The Cardano Foundation’s Delegation Methodology is Changing

The Cardano Foundation’s Delegation Methodology is Changing

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The Cardano Foundation would like to make an announcement regarding our delegation methodology. As many of you may be aware, our current delegation cycle has been delayed due to ongoing technical difficulties; namely through syncing issues with the current versions of Daedalus—owing to the large number of wallets that the Cardano Foundation controls.

As a result, we would like to take this opportunity to both extend our apologies for the delay in redelegation, but also use this as an opportunity to lay out a new direction for the Cardano Foundation’s delegation methodology.

Let us first say that this is a good problem to have for a couple of reasons. Firstly, these technical difficulties have been caused by the fact that there are orders of magnitude more transactions moving through the Cardano network today than prior to the Mary hard fork. As a result, our multiple Daedalus wallets are taking significantly longer to sync, and therefore we could not redelegate within our planned time frame. This means that our blockchain ecosystem is rapidly expanding, with many more participants making transactions than ever before.

Secondly, what began as a delay now gives us the perfect opportunity to reexamine our delegation methodology and implement some of the changes that our community has requested in recent months. We will discuss these changes below.

How will our delegation methodology change?

If you’re unfamiliar with our original delegation methodology, we suggest you watch this discussion between Frederik Gregaard and Hinrich Pfiefer before you continue.

Our previous redelegation period took place over one month. We now propose that we shift this delegation cycle to three calendar months (once a quarter).

We imagine this new delegation cycle will provide a variety of benefits, including:

  • Issues with redelegation are more manageable, given that more time exists to anticipate and react to technical challenges,
  • Small and medium stake pool operators who receive delegation from the Cardano Foundation are supported for a longer period of time,
  • Better alignment with development milestones and hard fork events to allow time to prepare and react to technical changes.

This is just one change in an ever-changing delegation methodology, and we will continue to evolve our delegation methodology with the help of our community. Below, we will briefly examine those delegation criteria which will remain the same as before.

Other Unchanged Delegation Criteria

For stake pools to be eligible for delegation from the Cardano Foundation, they must fall within the following criteria (data sourced from a self-hosted passive node):

  • Hold between ₳25,000 and ₳2mn as a pledge,
  • Operated by a stakepool operator that only runs one pool (difficult to verify but best effort attempt),
  • Have a normal operating cost of >= 1% and <=5% variable rate, and a fixed rate of around ₳340,
  • Does not have a high number of ada already staked (less than 5% saturation),
  • Have validated blocks successfully in the past,
  • Have not been delegated to by the Cardano Foundation in the last four rounds.

To randomly select stake pools to delegate to, the Cardano Foundation will use a third party randomizer to choose from eligible pools according to the criteria listed above.

In total, the Cardano Foundation has multiple wallets from which we will delegate our ada assets. Our ada assets are equally distributed across our wallets. Single wallets will be used to delegate to one pool at a time.

In Conclusion

So, to conclude, our selection criteria and the size of pools we are supporting remains the same. The major change is that instead of our three epoch delegation cycle, we will now move to a quarterly delegation cycle.

We welcome feedback and comments below. This thread will now become the main area of discussion for the Cardano Foundation’s delegation methodology. Please do not give your opinions and feedback in the old thread, as we may miss your comments. Thank you for your patience, participation, and helping to shape our processes.

We encourage each and every Cardano ecosystem participant with the skills and desire to become a stake pool operator to read our guide to becoming a stake pool operator.


Learn more about staking, delegation, and consensus on the Cardano blockchain in the following articles:

27 Likes

Great! Is there anything that pool operators need to do in order to be considered, or is it automatic selection based on the criteria set forth?

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Agree with everything except ‘’ * Have validated blocks successfully in the past,’’ Personally, I think pools that have not produced any blocks need the redelegation even more.

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Above appears fair and should give everyone who has minted at least one block a fair go. I don’t think that it would be practical to delegate to a pool until a block has been minted because they could not know if the pool is configured correctly. Admittedly it is tough as the cost in getting minimum pledge and sufficient delegation to have the chance to mint a block is a lot higher now than it used to be.

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I am glad that Cardano Foundation is actively working in improving the delegation process and help smaller pools.

However, I believe the following requirement shouldn’t be required
“Have validated blocks successfully in the past”

A small pool, with very few delegators and stake less than 100k in total has a very small probability of validating a block! I believe pools that have not validated a block in the past, needs a little help more than others.

This “validated blocks” in the past reminds me of the "no experience, no job” cycle :frowning_face:

Hope you will reconsider your approach.

19 Likes

When will the selection start?

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I’ve updated my pool to charge 0% but raised the fixed fee instead (700 ADA). Would I be eligible?

I like the terms, but I’m concerned about two of the points that seem to prevent newer pools from getting help getting started, the pledge amount and blocks produced in the past.

I understand both exist to make sure it’s a legit pool with skin in the game, but at current prices (and assuming that the price will continue to increase, 25000 ADA is a very big amount, specially for communities outside the USA that usually make less money from wages on average), this seems to heavily benefit very early adopters (that bought in at very low prices and are already benefiting from the price increase). And then this cascades into blocks produced, requires a pool with low stakes and pledge to be very lucky to even be considered.

Running costs of a pool is already an investment that most have to make and finance while awaiting block production, this would be a saving grace but if in order to be eligible one needs to have at least 25k ADA seems to me, to be a very steep curve.

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Creating and running a pool, means that the SPO has at least the basic knowledge to do it correctly. But still there is a valid point.

However, the ₳25,000 minimum pledge gives incentive to the SPO to make certain he has correctly setup their pool!

This “validated blocks” in the past reminds me of the "no experience, no job” cycle :frowning:

4 Likes

I would most certainly have to agree. I know that this may be bias, but having the requirement of having minted a block already could be seen as counterintuitive.

I understand the idea that it would be ideal to ensure that the pool they are delegating towards is running properly, but some pools may not have been luck enough to develop a block. These pools may need this help.

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Please read the section called “Other unchanged delegation criteria”. Selections will be based on that

No. Please reread the criteria in the post

The same thing could be said about the protocol parameters. 25k ada alone is not enough to often make blocks.

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this minimum amount its just too high now. you realise that in dollars it means a lot of money… they should consider smaller pledges because its impossible for most pools I know including my colleagues.

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no man, 25,000 its just too much of money for most people today including myself. its not feasible and only benefits bigger pools.

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25000 ada is also not enough to often make blocks. Please also read Prof. Aggelos his blog about having skin in the game and what it means for the protocol

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its not about skin but actually having money lol most people don’t.

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This might just be a killshot to the community helping with decentralization. 25k and successfuly minted a block thats a big ask

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To be clear these criteria have been here from the start and aren’t new ones.

They can’t remove both the minimum pledge and the “validate blocks” in the past as the two of them should not exist together.

One have to remain to make sure a pool has been correctly setup and the SPO has put real effort.

Of the two the one that is more helpful and kinda make the other obsolete is having a minimum pledge. If ADA prices increase more, they can always think of reducing the minimum pledge amount.

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Sorry Andy, but that doesn’t mean that these criteria should not change!
Cardano foundation team should hear the voices out there, see what has changed and adapt!

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In my own country, 30,000 € Annually is considered a very good income, I meant gross income before taxes…
25,000 ADA ± 30,000 USD
I just wanted to fix that…

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