Where did the Block rewards go?!

Hello everybody,

Yesterday, I noticed an abnormal/unexpected drop in the per epoch block rewards, which I and our xSPO community cannot explain.

I checked the block rewards of multiple pools including my own from epoch 292 until 299 and this is what I found in terms of block rewards:
image

To get the block rewards, I summed the delegators and operator rewards and divided that by the number of blocks minted in epoch. My source of data was adapools and cardanoscan.

As you can see, and as is expected, the block rewards should gradually decrease over time as a fixed percentage of the reserves is used to payout the rewards and these reserves deplete over time (decreasing rate of inflation). More information about this mechanism is to be found in this post

But as you can see in the image above, there was a 3,8% drop in 1 epoch, which normally would take many epochs.

With the xSPO community, we analyzed possible reasons for the drop and figured out that the drop is caused by a reduction of the reserves of Cardano.
see here: Pots | Cardano Staking

Reserves in 298: 11.68B ₳
Reserves in 299: 11.34B ₳ (3% lower than 298)

So something drastically reduced the Reserves.
There was no unexpected high number of blocks or any temporarily increased rewards. The above adapools link shows an untypical high number of rewards in Epoch 299 with 856.97M ₳ instead of the typical ~550M. But this number seems to be unrealistic in any case as the expected rewards per Epoch are ~30M

So the key question here is: What reduced the Reserves by ~340M ADA?
Is this maybe cause by the dbsync rewards bug which affects the values shown by adapools/cardanoscan?

Is there a way to see transactions that are going out of the Reserve? Not sure if this relates to a publicly visible address?
There were 4 new private pools in this same epoch; all with 64M ada

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perhaps the catalyst winners received the funds?
you can track here the treasure

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From what I understand, the catalyst rewards are paid out of the treasury and not out of the reserves so that would not affect block rewards at all

20% of the amount of rewards are sent to treasury each epoch anyway already.

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yeah, you are right, the rewards are coming from reserves… not from the treasury

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I found this

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To evaluate if the issue is just a problem in querying data I verified if the rewards which really appear in the addresses of my delegators are matching the data which is shown on AdaPools.
I can confirm that the rewards are really lower. So a simple problem with reading the data is NOT the case.

Instead, the table which @Alexd1985 posted above also shows that the Reserves were decreasing by 340M (which is 320M more than typically per Epoch). The table assumes it was used for rewards but this is not the case as it would have caused 17x rewards in one single epoch, which was not the case.

At the same time, the circulating supply increased by the same value.
So who took out ADA from the reserves and for which purpose?

Why is there no public communication from Cardano Foundation about it? They are managing the reserve and taking out parts of the rewards which are originally meant to be used for Rewards and Treasury should not be done without explanation.

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Btw. due to the table, there was a similar drop in Epoch 232 in December 2020.

This is very peculiar, and that is no small sum of ADA. Let’s keep on digging on this!

Sorry I do not have more to add to the convo just yet, but team HODLR will start investigating as well.

@ADA4Good , I wasn’t able to find these new pools. Can you share? We may be able to trace the Tx’s that filled these pools, and see if they originated from the treasury.

@Markus-VITAL can you assist with this information please?

I believe it’s those 4 you are talking about
3d5f6d2a147cf3c97aed0d7ea973e6a95abdf94255025bdf470c9809
ad1b6687f605b3543f9315a5f966ea70fc5f35e7b2a4c3a943bef78d
b405a62715301a625c2fd5eb3f5b16be9f1f3f0452f5b8b9286997c4
ea5f1fb21658736dce6e8c63a516e9e5d645e104b9efbfbb395d7e68

Ok… who can explain me where the rewards of 66m for this transaction which was funding the first of the above mentioned pools come from?

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66m rewards lol :sweat_smile:

Isn’t this a positive indicator that it came from the treasury?

Also, ADA4Good had this link in the OP and it gives a great graph of the anomaly.

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It was part of a list of “instantenuous rewards” which can be found here: Transaction 03b02cff29a5f2dfc827e00345eaab8b29a3d740e9878aa6e5dd2b52da0763c5 - Cardanoscan

Total rewards amount: 318M

Metadata says:
{ “presale-escrow”: “Moved from reserves to ada pre-sale redemption escrow” }

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Ok, after digging some deeper I see that the Address which paid for those instantaneous rewards is also executing protocol updates. Previous transactions:

The last one is referring in the metadata to an IOG Github issue: github.com/input-output-hk/cardano-ledger-specs/pull/2010

So the rewards were initiated by IOG as it seems. Now the question is. Why?

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Maybe the overall staked ADA is higher?

Maybe they plan on spreading around that delegation :slight_smile:
#WishfulThinking

No, this would not reduce the ROA of individual delegators. Lost rewards based on un-staked ADA are removed back to the reserve. If staked it’s a bigger portion that is consumed. The ROA is the same but rewards would shrink faster then. But no reason for a sudden drop.

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