Everyone knows there is a vote underway on mainnet for stake pool operators to register their preference about how paramaters K and minPoolCost should change. So I thought it might be useful to view the vote options through the eyes of a multi-pool operator.
Some multi-pool operators may vote this. No change, same pay, no effect on decentralisation.
This is the only bad option for a multi-pool operator. They have no excuse to split their pools further and they can only farm the same number of minFee chunks with the value of these being halved. This means they will take less rewards from delegators. This is good for delegators, but very bad for multi-pool operators. I would be amazed if any multi-pool operator votes this option.
This is the best option for a multi-pool operator. They have an excuse to split their pools further because K will increase. They will tell the community that the protocol has forced them to split and that they are only doing so to protect the interests of their delegators. Splitting will enable them to farm more 340 Ada minFee amounts. Each pool they run will still get the same 340 Ada min fee, plus their percentage, but now each pool will do less work (produce less blocks). Effectively the operator will earn a higher percentage of rewards from their delegators. Win Win Win. Smart multi-pool operators should vote this option and simultaneously publish FUD about how lowering minFee is bad for small pool operators.
Furthermore, the number of multi-pool operators will increase. This is because there are a number of single pool operators that are close to saturation and many of these will choose to split their pools and become multi-pool operators. They can also farm more minFee chunks by joining the multi-pool operator gang. Solidarity in numbers.
This is almost the same as no change for a multi-pool operator. With k increasing they have an excuse to split their pools. They just need to spin up twice as many virtual machines running as block producers and create the necessary keys. These VMs are easy to manage and they can all communicate via their existing couple of relays to the rest of the Cardano network. No extra cost really.
So they will have twice as many block producers with each earning half the minFee + percentage. Their income will be unchanged. Delegators are no worse off. But there is a little bit of extra work for the operator to initially spin up the extra block producer virtual machines, so this would not be the preferred option for a multi-pool operator. But, it is not really any different to “no change”. Probably some could vote this way if they worry that their delegators might work out the game theory.
Both these options probably don’t achieve much. Some small pool operators may vote 6: “none of the provided options” but this doesn’t say much about their reasons. Probably not much point in a multi-pool operator voting this option.
There is really only 1 bad option for multi-pool operators and that option may also be seen as bad by some single pool operators. That is option 2: “keep k at 500 and halve minPoolCost to 170”.
I am starting to think that with the way this vote has been structured, option 2 may be the only option that might actually increase decentralisation. No doubt, it is really hard to structure polls to produce good outcomes. Probably there needed to be more community discussion about the game theory.
Having more multi-pool operators doesn’t improve decentralisation. The huge minPoolCost is a barrier for small pools to compete. It should be reduced to 30 like the IOHK Quant @Colin_Edwards explained in this post