Will the amount of ada by delegation will decrease over time?

Hi,
today Prof. Kaygias posted an article with title “Stable fees and the Decentalized Reserve system”

So according to this article,when the price of ada goes up,the amount of ada getting through delegation will decrease over time (if it is now around 5% it will go to 4%,then 3% etc) ?
Is this correct?

Hello @soc09 ,

Article you are referring to doesn’t discuss staking or delegating rewards. It talks about exploring and idea for a system that can ensure that transaction fees on Cardano network are always reasonably low for all types of transactions. The premise is that by using real world data of financial value network fees can be automatically adjusted to keep transaction costs stable and low with out price of ADA affecting them.

It may sound like lowering transaction fees will reduce rewards for stake pools. However, reward system has many other parts to it. There are many scenarios where lowering fees will actually increase stake pool rewards.

For example: If price of ADA shoots up, that may be because a lot more people are using ADA. That means more transactions are made. Which means more blocks are created. Which means more stake pool rewards are issued. Even if those rewards are smaller, they may be a lot more of them.
Would you rather have your stake pool mint 1 block when transactions are at 0.2 ADA or mint 3 blocks when transactions are at 0.1 ADA. In that example 0.1 ADA would give you 50% higher rewards.

There are of course other mechanisms that influence rewards issued besides just the transaction fees. Adjusting maximum saturation and number of stake pools has a huge influence on rewards issued. So, if they implement a system similar to the one in the article, then they will probably adjust those accordingly so returns stay viable for stake pool operators and all that staked and delegated to those pools.

This type of openness and exploration is what makes Cardano one of the best blockchains. This article is just opening discussion about such system. This may lead to others offering improvements to this idea. Then someone will publish a paper on it. If idea is well received in scientific community then they will test it on Cardano test net. Once it passes all those revisions, improvements and testing, only then will they deploy it on mainnet.

So, by reading just this article it may seem like they are focusing on just lowering fees. However, there are many moving parts to that system. From what I can see, this idea has a potential to make Cardano the most fee friendly network out of top 20 blockchains, while at the same time providing higher rewards for staking/delegating.