Staking guide for delegates

This is a first draft of a staking guide. This guide prioritizes network health and delegate returns. Please comment with any and all criticism with the intent to make this guide better.
The goal of this new guide is to replace the current guide distributed in a couple places by bots (Selecting Pool for delegation - Support FAQ)

Delegation allows holders of ada to transfer their right to participate in the proof of stake protocol to stake pools. Stake pools are run by stake pool operators (SPOs) and a person delegating to a stake pool is called delegator, member, or participant. A stake pool consists of a block producer (BP) and any number of relays - each of these are called a node. The blockchain is made up of consecutive blocks and stake is power to make blocks.

If one pool or person is given too much stake power they can control consensus, engage in double-spending attacks, create forks, censor blocks, and damage or even destroy the system. Your delegation choice, who you give your power to, is very important at limiting a single entity from creating too many blocks.

"There should never be a conflict of interest between maximizing rewards and 'doing the right thing'"

The staking mechanism was designed so that you can optimally secure the network by trying to maximize your rewards and being greedy with your delegation choice. Stake pools can offer very different return rates.

"How attractive a pool is to delegators depends on four interacting elements: pledge (the higher, the better); operating costs (the lower, the better); operator margin (the lower, the better); performance (the higher, the better)."

It is important that you understand each of these elements and how they can effect your rewards.

The first thing you should consider when looking for a pool is pledge. Pledge is the amount of stake the SPO has in their own pool.

"Think of pledge as a 'commitment' to the network."

An operator with very little pledge that controls a lot of stake is highly leveraged.

"The lower the leverage of a blockchain system, the higher its degree of decentralization."

Pledge is part of the mechanism that prevents one person from operating many pools (pool-splitting) by making pool reward rates increase with pledge. If an operator wants to split one pool into many, they have to dilute their pledge between all the new pools, causing all of the pools to receive lower rewards than if the pledge were consolidated into one pool. Pledge is the only pool parameter that increases rewards and, paired with saturation, aids in decentralizing the network.

It is prohibitively expensive for one person to open many high pledged pools and relatively cheap for one person to open many low pledged pools. This is what makes it almost impossible for a single individual to gather a majority of stake by opening many high rewarding pools, it’s simply too expensive. This principal is the backbone of Cardano’s security model.

Every 500k pledge increase means delegates will receive ≈ 0.008% APY MORE rewards

Next consider pool fees, both margin and fixed. The fixed fee is subtracted from the total pool rewards for an epoch. Then the margin is applied. Then the remainder is paid to delegates proportional to their stake.

Ex. 340 ADA fixed and 1% margin
(total_pool_rewards - 340) * 0.99 = total_delegate_rewards

Margin can range from 0% - 100%; a 0% margin pool collects no additional fee over the fixed fee, and a 100% margin pool pays no rewards to its delegates.

Every 1% margin increase means delegates will receive ≈ 0.037% APY LESS rewards.

"By pledging more, the pool operator can ask for a higher operator margin while still being attractive to delegators."

As a rule of thumb, 2.3 million pledge and 1% margin cancel each other out.

Fixed fee effects delegate rewards proportional to pool size. If the pool has little total stake then each delegate pays more of the fee from their cut of the rewards. The minimum fixed fee is 340 ADA/epoch.

Saturation is the level at which a pool becomes too large. A pool is saturated at 100% and at that point is offering its best returns. Rewards drop pretty drastically when a pool becomes oversaturated.

Next consider performance. Actual performance, the ratio of blocks assigned to blocks forged, will always be somewhere less than 100%. A certain number of blocks are expected to be missed as orphans and from *factors out of the control of the operator, but generally the pool should be forging all of its assigned blocks. Performance is most difficult to judge because only the attentive SPO knows actual performance and few make this public. Those that do voluntarily report actual performance to pooltool.

*Early iterations of Cardano-node contained bugs that would cause pools to miss blocks for various reasons. Pools that have been around since Shelley launch will naturally have lower overall performance than pools that started more recently. Not all of these bugs have been corrected yet.

Certain websites track a pool’s luck, which is the ratio of blocks forged to blocks expected. This metric is only really useful for finding pools that are drastically underperforming. You can guarantee that a pool with greater than 100% luck has been scheduled more blocks than expected but it does not mean they have outperformed other pools. Conversely, a pool with less than 100% luck might have just been assigned fewer blocks than expected or may be underperforming by missing scheduled blocks.

You can find pool parameters (pledge, margin, fixed fee, saturation, etc.) on or

Besides looking at reward rates you should also judge a pool by its infrastructure. At a minimum, a pool should have a block producer and two relays. Relays speak with other pool’s relays and are responsible for transmitting blocks and transactions through the network. The more relays a pool has the better. The pool should have some redundancy in place that responds automatically to failures within the system. For example, if the block producer node blows up, there should be another node quickly taking its place. All of the nodes should be distributed and not under the same roof.

Finally, do some research into the pool operator. Are they asking questions about how to run a pool or are they answering questions? Do they run many different pools? If so, why so many and why not consolidate pledge for delegate benefit? Do they contribute to the overall community or ecosystem in some way? Is the pool run by an individual or a team? Do they completely understand how the protocol and reward model works? Can you reach out to them with questions?

Be cautious accepting delegation suggestions or advice from any SPO. SPOs and delegates have different financial incentive within the system. Delegates want high rewards from their stake. SPOs want to run as many pools as they can at the highest acceptable fee. This always comes at the expense of the delegates’ rewards. SPOs will suggest that you delegate to their pool, but it’s unlikely that their pool offers the highest return on stake.

Here are some, but not all, examples of fraudulent pool behavior that should be avoided:
Pools that…
impersonate other pools or businesses without any affiliation,
promise higher rewards than their pool can offer,
promise additional tokens or any other future value in exchange for your rewards,
modify their parameters just before and and after epoch switch to avoid detection

You should use a notification service like pooltool or cardanoscan bot on telegram to notify you of any parameter changes, like pledge or fees, or if your pool becomes oversaturated.

It cost almost 0.18 ADA every time you switch pools. If you only have a few thousand ADA you should try to minimize your pool changes. Your transaction fees can quickly eat up your rewards.

You do not need to withdraw your rewards. Rewards and any new ADA in your wallet are automatically part of your staking balance.

Here is a tool built by a member of the Cardano community that plugs pool parameters into the reward equation to generate expected reward rate. It is useful to compare pools against each other.

DO NOT use the Cardano Foundation Reward Calculator (Calculator). It is very inaccurate.

Source Documentation:


Hi Tom,

Do you have any concerns if I create a pull request to publish the Staking Guide on


You might want to replace “delegate” with “delegator” throughout the thing. The delegate is usually the one receiving the delegation.

I know you started this thing, because you think that all the guides and people downplaying the role of pledge seem dishonest to you. Fair enough. But shouldn’t there be some mention of the fact that very few pools have a relevant amount of pledge right now?

Do you only mean ISPOs, where the delegators receive less or no rewards in ADA anymore (high variable fee)?

In any case, calling ISPOs fraudulent per se is maybe a bit over the top. A lot are questionable. Very true. But fraudulent?

Also: The topic of mission-driven pools – donating parts of their profits for specific causes – is completely missing from your guide. You don’t have to agree with it, but it might be a deciding factor for some delegators.

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You can do with it whatever you like. I do not want any credit or any affiliation to a stake pool attached to this guide. This is, however just a first draft. I’m still hoping for more feedback to make this guide more appealing and formatted a bit better. You might want to hold off a bit for it to get improved, but that’s up to you.

@HeptaSean I truly appreciate your feedback on this.

I agree that there are few pools right now that have ‘high’ pledge. I want this guide to be applicable as long as the reward function and security “guarantees” it provides do not change. I’ve purposely avoided mention of current state of the network throughout so I don’t have to continually update it later on. There are many mentions I wanted to include like MAV and such that were omitted for this reason. I also believe a large reason that few pools have significant pledge is because of the current multi-pool problem and delegator’s conditioning toward it. GOAT started with 2 pools with 5 mil pledge each which later turned to 6 pool with 1 mil each. BLOOM is another good example, 1 mil pledge opposed to 6 million. It is more profitable for SPO’s to reduce their pledge than to consolidate it because delegates allow them to.
Granted, still few or any would be >20% saturation.

Again I agree. Perhaps using fraudulent is a bit heavy handed. However, all of the warning signs are there for fraud with every single ISPO. Give me what has value for a promise of future value. Every one of these ISPOs are collecting tons of ADA and making tons of blocks before even showing a working product. Cardano has been lucky so far that the main ones have all been legit. This early success will be cause for a ton of people to be victimized later on by the scam ISPOs. I’ll consider using different wording or making this part a bit more descriptive. I feel it is better to overly warn people and let them research themselves above the warning than to leave them defenseless. This guide is for people that need to lookup how to make toast…

This is a controversial topic and I’m sure to make some enemies here. I find donating particularly deceptive. You see this exploited at grocery stores, fast food and such. Want to round up and donate to this charity? The actual donator is the one who reaps the benefits, not the person they are donating on behalf of. The delegatos are unable to claim their ‘loss in rewards’ as a donation on their taxes. Meanwhile the SPO has an inflated donation benefit on their taxes. Donation based pools benefit the SPO the most. If a delegator interested in charity were to delegate to a high rewarding pool they would receive the tax benefit themselves while being able to donate MORE to the charity at the same time.

Both ‘mission driven’ and donation are advertising tactics pools can use comparable to advertising low fees as 1PCT does. If delegators are choosing pools based on advertising then the network is left defenseless. I have not read any security proofs related to a safe distribution of stake based on advertising.

Just to reiterate, this guide is focused on the best health of the network, not the ecosystem surrounding it.

I appreciate every bit of feedback.

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I am also thinking of all the single pool operators that will never be able to afford a meaningful pledge in the sense of this discussion.

I am very grateful that there are quite a lot of people now who tell people trying to start a stake pool that they won’t have much fun if they do not have a plan to attract millions of stake. Telling them that it won’t make much sense to start a stake pool if they can’t afford millions of pledge will change the narrative again.

I’m not saying that having lots of “small” pool operators (who simply do not have millions to pledge) being good for decentralisation is correct, but it is a prevailing narrative at the moment. Attacking that might even make you more enemies among the single pool operators than attacking the mission-driven pool narrative (where I tend to be pretty much with you).

We’re not talking about rewriting the incentive model, but only educating people about how the current system works. Pledge is baked into it already. One of the best ways to outshine other pools is to bring a fat pledge to the table to offer high returns. Steve Jobs didn’t self fund Apple; there are pools that have gone out to find investors for their pledge. It’s like running any other business, somebody has to show some capital.

There was a big push by IOG and CF to get a ton of people running pools for Shelley, but they overshot and advertised it as a bit too accessible. Some guy with $10k and the ability to copy/paste shouldn’t be running 1 of the 500 nodes a world network relies on, and nobody should be running a pool with just their own stake. Who should and shouldn’t be running pools is a different important discussion.

I’m familiar with this sentiment and I aim to change it. It could very well be a heavily advertised sybille attack. A lot of delegators have been falsely convinced that they are helping the network by accepting lower rewards for the sake of decentralization. In reality there is absolutely no guarantee that a single mogul isn’t running 2000 ‘small single pools’. Even if every small pool is a different person, delegating to a pool that makes a block twice a year isn’t helping anything, maybe the SPO, but they’re likely losing on the deal too.

The security of the network was based on an assumption - >50% of delegators would have the knowledge and desire to maximize their rewards. I think this was a foolish oversight, but it’s still the way the network was setup. I think the early educators and advertisers have weakened the network by teaching the participants (both SPOs and delegators) to accept poor returns. I hope to curb that and have adequate guides ready for the next bull run when new people are entering and picking pools.

Perhaps I should make a different guide for potential SPOs on whether or not they should start up their own pool.

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Hi Tom,

I can deal with the formatting and continue following the thread as any significant revisions may occur.

I also made the observation about the mention of mission-driven pools being missing from the guide currently, specifically in relation to discussing the margin or variable fee. Even a small acknowledgement of the potential to make a staking decision on the basis of values seems important. Some delegates may be willing to accept slightly smaller rewards to support causes in which they believe.

Full disclosure, my thoughts on so-called “mission-driven” pools stem from operating a relatively new pool that would be considered mission driven.

Cardano proposes a different–better–model of doing business in a Web3 world that often seems to get lost in developer-speak about technical details. Cardano needs more delegators. The home page literally screams, “Making the World Work Better For All.” For a bit of background on how the margin parameter seems to hold potential to help all of us build the world that we want to live in–by design, it would seem–I would recommend for example Kickstarter co-founder Yancey Strickler explains his ‘bentoism’ philosophy

If we implement a version of Cardano without deeper values, then Web3 has the potential simply to inherit and repeat all the mistakes of society so far.


I don’t doubt that and I see people doing it all the time. However, if I were making a guide about the best restaurants in the area I would not include extracurriculars that the owner takes part in. I would focus on what makes the restaurants the best. The same goes for stake pools. There are great pools and there are not so good pools both in reward rates and infrastructure. Whether or not the SPO works with the homeless on the weekends has no nothing to do with the pool forging blocks. Pinning a ‘cause’ to a pool is just advertising.

The mission of the pool itself is also subjective. What if one pool focuses on getting lumber to rebuild homes destroyed by hurricanes and the next pool is about saving pine trees. These are both relevant and important missions, but they directly compete with each other. A guide should not make judgements like that.

Hi Tom,

I’m impressed with the content that you pulled together for the guide, as well as how quickly you were able to do so. I would have found such a guide very helpful when I first became interested in Cardano, as I expect others will. That’s why I’m interested in being involved.

The prisoner’s dilemma (Prisoner's dilemma - Wikipedia) that Strickler cites comes from game theory (Cardano | Discover Cardano) and is used as a standard example showing why completely rational individuals may not cooperate, even if doing so appears to be in their best interests.

Your example assumes that the pool focussed on rebuilding homes will not cooperate with the pool interested in saving pine trees, and vice versa. Drawing further from game theory, in a Nash equilibrium (Nash equilibrium - Wikipedia) each player is assumed to know the equilibrium strategies of the other players in a non-cooperative game, and no one has anything to gain by changing only their own strategy. Every win-lose (non-cooperative) game has a Nash equilibrium and is finite.

We do not want Cardano to be finite. Continuing the Cardano experiment indefinitely requires cooperation, balancing our own interests with the needs of others.


By the way: You do realise that this is a contradiction to “The lower the leverage of a blockchain system, the higher its degree of decentralization.”? The ideal – leverage of 1 – would exactly mean that everybody runs a pool only with their own pledge/stake.

But leverage 1 also contradicts the goal of having 500 (or 1000) pools, because we clearly want to have a lot more users.

To reach at least a low leverage, they would all have to be highly pledged. So, either only whales operate stake pools or:

Pools would have to find investors giving them pledge. This could also be done by a mechanism like the Eternl Staking Vault, where users could at least have the guarantee to get their pledged ADA back. But it nevertheless would require enough users to want to enter into a stronger commitment than the “usual” stake delegation.

Here is an example of a straightforward revision suggestion to shift the tone:

Regarding potential delegation suggestions or advice from SPOs, consider the source of information. SPOs and delegators have different financial incentive within the system. As a delegator, you want high rewards from your stake. An SPO may want to run as many pools as possible at the highest acceptable fee, at the expense of rewards for delegators. If an SPO suggests that you delegate to their pool, evaluate and decide for yourself whether the pool offers a balance of returns on your stake and usefulness to society that you want to support.

Here are some, but not all, examples of pool behavior that may be questionable. Pools that:

  • Impersonate other pools or businesses without any affiliation
  • Promise higher rewards than their pool can offer
  • Promise additional tokens or any other future value in exchange for your rewards
  • Modify their parameters just before and after epoch transitions to avoid detection


I’d probably differentiate between these points. Impersonation and parameter modification close to epoch boundaries can very well be called fraudulent. High reward promises might sometimes just be a website not being updated, but – if they are way off – also easily border on fraudulent.

ISPOs – especially ISPOs that are not in addition to “normal” rewards, but replacing them – are questionable, but not fraudulent per se. The same goes for advertisement as mission-driven.

Here are some, but not all, examples of fraudulent pool behaviors to avoid:

  • Impersonating other pools or businesses without any affiliation
  • Modifying their parameters just before and after epoch transitions to avoid detection

Other pool characteristics suggest that further research is appropriate:

  • Promising higher rewards than their pool can offer
  • Offering additional tokens or any other future value in exchange for your rewards
  • Supporting social causes
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As I mentioned, I registered a stake pool that I suppose speaking in generic terms would be categorized using a term such as “mission driven.”

To clarify, the appeal of creating a stake pool supporting charitable causes that I already personally support financially stems from the potential to help generate additional revenue for those charities without requiring more in donations from me.

I and obviously others already support the same non-profits over time through donations. What’s new with Cardano is the mechanism of supporting charities not by donation, but by staking. With staking, the donation is generated by the blockchain protocol, while everyone who supports the causes also benefits financially instead of giving funds, as when donating directly.

By setting up the stake pool, the charities that the pool supports have everything to gain over time and I have very little to lose while doing work that I enjoy.

The intention for setting up a stake pool and the reason that setting up a Cardano stake pool seems a good arrangement have nothing to do with advertising, to be clear. I have no hesitation at all in allowing the charities to stand on their own merits.

Applying Strickler’s bento box, Tom, your focus seems to be the needs of Now Me and Future Me. In the stake pool that I operate, with the needs of Now Me and Future Me met, the focus shifts to Now Us (considering the needs of people around us) and Future Us (envisioning the world we want our children to live in). As Strickler writes, “The debate is between the voices of Now Me and Now Us. But the decision is made by the values of Future Me.”

Considering the range of different potential approaches to leveraging Cardano incorporated elegantly by design it would seem, to provide an accurate depiction of the ecosystem for the widest possible audience of current and prospective delegators your guide must reflect the broader perspective.