Understanding Rewards Flow and how it will change over time

Hello everybody,

A couple of SPO’s in the xSPO alliance has been working to understand rewards calculation in more detail. The available information on Cardano.org is just a part of the whole puzzle which we tried to complete.

Thanks also to @brouwerQ for all the insights in the other Thread which helped to understand this better.

This is the final picture that represents our understanding of the rewards flow:

Interesting notes about this:

  • Currently: Currently 0,19344% are removed from the Reserve every Epoch. (99.8066% stays in the reserve)
  • If the situation remains the same it would mean that the reservice is shrinking by 13,18% every year.
  • So if the current ROA is 5% it will be 4,34% in one year.

Side fact:
A year ago the rewards per block were 2000 ADA. Now they are 730 ADA. This does not reflect the above calculation but is explained through the federal Nodes which were also generating blocks without consuming rewards. As we are on k=0 (all blocks produced by SPOs) a similar move will not happen again. Anyways network parameters and especially the rewards formula may change in the future which would impact the calculation.


So in 10 years.
the ROA will be 50% from today?

If none of the variables changes, yes.

I run SKULL pool, what pledge would you recommend?

Sorry i cannot recommend you a co crete value. It depends on what you can afford, your legal environment, how much it is for your tarket audience,…