Stake Pool Operators SPO

Don’t you think that stake pool that cannot mint new blocks should still receive delegation rewards from the Cardano network for what they have locked in pledge and live stake at their stake pool?

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How would you suggest that could work @razzi? give me an example with numbers and what you propose.

There are many ways in my mind that would work but before we go there, do you recognize the same problem that I am mentioning?
Do you agree with me that there is a value proposition to hundreds of stake pool operators that have locked their stakes in their pool without any returns or for breaking even to cover the cost of running a stake pool.
I am an enthusiast and I am not running a stake pool (BEY) primarily for the money but for how long I can stay like this?

A small pool also gets rewards already now since the the pledge is also counted as active stake.
So in terms of rewards you are not worse compared to delegating to a pool. You just the rewards very infrequent and of course you have the cost of running the pool.

So the question is, why should someone pay your pool cost if you pool is not being used by anyone?
Compare it with a car wash. If you open your new car wash and nobody is coming. Is someone paying you your bill? I think it would not be a good thing to feed pools which are not getting self efficient. There are anyways to many pools out there and it would just keep up a lot of zombie pools.

In my opinion this would not help the network. The whole network would pay a tax for keeping up those pools.

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@razzi the point of breaking even is covered here to some degree.

Pledge is a variation of stake, which depending on a0 varies the amount of block reward (at least in theory). It does not add to the stake and therefore does not increase the chances of winning a block. There is a change to the reward formula coming up that will take pledge more into account, but it will also not increase the chances of winning a block.

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No not really. Let’s say a pool has a stake/pledge of 10k. The chances of that pool finding a block currently sit at about once every 500 days or about 17 months! But even with those odds, if the pool endures, it will eventually get the some rewards. However those ada rewarded will never cover the costs of running the pool. So let’s say this pool finds 1 block in 500 days. It will get a reward of about 800 ada. Even if the pool’s infrastructure is pretty cheap (let’s say 50 dollars a month) it would have costs the pool 850 dollars to just even run the node. So in essence this pool should economically not exist. Unless it is purely for voluntary, research, learning purposes. And if that is the case, rewards should not matter.

So in short, small pools either must have enough pledge to be economically sane or they must add so much value that delegators are willing to delegate to them.

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I don’t follow you when you say that we can still get rewards? I am not seeing any rewards.

Well you have your point of view but I don’t agree with you as well.
Where are you getting the feedback that small pool would probably mint a block in 500 days or so? Is there a document out there or review from other SPO?
You want to think about the competition as well, in other words, you are telling me that I should not exist in the Cardano Network, in this case I can go and run a stake pool with ETH V2 or others?

This calculator is great and very precise:
https://dynamicstrategies.io/crewardcalculator/pool1ewrm7y47s9hv6hxku9n5gfnsuspymp0qqpwgvgm9rvm37cek2h6

Otherwise just lookup your pool at adapools.org there you see your ideal blocks per epoch. If this number says 0.01 then you will find a block every 100 epochs on average. 100 epochs is 500 days.

No i didn’t say you should not exist. i said “economically exist”. And i also said that it’s fine to exist if it is not for the ada but to help the network, for research, voluntary work and so on. Moreover I also said that if you can find delegators you will be able to earn enough.

For your information: I am here since February and have not yet minted a block either. But I am fine with that.

My current estimated blocks in epoch is 0.03, that’s 1500 days? LOL

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No that is 167 days: 1/0.03 * 5

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That was originally my initial thought when I wrote this post, I didn’t know that we can still get some rewards after x days. It makes more sense now to me, but still in general the game is not fair for new SPO.
Ada’s price was in cents with these rules and today it is economically not possible for new SPO to exist.

I am saying that with the current rules, it is economically not possible for new SPO to exist; In other words, new SPO should not try and enter the eco system and possibly look up the competition and run a stake pool where it is economically possible to exit.

Pledge does count as stake as well ! Otherwise, there would be no point in having 64M pledged private stake pool :slight_smile:

To get new SPOs aware of this challenge I wrote an article: Cardano Stakepool Operator Considerations

Maybe you find it helpful. It also contains some calculation examples.

Delegating is for people who don’t have enough stake to make consistent blocks on their own.

If you are running a stake pool at a loss then maybe you shouldn’t be running a pool. It’s proof of stake. You need stake to make blocks.

You could get rewarded every 5 days by delegating.

Happy that things are making more sense now, @razzi.

Yes that is correct that is why the minimum fees will be lowered. But it is still possible to make your pool economically feasible. you just need to attract delegators.

Exactly. I would only want to add to this again what I said above: It is okay to start a pool with a low stake/pledge as long as you can somehow attract delegators so that your pool will not have to operate at a loss. Otherwise you have to accept the loss because you are not in it for the break-even or profit.

Think of that from a delegates perspective. What incentive does a person have to delegate to a pool that offers the same service as every other pool, but gives less rewards?

Expecting delegates to act irrationally is a bad business model.

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