” Are you prvately going to stake enough ADA to reach Saturation Point so as to discourage any outsiders from delegating to your pool? By the way even if your pool is “private” you can not stop anyone from delegating to your pool. In short, I don’t think there’s such a think as a private Cardano stake pool. If your pool is attractive, anyone can delegate their stake to it. If your pool is not attractive (say your pool is way below or above Saturation point), stakers might leave. Maintaining a stake pool doesn’t give you control on who can join or exit it. In that sense it’s not private. Hope it helps.
Another point to consider though: a pool can be private in effect if (a) it’s not publicised in any way, and (b) it’s sufficiently unattractive that it’s way down the list or doesn’t appear at all in the list of pools in the wallets. Which will be the case if it’s well below saturation point, as it will be unless the owner is a mega-whale.
@RobJF has already written it, but I want to describe it in more detail. There are two things that make a pool “private”:
1.) a private pool is just a pool that is registered on-chain without a metadata URL. It will be ignored by the wallets, means not listed in the wallet, thus not selectable by users of the wallet. It’s important to know that this feature is not enforced by the protocol, it can’t be. This is a recommendation for wallet developers.
2.) a private pool has a margin of 1 (so to speak a fee of 100%), which means if people are delegating to this pool, they will receive zero rewards, because the stake pool operator takes everything.
As far as I understand, the second is optional but highly recommend. Because, like @DAPP360_MIKE said correctly, you can not prevent people from delegating to a pool, even if this pool is private.
But it would be still quite an effort digging the blockchain and doing everything manually or writing your own wallet that doesn’t follow the recommendations.
Alas, other than having to buy bigger pants each year, being a mega-whale is not a problem I face. I had assumed that by not advertising or being near saturation point, “my” pool would be fairly unattractive to others.
My question, which it would appear I’m having difficulty formulating coherently, is: What reward do stake pool operators receive for their efforts over and above the percentage staking returns that the actual staker could expect?
As I write this I am imagining the answer being "The percentage is fixed (at say 10% or whatever) and the pool operator then passes on a proportion of that (as advertised) to stakers, depending how attractive they want their pool to be (or the amount of expenses / profit margin they have to cover).
So, if all of the rewards (100% as Tommy said) are being allocated to me as the pool operator, that would make me fairly unattractive, more so than usual.
Another question: Hypothetically speaking and for ease of calculation, if a stake pool had one million ADA delegated to it I assume its chance of being chosen to mint (do we mint in Cardano?) a block is 1/ 45000 (I’m using total supply but we could use circulation…). Therefore, at 20 second slot times (4320 slots per day) they have roughly a 1/10 chance of becoming a slot leader each day. Is that right?
I’m just trying get picture how frequently the awarding of rewards could be expected to flow out, even just as a staker not a pool operator. Perhaps that is a reason for stakers to distribute stakes more widely to a number of different pools? This is where saturation point becomes important yes?
I am beginning to see the need for game theorists and behavioural economist etc. How interesting and exciting.
@Elurevad " What reward do stake pool operators receive for their efforts over and above the percentage staking returns that the actual staker could expect?" From what I’ve read, the stake pool operator unilaterally decides and declare what her/his compesation percentage is for his resources and time. The operator is at liberty to claim anywhere from 0% to 100% rewards. This percentage will determine if potential stakers find your pool attractive. Charge too much and you scare them away. Charge nothing and you will operate at a lost.
There is no predictability as to which stake pool will be slot leader. So it’s difficult to determine the orderliness or rotation of how stake pools are selected to be slot leader. Here are some articles that might answer your questions
In fact, I feel exactly the same as you. I am a developer and have created a linux server with Jormungandr running over nix. It was fun and it works, mostly. I would like to run a stakepool but my experience with firewalls and networks is a lot less. I’m thinking I can’t be secure enough to advertise my stakepool but would like to run it anyway. As far as the benefits go, however, I think they are few. You save paying the fees, which is not a lot.
