Re: 0% Tax ratio staking pools

I noticed currently there are some staking pools with 0% Tax ratio. How will a staking pool with 0% Tax ratio survive? I don’t think a staking pool can solely reply on Fixed cost voters pay to survive unless they change the Tax ratio later on


Hello @jiangh77

You are right, a pool with 0% fee isn’t sustainable for the longterm. I guess the strategy for most of those pools are to attract delegators and as soon as they reach a good amount of stake, they will increase their fee again.


Hey @jiangh77,

Zyroxa is right. I for example watched this for quite some time now and, although being reluctant to go for 0% variable fee, I now also took this step. You are completely right with your assessment of being unable to survive long term like this. The problem for smaller pools is: Delegators, at least right now, go with either large pools (consistent block production due to the large stake - and “so many delegators cannot be wrong”) or they sort for “lowest cost” and choose one of these pools (which usually are larger ones). As there is a minimum fixed cost of 340 ADA each epoch, setting the margin to 0% is the only option smaller pools have to improve their ratings slightly in this respect.

So, until pools have reached a certain size to produce at least 4-5 block(s) per epoch (=steady returns for the delegators), one can either chose to stick to principles and keep the 1-5% margin or join the “race to the bottom” and hope to be able to convince delegators one for one in the future :slight_smile: I came to the conclusion, that the latter is not problematic as long as you are transparent about it and tie your 0% offer to a amount of stake you want to gain instead of a specific date or so.

I disagree. Someone somewhere in the world will figure out how to make a 0% work. Through charity, tax deduction, or otherwise. Once that happens it becomes easier to make another 0% pool.

The longterm trend of stake pools are stake pools that are 0% or 100%