SPO Poll - Q3 2023 Setup Preferences: Answer 4 (Increase k to 1000 and halve minPoolCost to 170 ada)

Greetings Stake Pool Operators,

This thread is part of a series of polls aimed at understanding your preferences for the potential parameter changes coming in Q3 2023. The question we’re addressing is:

Which setup would you prefer to be put in place from Q3 2023 onwards?

In this thread, we’re focusing on Answer 4: Increase k to 1000 and halve minPoolCost to 170 ada.

Please share your thoughts, considerations, and perspective on this specific option. Your insights are valuable for your delegators and will help others understand why you might favor this choice.

Consider addressing the following points in your response:

  • Why you prefer this option: What about this option aligns with your operational approach, growth plans, or other aspects of your stake pool operation?
  • Potential impact on your stake pool: How would this scenario affect your operations, your capacity, your competitiveness, and your ability to attract and retain delegators?
  • Potential impact on the broader Cardano network: How do you see this scenario affecting the overall health, decentralization, and performance of the Cardano network?
  • Additional comments: Any other thoughts or comments you’d like to share about this option or the current state of stake pool operations on Cardano.

Looking forward to a rich and productive discussion!


I have already made a post about why I will vote for option 4.

lower minPoolCost to 170 Ada

minPoolCost needs to be understood through the effect it has on competition. With minPoolCost currently of 340Ada this means that any pool with less than 10 Million Ada in total stake is uncompetitive. This is because the minPoolCost represents a relatively high percentage of total rewards. Anyone delegating to such a pool will lose too much of their rewards to this mandatory fee going to the pool operator.

You are likely to see a lot of incumbent OG operators argue that this fee should not be reduced. They will make all these arguments about needing to pay for high quality gear and high network reliability. However, it is easy and cheap to run a stake pool. Ordinary commodity gear and a fibre internet connection is all you need and will probably get you 99.9% uptime. The Ouroboros protocol is not only designed for, but actually expects, some disconnectedness of stake pools. Here is a quote from the Ouroboros paper:

“We note that the availability assumption (restricting honest parties from long periods of dis-connection) stated above is very conservative and our protocol can tolerate much longer offline times depending on the course of the execution.”

If the cost to increase uptime from 99.9% to 99.9999999% is pool operator fees increasing from 1% to 2.5% then delegators are overpaying by 15 times to prevent 0.1% lost blocks due to downtime.

The real truth for why many incumbent pool operators don’t want the minPoolCost lowered is because it is a barrier to competition. Pools that have managed to make it to where they control more than 10 Million Ada total stake, don’t want competition.

If we want Cardano to be decentralised then we need more pools and more competition. Anyone should be able to run a pool if it makes sense for them to do so. There should not be any artificial limit placed upon what a pool must charge. I would prefer to see minPoolCost lowered to 30 Ada as was suggested by IOHK Quant @Colin_Edwards in this post. This was part of his reasoning:

The proposal that best adheres the initial specification of the minimum fixed fee, in my opinion, is to move the fee from 340 Ada to 30 Ada. This would reset the relative sensitivity of the variable fees and fixed fees back to their original levels, and it also closely matches the original fiat values of the fee, which was originally set to around $5.25 / day. That will not fully compensate pools, the intent was that the variable fee would be useful in more situations than just when demand for staking far exceeded the available capacity of stake pools.

In any case, 30 Ada fee is not one of the options in the poll, but lowering it to 170 Ada is at least a step in the right direction of more decentralisation. So, this is what I will choose.

Increase K to 1000

Increasing K will force multii-pool operators to split their pools further and in turn cause delegators to re-think their delegation strategy. The mult-pool operators may have some difficulty managing this situation and hopefully they will lose some delegation, which will be beneficial for small pool operators. More importantly, if stake moves from multi-pool operators to small pool operators then this will improve decentralisation.

I think K needs to change in order to push delegators into making a decision about re-delegating or staying put. Hopefully then at least some delegators will shift their stake for improved decentralisation.

What about multi-pool operators?

I argue that running multiple pools is against the design intentions and philosophy of Cardano. The design architect, Aggelos Kiayias, has basically said as much. Have a read of this blog post by Aggelos, particularly under the headings:

  • Be wary of ‘pool splitters’
  • Don’t split your pool

This quote from the article sums things up pretty well:

“If you are a whale (relative stake > 1/k) you can create multiple pools – but you should keep your leverage as close to 1 as possible or less. Pool splitting that increases your leverage hurts the delegators’ rewards, and more importantly, it hurts the decentralization of the Cardano ecosystem, which is detrimental to everyone.”

In summary, I hope that more pool operators vote in favour of lowering the barriers to competition by lowering minPoolCost. Furthermore, I hope operators vote to increase K. Both changes will be likely to improve decentralisation.

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Why you prefer this option: Gives more chances to small pools to succeed. They are the future leaders of Cardano.
Potential impact on your stake pool: No impact.
Potential impact on the broader Cardano network: Pool farms will split and keep their delegations, nullifying the value of the k change.
Additional comments: The Cardano Foundation can help educate delegators about pool selection ahead of this change with a large campaign. When unsaturated pools (at k=500) become saturated (at k=1000), there will be a mass reshuffling of stake. This is an opportunity to massively improve the decentralization of Cardano if stakers simply know to select a pool smaller than their current one.

The Cardano Foundation can also report on progress and impact of the change. K-effective is currently 50, which is far away from 500. source https://www.balanceanalytics.io/chartboards/decentralization


If k is doubled, and if Cardano actually decentralizes as a result, K-effective should also preferably double, rather than stay at 50.

Ideas for a CF campaign:

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This seem a bit counterproductive to me. Seems like implementing a rule that would require the SPO’s active pool to achieve 65% saturation before setting up additional pools would be a much better solution.

After thinking things through more, I changed my mind for the reasons in this post

I voted option: “keep k at 500, halve minPoolCost to 170”

But I did add some metadata to my transaction stating that I would have preferred to vote a minPoolCost of zero with some brief reasons.