Stake pool farm and decentralization

As a Cardano evangelist, I want and pray that Cardano is 10,000 times more and truly decentralized than any cryptocurrency network. As a pool operator, I am seeing how easily Cardano stake pools can be decentralized to one pool operator running a stake pool farm. Take a good look at pooltool.io, and you will see multiple oversaturated pools that are operated by the same node operator. Let me be clear, it is not the node’s operator fault. He is doing nothing wrong by maximizing his rewards while helping the ITN. I am a small pool (7.5 million) yet I have two stake pool nodes. However, if one operator can run a well-oiled stake pool operation that creates 9% of all blocks and attracts the most delegates by running multiple separate pools, is Cardano really decentralized? If it’s possible that 1 pool operator (based on having the required delegates) can control 10% of all block creations via multiple pools, how will smaller pool compete? if oversaturated delegates are simply channel to the stake pool farm’s next node, where will smaller pool acquire their delegates? They can’t. If stake pool farm is allowed to continue, smaller pools will not grow. To insure maximum decentralization away from pool operators, there has to be some other tool than just Saturation Point. It is not working in the ITN at the moment. Just my thoughts. What do you think?

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All good points. I think they have a plan for this at least in part here:

My theory is they did not enact this in testnet as it would have been counterproductive to getting a lot of pools set up. I also think that the difficulty with logging in through Daedalus has made it difficult for people to switch pools with regularity hence adding to the apparent centralization.

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I hope they do. But there’s a catch 22. If the pledge is too expensive, poorer regions (Africa, etc.) might be locked out. If it’s too low, stake farms pool will increase exponentially. It’s a balancing act. Unfortunately, I don’t see how pledge fixes this issue. High pledge enforces that only wealthy pool operators can run a pool. Restricting the number of pool per operator and adding punitive measures for violators might be a potential solution. How you pragmatically implement such a solution, I don’t know.

That’s where I am. Stuck - with good pools luckily - but would like to spread the test stake around to help some smaller pools get going.

At one point Charles mentioned in an AMA (not sure which one) that there may be some way to have some sort of credit system for community members to count towards a stake in lieu of cash. Hopefully there is a way to implement such a system.

The big one that you’re likely referencing is the 1PCT entity. I will say that I chose to delegate to one of their pools. The only reason for me to choose them is because they seemed to be hitting nearly all of their blocks despite the fact that many other pool operators were struggling to hit their blocks in light of the network forking issues. Early in the ITN I tried to stake to some smaller pools (~30M staked) and ended up getting 4-8% returns on most days. This wasn’t within my tolerance level, so I looked for the most dependable option that I could find. That being said, once the network has settled and everything is running smoothly, I definitely plan to re-delegate to a different pool.

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This is my experience as well combined with Daedalus log in issues that I haven’t had the time or energy to fix.

Now are you aware that in a competitive fork (same blocks assigned to two different pools) the reason some of the smaller pools are losing blocks is that pools with the most delegates win that fork? Size gives the bigger pool an advantage. It has happened to my pool several times and I have documented it. Also are you aware that the bigger pool also miss blocks but they are not affected as much? Example, my pool at 7.5 million gets 4 blocks. I missed one block for whatever reason and create 3. Suddenly, I have a rank of 75%. The bigger pool at 80 million gets 25 blocks. That pool misses 4 blocks (4 times as many as my pool) and yet its performance is ranked higer at 84%. Do you see the second disadvantage to a smaller pool. My point is this, in POS delegates can centralized or decentralized the network. If well-oiled pool operator has a formula to charm (better rewards with a stake pool farm) delegates like you with more rewards, we will have a centralized network where blocks creation is centralized to a few stake pool farm. It’s the tyranny of the minority even though there are many non-farm pools.I hope IOHK has a more egalitarian solution in mainet. Remember, a capitalist will sell the rope to the hangman that will be use to hang this very same capitalist. Why? Because the hangman offer a good price.

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Sure, this could be looked at as a disadvantage for smaller pools. At the same time, you could argue that the advantage for smaller pools is that you only have to hit that one additional block to have a 100% performance rate while the bigger pool would have to make 4 extra blocks. It’s simply statistics. :slight_smile:

I agree with you that the network has to be more egalitarian, and it should not favor one pool over the other based on amount of stake. Hopefully we can get to a point where nearly all pools are hitting 95%+ of their blocks. This will make it easier on both delegators and pool operators to really see what the topography of the network can look like.

I agreed with you about stats view from a different perspective. Hitting a 100% for a smaller total of blocks is easier than a larger one. The more I thought about the inequalities, the more I realized that the power lies in the education of the delegates. I am starting to believe that no kind of game theory mathematical equation will bring about equality in staking. I think we, both small and large pools, need to educate delegates about the importance of maintaining equilibrium and decentralization among stake pools. There are over-saturated pools with 5% ROI. Yet, the over-saturated delegates are not redelegating to a different pool. I think, I will do my part in educating delegates on the importance of sound staking.

Thats not true for competitive fork results ! Occurances of a pattern you monitored does not prove that the converse isnt true - there are quite a few examples showing the converse as well. The results will mainly depend on whether your block had the correct parent hash and is propogated to the node scheduled to create a block after you - as compared to your competitor.

Your point about ratio affected due to lost blocks is true. But since the amount of delegation to your pool does not weigh into the decision for winning a competitive block, its simply a case true for whether your pool makes a block or not , affecting your results.

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That’s not really the case, but they can unite, as one pool can have multiple owners. Pledge, even the high reg fee, is a must, and of course, I won’t be able to run a pool then, but that’s, OK, cos it’s not built for our greediness, but for a future common good to eliminate our selfish actions, in which the absence of any kind of Sybil Attacks is mandatory.

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If the converse is true. Can you point me to a competitive fork in which the smaller pool won. I’m not denying your statement, I just haven’t seen one in my case or in order cases where a bigger pool than mine lost to an even bigger pool. If you have some evidence, please help me dispel my myth. It will be sincerely helpful for me.

You can scan the source from pooltool against specific pools, but to provide an example, you can check chain length 167686 :slight_smile:
Or you can query the pool by epoch history for competitive forks for one of the IOHK (non private) pools.

@rdlrt Thanks for the correction that smaller pools with fewer stakes are also wining competitive forks also. Thanks to @rdlrt a.k.a. Priyank for providing me with evidence. I appreciate the correction.

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Cardano won’t be decentralized. All this peer reviewed stuff will be for nothing in the long run. The reason people don’t redelegate is because they’d rather get 3% returns consistently vs some no name pool that can go offline without warning for days (my experience).

In my opinion it’s better to run your own stake pool and stake to it. But as is now I don’t see the benefit of staking to other pools.

When exchanges like binance, coinbase etc start offering staking services I’d rather delegate to them because I wouldn’t have to worry about the lack of communication if the pool goes offline.

People keep talking bout privacy, decentralized and all that crap… But most persons just want ease of use. Set it and forget it. And if we’re not careful we’ll repeat what’s happened with EOS and the like.

I may be wrong but in my view, it’s shaping up to be another centralized platform

I don’t agree with your assessment but you did make some good points about the unpredictability of jumping from pool to pool