Question for the group, I was reading the shelley page of the cardano roadmap, and I read that the incentives scheme is designed to reach an equilibrium around 1,000 stake pools. There are already 788 stake pools out there, so what happens when it goes over 1000? Does the system stop accepting new stake pools when it reaches 1000, or does it continue to grow but each stake pool earns less? I’m missing something…
I am considering making my own stake pool, not out of greed but to contribute to the community and be a part of the history of cardano.
As I understand it, the more stake pools the better. I believe it makes it faster, but I’m not sure about that. I know it keeps the ADA busy and that is a good thing for the price as well as the stability.
I’ve been studying this stuff but it is hard to nail down even for myself what it is exactly that I know. I am always blown away by Charles when he makes a video and the ambassadors and tech people here on the forum seem pretty darn smart too.
I was thinking of doing a private stake pool but I live in a rural area and naturally as soon as I began to research it a couple of weeks ago, our internet connection became very erratic. So I suppose I’ll just be hodling and staking to show my support.
I don’t know if this is any help, but you did say any input!
There is no limit to the number of stake pools. Everyone can register a stake pool. No one can prevent that. However you should keep in mind that if you do not attract enough stake your stake pool will be acting just like a Daedalus wallet since it won’t be minting any blocks. It will just validate/confirm transactions.
Cardano comes with a k parameter which is currently set to 150. That is currently the desired number of pools. IOHK thinks that that number is an optimal number of pools right now. Why optimal? There are many, many factors they considered here among those were also the rewards. If the number of pools was too high the rewards would be split among greater number of pools therefore it would make it less attractive to run a pool. You can think of K as an incentive rather than a hard cap. If people behaved rationally there would be 150 pools ordered by incrementing fixed costs and fees saturated but since we like to stake with pool operators we are attracted to for different reasons we have more than 150 stake pools and the biggest ones are not necessary the cheapest.
umm, actually adante, after a few minutes with your answer, I’m confused. Given what you’ve said here, why has it been important to Charles that there are much more than 150 pools? I’ve seen him say with positivity he hoped for 1000 as well as remark in the last week or two of his own videos how quickly the number of pools was increasing.
For me, your statement and Charles’ statements about this don’t jive.
To have 1000 pools is good because it means the community is strong, there’s a lot of interest in Cardano and there’s a lot of competition. With competition the cost goes down (lower fees) performance goes up. If some of the pools shut down it’s not a problem since there are many others waiting in line. Not to mention marketing. Another good reason for having so many pools is that IOHK can increase k whenever they see fit. That could (and probably will?) happen once Shelley settles and smart contracts and governance stabilize.
So, if you will, can you then explain the k parameter being set at 150 now to the reality of the 800+ pools that actually exist?
What does it mean that k is 150 but there are 800+? All of the current pools are working now aren’t they?
Another question I have today is that I was under the impression that when the current epoch started yesterday that blocks were going to start being produced. And yet when I opened my Daedalus wallet a while ago, 0 blocks have been produced. When does that start showing up?
Thanks again, I appreciate your time.
I’m sorry. I know/knew there is a selection process when it comes to which pools are producing. the k=150 is how many are working at a given moment? correct?
If that’s true though, what I’m stumbling over at the moment is that this idea that everyone who is staked is making the 4-5% all of the time is incorrect. They are only making the return when their pool is selected. Correct?
The implications of the dynamics of this among the total group who own and hold ADA to stake is starting to look/feel a little weird. How does one resist the urge to chase pools that are regularly chosen? And then if one does try to chase down a pool that gets selected then you are always 10 days away from earning any return.
I’m beginning to think I should just hodl and get my grass cut. If I want to earn interest I should get some other crypto and go to some defi platform to earn interest on something.
If I am understanding correctly what I just said above, I still have the question about when blocks are going to be produced.
I apologize for thinking out loud here and appreciate your engaging with me.
Like I said before, there is no hard cap on the number of pools. Anyone can register a pool. Currently there are 928 pools registered. Each of those stake pool operators want to find a place under the sun. The reality is many of those will never produce a block because their stake is too low (currently there are about 450 pools with a stake lower than 1M and to make a block daily you need about 3 times that I think) and they will be shut down or they will just run at a loss.
K is the “ideal” number of pools. That means that if all ada would be staked then you would have 150 fully saturated pools.
To summarize: Pools with stake greater than 3M or so will be able to produce blocks daily. The rest will be running at a loss.
What you see in a wallet is not number of blocks but the amount of rewards you get. Currently all the blocks are minted by IOG. They will decrease d param from 1 to 0.9 in the next epoch. That means that 10% of all blocks will be created by stake pools and 90% still by IOHK. The d parameter will keep decreasing gradually over the coming weeks and months. Cardano will be completely decentralized only when d=0. That is expected to happen around March 2021 but things can change if IOG decides so. The first rewards will be visible in Daedalus on Aug 23rd as IOG decided to postpone it for a week.
To my mind then, understanding this brings up the question why aren’t stake pools ranked by the amount they have staked? So far, I’ve seen no rhyme or reason to the rankings. When I chose my pool I just picked one that looked like it was being run professionally. They show 305k. Because they aren’t ranked by the amount staked I have to hunt and peck to find one with the 3million level?
I’m not truly complaining, more curious why it’s being done the way it’s being done.
To earn ada you need to stake. You need to delegate to one or more pools. If you check out the rewards calculator you can play with the numbers and see how much you will get. With the calculator you will get estimations. For real numbers you have to wait a bit. After a few weeks you will see a pool’s performance in Daedalus.
You will have a lot of pools that will be regularly chosen (all those with enough stake). It’s up to you if you want to chase every percent. I don’t know if that makes much sense since the slots that a pool is elected for to produce a block are random (taking in consideration the stake). Big pools don’t necessary have better performance or ROS. So you want to check that out too.
Hodling without delegating is not a smart idea. If you delegate your ada is safe, you can add ada to the same wallet or spend it and it will still be delegated. You can undelegate by explicitly choosing so.