Cardano has a huge number of pools that are managed by independent entities. Some operators operate multiple pools. Only 2 operators have an approximate 10% share in the production of blocks. The third and other operators have less than a 4% share. There is currently debate in the Bitcoin community that 2 pools together have more than 51% share of block production. Namely Foundry USA and Antpool. According to some, this is reportedly not a threat to decentralization, as miners can supposedly delegate the hash rate elsewhere at any time. It’s very dangerous not to see the tendency towards centralization as a problem, and to comfort ourselves with the argument that pool operators can’t do anything without miners anyway. Delegation of power works very similarly in the Bitcoin and Cardano networks. The only difference is basically in the resource that is delegated. Stakers can also delegate to another Cardano pool at any time. Still, we should consistently make sure that the number of pools increases. We must not make the same mistake the Bitcoin community is now making. Let’s explain the meaning of pools and reiterate the basic principles of decentralization.
TLDR
- We know from game theory that security increases with the number of participants in a network consensus.
- Big miners delegate to the largest pools instead of supporting other smaller ones.
- Foundry USA pool is owned by the Digital Currency Group.
- Decentralization is like democracy. People must take care of it or they lose it.
- The more participation in the consensus is economically affordable, the more likely it is to maintain a high level of decentralization.
This article was prepared by Cardanians with support from Cexplorer.
Read the article: https://cexplorer.io/article/the-number-of-cardano-pools-must-never-decrease