I have been using https://pooltool.io/ to determine where to stake. It has been interesting to see how Stakers are moving around the Stakepools. Also, I noticed some challenges for Pool Operators. These are some of my observations:
For a majority of Pool Operator to regularly win the right to create blocks or it seems are able to create blocks, they must have greater than 2 million ADA staked in the Pool. I found this by doing a sort on the ‘Lifetime Blocks’ column and then looking at the ‘Live Stake’ and ‘Epoch Block’ columns.
When sorted by ‘Current ROI’, shows that the highest ROI does not imply that rewards are also the highest. See the ‘Lifetime Rewards’ column.
Also although the ROI seem amazingly high compared to other Financial products (eg Shares, Property, Bank Interest rates), the key information here for the Staker is whether the Pool is producing a maximum possible Epoch Blocks in order to maximise Actual ADA rewards. But one also needs to be BEWARE that some of the Pool Operators have exhorbitant multiple fees (Fixed, Variable and Max Fees) as shown in their respective columns.
A possible contention worth discussing is - given that for the hundred or so of Pools that are generating more than 8% ROI (after all fees), for the Investor, such a high return means that even if the Pool is saturated, this may still be very profitable. This is mostly true because the saturated Pools seem to have regularly higher Epoch Block creation thus guarantee higher Rewards.
Another contentious proposition is - Given the current Staking trends, it appears highly probable that a major consolidation of the Stake Pools must occur. And the sooner the Pools that have less than 2million ADA do so the better for them, if they are to become profitable and survive the competition.
It is not clear that equity in winning the opportunity create an Epoch Block for all Pool operators is occuring. This can be seen by sorting using the Epoch Blocks and the Lifetime blocks. My suggestion is perhaps for the creators of the website: https://pooltool.io/ should create a new column Pool StartDate. This will then enable a more accurate analysis of the equity of opportunity given that newer Operators may take some time to gain Stakers. At the moment, it is a presumption, but may not be true.
Will you clarify what ‘Current ROI’ means in the pooltool? I found no explanation about it in its website. I am guessing that it is the ROI of the block/s created by the pool in the current epoch, am I right? And also, it is a percentage of what? of the ‘Live Stake’? I think I am among those who are confused by this parameter as I sometimes interpret it as the ROI in the point of view of staker, but it seems it is a parameter on the of view of stakepool operator, so which one is it?
‘Live stake’ ist the actual stake of the pool, which can still fluctuate inside the actual epoch. ‘Current ROI’ ist the last ROI calculated, so it’s from the last epoch. You can’t calculate the ROI from the actual epoch just by the numbers of blocks produced because there are more factors influencing it and which are all known just after the epoch has ended.
The ‘Current ROI’ is calculated from the view of a delegator. You can see this if you look at the large private IOHK pools. They produce a lot of blocks but because they have 100% fees, their ROI is at 0%.
OK. Thank you for information.
Now, as my understanding that ‘delegator’ = ‘staker’ (not the stakepool), I am actually currently checking the staking process as a delegator. And I find mismatch on what you said against what I actually confirmed in my staking process.
In an instance, I delegated my Ada coins to a pool that indicated a 36.7% current ROI as shown in pooltool. (I won’t mention the pool since this isn’t a pool promotion thread). I have 4900 Ada coins, and when I checked, after 4 epochs (or 4days), I was rewarded only 7 Ada coins. Now any simple math I do, the 7 Ada coin reward wouldn’t translate to a 36.7% ROI. Why is this so?
Hope you could provide me insight on this one.
The Current ROI can be misleading.
It only represents the rewards paid in one epoch to the delegators from two epochs prior to the current epoch.
The Current ROI can fluctuate greatly from epoch to epoch for small pools and even quite a bit for large pools.
It is not really a good measure of what your likely return will be in the next epoch.
For example, my pool, Squid Pool, is a smaller pool and does not always get a chance to make a block in an epoch, which produces 0% Current ROI for that epoch. But then we may get 1 to 3 blocks in an epoch and return anywhere from 12% to 39% as Current ROI. So over time, it averages out. Currently, for the last 15 days our average is 14.2% by my calculation.
On adapools.org there is an ROI Avg. I’m not sure what time period that covers but Squid Pool is at 17.6% there.
I find the ROI average over time to be a much better indicator of how well the pool is doing and what your real return is likely to be closer to.
It is debatable what the right time frame to cover in the average is. If it’s too short it fluctuates too much. If it’s too long, it doesn’t react to changes in pool health. It would be interesting to evaluate pools on multiple time frames similar to how mutual funds often show their returns for the last quarter, year, or 3 years.
The 36.7% are the ANNUALISED actual ROI. So if you would stake for a whole year and the pool would return rewards as if in the last epoch, you would gain 36.7%. Be assured, this will not happen, you were very lucky during the last epoch.
You can calculate your annualised average ROI: You gained 7 tADA in four days, so 1.75 tADA per day. This makes 639 tADA per year. With your 4900 tADA staked, you have an annualized average ROI up to now of 13.0% which is a very nice amount and above average.
I see. I am actually getting a better picture of what is ‘Current ROI’ and ‘ROI average’ by your explanation @shawnim. Thanks.
Now I checked, your squid pool is definitely showing higher ROI Avg than the current pool I’m staking in, so am a little bit enticed to change delegation, but my initial purpose is to understand staking in general so I guess I’ll stick to my present pool for few more weeks.
Yes, I think I got lucky on the chosen pool, though it has still a few ‘Lifetime Blocks’, within 4 days, the pool was able to find a block and the current ROI suddenly became 36.7%. Pretty amazing timing for me, I guess.