It seems like @IOHK_Charles and company think that Stake Pool Operators are the garbage collectors of #Cardano.
And how is it #decentralization if they can change parameters whenever they see fit?
This is outrageous. No discussion. No vote. Just a big EFF YOU to stake pools.
IOG SPO call:
IOG: “340 min fee is changing to 30”.
IOG: “oh also, hardware requirements are increasing too”.
The min fee was designed to help cover hardware cost for SPOs. Open to discussion on this and how it makes sense or doesn’t.
#Cardano #CardanoCommunity $ADA
I’ve deleted any posts or comments I may have made about the recent IOG SPO community call.
My only reason for doing so is because they made a post saying don’t discuss the call on Twitter, and I don’t want to be on their “bad boy” list any more than I already am.
Why does IOG still make decisions on parameters? @RichardMcCrackn @danny_cryptofay @adosiawolf @HolgerCardano24 #ADA #ANQA $ADA #Cardano
Since they referenced the Chatham House Rule I took it to mean that you just shouldn’t say who said what? Not exactly sure how broadly they meant it though. chathamhouse.org/about-us/chath…
Don't discuss? Sounds kinda sus to me. Isn't the community supposed to govern at some point? Lol.
They didn't say not to discuss, just not to attribute who said what. Like....that bloody idiot KOALA_Steve in the call said let's make min fee 200%
Fyi I could not make the call.
If you couldn't make the call, then why in the world did you propose a 200% increase in min fee??
hahaha
Colin shared only his personal thoughts in today’s call as part of our ongoing SPO consultation process on these important topics. Absolutely no 'decisions' have been made. Please join the debate by replying to the survey in the Discord shared after the session?
Tim, thank you for the reply. Apologies if I’ve stepped out of any boundaries with this tweet. I want what is right for the community, and if this tweet is not conducive to a positive look for such or IOG, or does not resonate well, I’d prefer to delete the tweet. Feel free to DM
Not at all Salt. I hope I have cleared it up. I hope you will join our Discord again next time to continue this important conversation 👍
Thanks for keeping things professional Tim. I admit, a little toxic on my behalf to take to twitter. Often in these times it’s a little too easy, and one must check themselves. Grateful for your words, per usual and grateful for your team. I know you guys are doing what you can.
Hardware specs needed to be raised. We aren’t even close to Solanas specs. If you were relying on the 340, you really wern’t/ aren’t in the game anyway.
I think that we should urgently share and discuss these cip:
1) prepay mincost and pledge curve by @shawn_mcmurdo
forum.cardano.org/t/prepay-min-f…
2) leverage based saturation and pledge benefit by @TobiasFancee
forum.cardano.org/t/cip-leverage…
Actual settings are incentivizing pool splitting
Boring. I'm starting to believe #Cardano community is often too critic to itself, committing small chronic self-suicides by FUDding for things other blockchains doesn't even think a second about.
Pool fixed costs drop won't change our destiny very much, while our whines will.
Yes, Tim has already tweeted saying that there was no confirmation/decisions on the changes.
SPO calls are also meant to be private.
THIS IS SOMETHING EVERYONE IN THE #CARDANO SPACE SHOULD BE CONCERNED ABOUT!
The minimum fee for pools will change from 340 ADA to 30 ADA, effectively killing small pools.
Please, please, please run your numbers and research again, this will not be good for decentralization!
0/n
Did they say what new hardware requirements will be?
Nothing in particular, just that they see it increasing as they expect the network to continue to grow with more and larger transactions. Which is great, but don’t preface it with an “oh btw, we are cutting your fees”.
Partially a timing issue IMHO.. Perhaps fixed remained 340 to ensure a strong backbone of community pools emerged prior to further expansion.
But if HW cost is anticipated to grow, pools mustn't be hindered from gaining stake over time to pay for it, if we want many validators.
They aren't cutting our fees, they are adjusting the minimum we can charge.
Set your fees to what they need to be for your operation.
Faster, bigger, moar.
Sounds like mostly memory-and HD related tbh, I don't see current CPUs being concerned even at "Tier 1 levels" (Holger terms).
Bigger Tx size with SCs and dApps and DEXs… got to hold the The Whole ledger.
Is that real?
I always wanted to be a SPO. With 30ADA/epoch it would be feasible.
The CIP by Shawn for prepaying fees was a great one imo.
Fixed fee to 30 ADA means I can't cover my costs as the operator let alone do any donations to charity.
Bye bye funding water wells 🥲
This sounds disastrous for the SPO landscape... Is this an unequivocal change, or do y'all SPOs at least get a vote?
Are any other parameters looking at being changed besides the min fee, also wouldn’t everyone just keep it at 340? Or increase their margin?
Race to 0. What you will most likely see is all pools setting their min fee to 30, variable fee will probably stay around 1-5% as we currently see. (I believe) making small pools less (or not) profitable and ultimately shutting them down. Larger pools (imho) would be fine.
This is not a viable solution, can't run the infrastructure for this amount of ADA. It will lead to one pool one relay without redundancy and backup or running multiple relays on one machine. First pump the network with "everyone can run a pool" and now cutting down on it.
The number of pools, decentralization and the quality of the network will go down drastically by this decision. It is only meant to support and cut down the network to the large stake pools.
Smaller pools that are getting 1-2 blocks (sometimes 0) might just turn off their nodes. Is this what Cardano wants? Depends who do you call Cardano. Let us enable on chain voting and then let the community decide
There are pools that aren't minting any blocks that still have their relays on. I don't think this will dramatically change too much.
So months and months of nothing and this is their fix? I have business decisions to make.
fixed fee should be 0. instead of helping small pools, it only incentives delegators not to delegate to them and do it to almost saturated pools
In order for this to work there needs to be some min variable fee though so that creates an equally competitive environment rather than all pools racing to 0-0 fees otherwise there won’t be a network
The problem is the sudden change.
It should have been changed every 3-4 months so people did not become dependent on the inflated value.
With the lower min smaller pools can set their fixed fee to 50, 100 or whatever they need and still be more competitive with larger pools.
After months of not minting, I was pumped to finally start breaking even. But this news is quite worrisome.
Why not figure out a healthy balance?
Those who keep min fees at 340 cannot raise margin %
Those who raise margin %, will decrease min fees by "x"
Something reasonable.
It just allows SPO to choose a lower min fee. It isn't compulsory. SPO can choose any combination of min fee and %. Some pools are cheaper to run, some are not.
This! 💯%
Pools are free (and encouraged) to set the fees that make sense them and their delegators. Lowering the minimum fee is just that, the minimum. A pool can still charge whatever they want above that.
It would be better to adjust a0 before adjusting minimam fee.
Large capitals will become stronger, and this will hurt the chances of new validator participation (decentralization).
I think it is important to decentralize layer1 as much as possible to ensure security.
Many small SPOs claimed in the past that the high fixed fee negatively impacts the delegator‘s rewards when you only produce one or two blocks per epoch. So this is actually a good thing imho… A min. variable fee would have been nice though!
Well, it objectively does. 340 was about 1/3rd of 1k (per block). It is now approximately ~half of the subsidized rewards per block.
I liked the idea of a small min % also, as it scales better w/ saturation. There is a disconnect b/w SPO fees and market price as well.
30 ADA min fixed fee will not even cover hardware costs 🤦♂️
If this change goes threw, I guess a lot of smaller SPOs will just give up...
is it actually caped at 340 per epoch or is it a multiple times 340 when you mint more than one block per epoch?
Let the most skillful operators thrive by allowing them to optimize cost/performance. Low quality infrastructures won't provide good performance and delegators will leave. I'm totally ok with a ~50 ADA minimum fixed fee. The market will set fair value for fees.
And what is that change supposed to help with?
It's not like we will set the MinFee to 30, and suddenly whales will start flowing to our pool because finally, we are competitive. They won't.
Also, one block per month(s) for a smaller SPO probably won't even cover their costs.
For how research driven and methodical #Cardano development has been, the cut to 30 from 340 seems like one of those up all night "ugh.. idk.. I'm too tired to think anymore.. How about 30?" thoughts.
They can do better. Incremental approaches right?
$ADA #CardanoCommunity
What about having a minimum margen fee and Fixed fee = 0? This way delegators to small pools will have the same ROI as in the big ones, which will help decentralization. Now those who delegate to small p are the ones who really care about the network and are not driven by profit
Truthfully, there are a lot of SPOs that are carrying #ADA not minting blocks. That's not good for decentralization or the end user. Reducing the mandatory fee allows the free market to set the prices of cost.
1/ With the current 340 min fee, I currently don't recommend anyone even friends and family that I introduce to cardano to stake with my pool. This is because the current min fee forces small pools to put the burden of bootstrapping on their delegators with huge effective fees
2/ Ideally a min variable fee would be added with this change, however since that requires ledger rule changes that won't be happening any time soon. This change isn't close to fixing things, but at least it allows small pools to offer essentially the same rewards as large pools
This is surely something to put through the community once Voltaire Governance is functioning right? ....Unless this is absolutely needed for scalability or block rewards are due to fall low enough for 340 to be a large chunk before then
This is us leaning toward the “it’s not a must”, it’s community engagement. Without discussion, there’s no resolution.
Is this Min fee fixed or adjustable per SPO? If fixed, I'm assuming the reward percent split would then need to be adjusted to account for the difference?
Adjustable, with these proposed settings 30 ADA would be the minimum allowable amount one could set for the “fixed fee.”
i am the delegator the only thing that stop me to delegate to small pool is min 340 fee because it will cut lot of reward i get if they only make 1000A or 2000A reward per epoch there is always a fee you can set i think it’s good for smypool
Something weird about the “can’t run a node on 30ADA” claims for nodes with millions of staked $.
If you can’t make money running a single server in that situation then you’re just one of the lucky first runners who managed to set up a cottage industry for yourself.
Good to consider a reduction in minimum fee. When ADA price appreciates it gives more flexibility for pools to adjust. When ADA is $5 it would currently mean a $1,700 fee. SPO's won't need to charge the minimum but I think it's good long term.
From my point of view the min. fee of 340 ADA does hinder to attract new delegators if you are a small pool as a great portion of the rewards goes to the pool. Smaller fixed fees e.g. 50 ADA + variable fees would make SPOs more competitive
I can see this happening if Hydra offers new incentives for SPOs. Hydra is supposed to be close to release, so in ways this makes sense. Although, I could be very off base here, just thoughts.
Great for me, I had a pool for a year and did not find any blocks. I told many people and they came to this system but because I am a small pool they went to a bigger pool. i did it for one year and i will do it as long as i can.#Cardano
I moved my small pool to a rackmount server I got on eBay over the holidays, because making zero blocks and paying $$$ to @digitalocean wasn’t tenable. This is the _only_ reason my pool will survive these changes, as my monthly cost is now just electricity.
I remember back during launch everyone complaining about the 340 and wanting it much lower, now everyone is complaining about the opposite. It’s a minimum fee - it should be 0 honestly.
Decreasing min fee to 30 ada is an interesting concept. I'm curious about the full context of IOG's reasoning.
30 ada for min fees with current ada price less $1 Not good => will create less SPO and more centralized Pools.
They can start implementing that if $ada price > $9
#CardanoCommunity
I think would a good case. The possible minimum is 30, but every SPO can decide, just as the operator rewards, what fits best to his/her stakepool. Covering the operator costs, as well as the rate of Ada at that moment.
I never agreed with a sudden change to 30. I think it would have been better to do this incrementally over several months.
Stakepool fixed fee should be lowered to 30 ADA (instead of the current 340 ADA)
A. I am here for the profit only, better for me
B. NO this will destroy small pools which provide value
C. We need to find another solution
D. IOG/IOHK must include us in decision-making
RT & Vote
Yea... @shawn_mcmurdo CIP was better. It included at least a minimum variable fee...
Also where did they come up with this 30 ada number? Sure maybe when this fee was set ADA was 10 times less... but, the requirements for running a pool are higher now.
It's good for smaller pools. Now yours has 20m, so it's not a small one. Please understand that most investors care more about decentralisation and giving smaller / newer pools a chance, rather than how much bigger SPOs earn per epoch.
Why is this an issue? The 340 minfee is a hidden number and should by all means either be set to a pool parameter or reduced to 0. This makes the margin % more of a meaningful parameter, that actually scales with the pool size.
so the big pools put 30 and we all get demolished, later, they set a higher fee as they previously wanted.
read about wallmart strategies
My opinion: mission driven pools can easily survive with the argument of their mission (if it's any good).
Small pqools get a chance to attract stakers with a lower fixed fee.
so my choice is:
E) it's better for everybody and helps decentralization.
I feel like a lot of SPOs don't understand the min fixed fee debate. Many believe that it's the parameter keeping their small pools alive when in reality it's the contrary. You're operating with a >20% effective fee and wondering why you don't get any delegators. 🤷
#Cardano $ADA
There are pools that are more anon and way less active in the community than me. Their pools are running fine because they got lucky and escaped the min fixed fee in early Shelley or the ITN. I wasn't so lucky. No whale ever gave my pool a chance.
As the Cardano adoption increases, and the pools will need increasingly stronger hardware.
This means that it will get increasingly expensive to run a pool. This is okay, however...
1/n
In the long-run, you cannot sustain a small pool on 30 ADA/month.
Most big pools CAN quickly decrease fees to 0%, 30 ADA which will draw everyone to them. Bigger pools will be able to run these pools for months, killing off small pools one by one that HAVE to take fees.
2/n
This scenario will make Cardano more centralized.
We will end up with a few big players running relays on robust nodes, but we will kill innovation, charity, humanity, and start running our network as a business for cash only...
3/n
Some startups depend on their pools to get initial funding. The competition is already fierce, but with 30 ADA fixed fees, the first block will be too hard for too many to produce.
4/n
There's my 1 lovelace, let's hope for better, more human-focused solutions on our beautiful blockchain.
Also lmk if I'm wrong (I hope I am).
@CheffWallets @zeitgeistpool @eva__ginger @PoolShamrock @ADAFrog_Pool @EPOCHpool @HolgerCardano24 @PoolShamrock @HEROsPool
5/n
I couldn’t disagree more. I currently don’t stake to small pools because I don’t want my ROS to be cut significantly. Smaller fixed fees would actually allow me to delegate to a small pool and not have it impact my ROS at all. #ThisIsTheWay
I disagree. Small SPO take a huge amount (340 ADA) in my opinion. There is no incentive to delegate to small pools because that fixed fee reduce the delegators rewards to about to 2~3% annually compared to stake pools with full stake.
Maybe pools need to step it up and add more value. Maybe what decentralization looks like on Cardano is a plethora of legitimate small businesses offering some sort of value.
Being the heart of the network not enough for you, ser?
Obviously pools, that I know of, offer more than just steady infrastructure to secure the network etc.
There also has to be the right incentivization if you want more out of them.
They can only do so much with so little.
340 ada is what the pool operator earns each epoch a block is minted they don't pay this as a fee. So 340 to 30ada Is a huge drop in earnings to help run the network.
You still can, you just need to increase the % fees...
I think my post came off wrong, but I believe it's a drastic change. They could keep it reasonable so mid-tier pools can stay with like 100-150 USD per month to cover their costs.
Nope nope nope. Here’s what will happen. Big pools will keep higher margins because they want to make profit.
Small pools that offer 0% margin and can afford to charge the lower fixed fee will suddenly seem way more attractive to delegators@due to their much improved returns
The point here is that you DONT have to set the minimum. This opens the market place. I'd be very surprised if lots of pools jump to 30, because as you quite rightly state, they'll not run for long. Thus, sensible settings can now begin.
What it stops is the multi-pool operator who launches multiple pools and enjoys the 340 benefit for a single block. I think this is good for decentralisation overall. Will I eat my words? We'll soon find out.
Yes, for a single block epoch, the 340A is approximately half of the block rewards (they are no longer 1k per block as some still think, because they reduce over time).
So while it may pay for a decent time span to get a block, it makes your ROI unattractive in practice.
Nonsense. Reducing the min fee would be a fantastic change for small pools, because they wouldn't be forced to take the lions share of rewards, making them unattractive to delegators.
I'm a small pool retiring specifically because the 340 min is crippling. I'll stay if it goes.
IMO The narrative of Cardano has changed of late. The old way was all about supporting the small and more decentralised spo's, but now it has swung in favour of the big numbers guys, with what seems to be active measures to force the little guy OUT. What has changed and why!
This is somewhat true. I think it has always been there tho, underneath the surface.
I think the harsh criticism of MPO under the ISPO era forced them to defend themselves, which carved a new perspective and mentality that has been accepted publicly by the community at large.
This doesn't kill small pools. It gives them a chance to compete with larger pools.
Static fee eats up a lot of delegators' rewards.
Plus they can raise the static fee if they want to just like they can margin
Uber lowered fees for users in unregulated markets for months to kill local taxi driver businesses.
This is exactly what will happen here, big business will come in and sweep up all delegators who will flock to lower fee pools, then they will crank them up again...
I like where you’re coming from and think the conversation is worth having. To play advocate though, 340 ADA is a lot for most people that aren’t US/1st world based.
I agree, I think we need more than just min fees and %... There can be different incentives to decentralize, we need to get creative -> FUND 9 HERE WE COME 😂
This right, removing the Fix 340 fees will kill small pools forever....
Wrong, it will help small pools. The 340₳ min cost are a terrible burden for small pool that mint few blocks. When a spo mints 1 block, 340₳ min cost are substracted from already small total rewards. It prevent them to be get a competitive by decreasing their yearly ROA
this gives "sharks" w/ large amounts of ADA, but currently not enough to run a stakepool, the ability to do so. 4000 new players can now enter solo. 340ADA is a lot @ $10-$20/ea. this helps w/ decentralization. running on fumes from IOG delegation is centralized and top down.
It is a tweak that has to be carefully considered ofc.
I would add that it also makes the possibility of smaller holders banding together in multi-owner pools more viable as well.. even moreso if Conclaves is implemented (probably not this year but who knows)
Im no developer, or know anything. But is it possible to create a smart contract project in which people place their ada, which then gets staked into many small stake pools to support decentralization? Would need incentives like a native token or nfts and donations but...
This is @StakingDao's objective. Would be worth giving them a look. There are unique problems with that solution too, but they are taking them into consideration as they can.
For those that say 340 ADA is too much per epoch they are not taking in consideration that the set of small pools dont do blocks. In fact they might do 1 or 2 block per year if lucky. 30 ADA minimum is very low given the price of #ADA. K value the one to look to change.
Small pools at the moment minting only one or less blocks an Epoch cannot be attractive to delegators when they take over 50% of the rewards in the 340 ADA pool fee. Why would anyone stake with them?
That's a controversial topic since some guys think its a good idea and others aren't worried about it. from my perspective, pools at 340 Ada infrequently mine blocks can save for later to fund their operations, only 30 ada is not enough for any VPS I know.
I think the opposite, it will be huge for small pools as investors will be willing to take more risk and venture out to smaller pools with lower fees per epoch.
small pools had time to generate for their hardware... the fees cannot stay for ever that high... there are over 3000 plus pools some will shut down some other will arrive... thats how it is!
thats how life is as well...
THIS IS INCORRECT!!! Tim Harrison responded to this claim and clarified that that was one team member's personal opinion and not something that had been discussed outside of that person's personal thoughts
The 340 fee is stopping smaller pools from attracting delegators. This needs to be reduced. 30 is probably a good number but there should also be a min % fee of at least 5%. Maybe the min % fee should then increase as K increases.
As a delegator I'm fine paying 340 ada min for a great single pool operator (and it costs that much to run a pool!) but can understand the argument about 340 being a huge percent fee for small stake so currently on the fence whether this is good or not for decentralization.
The 340 minfixed fee it's what makes your pool (and mine) still alive. You won't attract new delegators lowering the fees to 30 Ada, but the whole network infrastructure will have a bad hit IMHO
340 down to 30. you really want to kill small spos
#Cardano #CardanoCommunity #ada $ada
For anyone curious what this will look like in practice I just updated the saturation curves on PoolTool. Small pools can be competitive on ROS with big pools down to about 1M ADA staked.
pooltool.io/pool/95c4956f7…
Tip: Delegate to pools that give back to the ecosystem.
Agree. #MinimumVariableFee would be a MUCH better solution tho.
Ah! I see the fee race to the bottom has begun on Cardano. A kick in the teeth for the small SPO's, you know the one's that have been there from the start!
the majority of delegates only care about ROS and low fees. the race to the bottom is here. who will be the last pool standing. between similar ROS pool the lower fee pool will win.
Certainly a step in the right direction although either zero or something not price-dependent would have been even better. Anywho, let's see if they manage to even get this done ?this year?
Interesting updates on the recent IOG #SPO call...
We'll see what it will bring in the future and definitely take it into consideration.
What's going on #Cardano community?? The price just doesn't match up with the SPEED of the network. The reliability and consistency. Then you have news of potential k=750 and reduction to min pledge of 30. Things are really pumped... Not the price. When fundamentals don't change
...or they get better, then there's only ONE thing to break. The Fudsters, Tar Monsters, Nay-Sayers, HOODOO VOODOO cryers are going to soon regret the basement prices right now. Oh what a great DAY! Those that know, KNOW!
Those Multi-pools that hide away and lap up easy profits are finally going to feel a little penny pinching as other pools offer better deals to their delegators.
The pools out there now operating at a loss will retire or they will go to 30 ADA + 0%. I mean why not? They need delegators. I operate at a loss and I would. The problem comes when they want profit, the delegators will move to another 30 ADA 0% pool. Where’s the SPOs incentive?
I missed the SPO call, so I don't have that fact/discussion point. However, just the fact it's being discussed is music to my ears. It will throw the ecosystem into the market place it should be for delegators.
Going to be interesting to see how many 30 ADA + 0% pools pop up. Would they? Mmm.. Gonna be interesting to see how many are willing to operate at a neutral or even loss levels. Can't wait to see it happen. Those that don't offer value/service have to wise up.
I don't even understand where the delegator incentive is? A 310ADA difference is almost negligible in terms of epoch rewards. I.E. HODLA varies from 38k - 27k. A 310min fee difference is irrelevant to their delegators. Just like they don't care to stake in 0 -1% margin fee pools.
Price will go up as TVL goes up. Avax has a much higher TVL yet Cardano has a higher market cap. Some would say that makes no sense.
We need an ERC20 converter to start moving TVL from other chains onto Cardano as well as organically growing it ourselves.
There is no min pledge, there never has been. The suggestion is min fixed fee to 30ada.
My BAD! Thanks for picking that up. I meant Fixed Fee. Most of you know what I meant, but yes. I typed that wrong.
Last time you said something like that 1ADA was available for ~.40
Too many of our valued SPOs seem to get too bent out of shape too quickly when changes are "proposed". Don't do that. Makes you look less smart than you are. Consider changes thoughtfully, look at all facts, tell IOG your opinions, don't dump Twitterthoughts/emotion randomly.
I want to get something out of the way, in these SPO calls the employees of IOG are allowed to speak more freely. This is good for them, and the community.
So we're going to follow Chatham House rules here. I am not going to quote any names. No one should be attacked.
I also reached out to someone from IOG and asked for some further clarification from them.
I was told that nothing here is final, however, it seemed that this is the most likely direction of parameter changes.
There's a parameter on #Cardano that sets the minimum required fixed fee. It's currently 340 $ADA. This means that out of the total rewards a pool is going to take 340 $ADA from all rewards each epoch.
I personally have wanted this changed for over a year.
It creates an uneven playing field for smaller pools and benefits those that operate larger pools.
For example, if you delegate to a pool with only a million $ADA it will eat up a large percentage of delegates' rewards. However, if you delegate to a pool at 50mil it's barely 1%
This min fee was designed in the first place to limit the race to the bottom. To make sure operators weren't shooting themselves, their competitors, and the network in the foot for stake.
The price has since gone up about 900% since this was set.
The new proposed value is from 340 ---> 30. This would bring a more even playing field for smaller pool operators that are just getting started.
Some are saying this will kill small pools. This makes no sense to me. Just raise your fees, you're not required to be the minimum 🤦♂️.
I personally think 30 is pretty low, especially as we're going to have to increase hardware specs over time. There should be a minimum fee % for all SPOs.
Whether that be 1% or 2% that means there's no benefit for larger pools and no race to the bottom.
I asked why no minimum fixed fee %, and the response was that they'd have to change the ledger rules(not an easy variable fix).
The next parameter discussed was the k parameter. The k parameter determines the limit of stake in a stake pool, this is called saturation.
Saturation is determined by (total supply/k). It's about 68mil now, the more that delegate above 68m removes rewards from all other delegates.
The proposed change to k is 500 --> 750. This would bring the limit from pools down from 68m to 44m.
This was a surprise to me.
Early last year we were waiting on a k parameter change to 1000 in q1 of 2021. It never came, it was stated that there's no reason to increase k without having a function a0.
a0 is the parameter that provides incentive to delegates to delegate to a pool that pledges $ADA to pool
The a0 parameter IMO does not provide enough incentive to delegates. So many operators do not lock up much skin in the game.
Why not an a0 change first?
If you increase a0 it takes rewards away from majority and gives them to whales with 68m $ADA.
Your APY: 2-4% 68m APY: 7-9%
Due to this unfair nature, parameter a0 needs completely reworked to have a different impact on the rewards function. This would require another more complicated ledger change first.
This is my assumption on why IOG would take this route of parameter changes.
Sorry for the long thread, I think about these parameters ALOT and have since they were introduced. I wanted to get my thoughts out there and hopefully educate.
I think these parameter changes are much better than nothing. The 340 is rough on small pools.
The small k increase will do something, however, it's not too harsh to make the majority of the network have to move. I think they're coming from the right place, trying to engage the community.
Of course, this could have happened sooner, but how does mentioning that help?
I really don't understand the argument that reducing minimum fee to 30 harms small pools. I don't mean like I disagree with it, I mean like that argument seems completely absent of any logic. If there's something I'm missing I really want to see it explained.
2/2 Now that the number is gonna go at 30 it's gonna be difficult to keep the pool alive without raising the fees and that bigger pools can just decrease the margin to 0% taking more people in and running small SPOs out of business and then increasing the fee and enjoy the profit
These changes are a fantastic move in the right direction, especially for smaller pool operators. 30 is a fair enough minimum especially as the price of ADA goes up. That being said, we’ll need to live with these changes for awhile to see how they play out. A good start!
What about the huge investment for upgraded infrastructure that’s going to be needed to handle future block production by SPO’s? I think either IOG or the CF should offer grants to small single SPO’s to help with this.
This is accurate and as I see it. These changes are much closer to what I was suggesting at the start of Shelley. Unfortunately it is difficult to now repair the damage, and leaving it this late has invited other issues in using these values now. But it's better than nothing.
I think we should just rip the band-aid off and get it done. Then pursue the more difficult protocol level changes ASAP.
30 is a bit drastic. Why incremental adjustments? I am not in the know but a huge cut all at once may cause some major unforeseen problems.
Why changing it drastically (reduction around 90%) instead of changing it progressively and looking the impact it does? I really don't understand it.
Great thread. Fixed should change but 30 is a bit low for a quality setup especially in a bear market which could potentially impact pool & network performance with some running lower spec servers. Obviously SPOs can still set fees but its easier for established pools to do that
Great thread. I support no minimum fixed fee and a min margin of 1 to 2%. 30 ADA min fixed fee would be good enough for now.
Taking some time to think about the idea of min rewards being changed in #Cardano has led me to realise that when price fluctations occur like today, setting the right market place value is going to be important. Finally, pools will need to set their rate out and update regularly
The quality of pool is really going to make a massive difference to the delegator AND the chain itself. Those that choose cheap rates are very likely to be wiped out of business very quickly in capital + operational costs.
Instead of pools simply setting a rate, sitting back and lapping up the rewards would change immensely. Overall, I think this is good change for the ecosystem. I already know what I would be setting my rate at.
Why is changing the minimum fixed fee beneficial?
Very small SPOs currently have a hurdle to overcome in delegation in order to achieve around the same return as a SPO with 1 million - 1.5 million+ in delegation.
Minimum fixed fee at 340 can eat up too much of the rewards.
Why is changing the minimum fixed fee potentially bad?
There is currently no minimum variable fee set. Some at IOG would like to see this changed, but it is a ledger change so not easy to do.
Without a min variable fee, there is a likely scenario of a race to the bottom.
While SPOs don't have to change their fees, to stay competitive very small SPOs may lower their fees to the minimum in an effort to attract stake.
30 ADA per epoch is not nearly enough for most operators to run a business, so this is a short term loss move and not sustainable.
Larger SPOs with more resources or backed by Venture Capitalists could also make the same move as small SPOs and can afford to run at a loss much longer than the little guys.
Waiting until small SPOs die off from losses, and then raising fees afterwards is a real possibility.
Why is changing K to 750 beneficial?
This is supposed to further #decentralize the #Cardano network, by lowering the saturation limit of pools down from 68m to 44m.
Stake is supposed to move out of existing saturated pools into new pools to spread out the $ADA staked.
Why is changing K to 750 potentially bad right now?
There is currently not enough incentive for existing pool operators to maintain a specific number of pools.
a0, the mechanism for pledge does not work as intended, so pool splitting is not discouraged by the network.
Currently, effective K is actually around 45 instead of 500 because of the number of pools run by the same operators.
Increasing K right now will have no impact on this.
Current large pool operators can start up additional pools to fill out the slots opened by moving to K 750.
There is plenty of argument to be made for and against running multiple pools, and that is not something that I am tackling in this thread.
I'm just pointing out that if the goal of these parameter changes is to help small pool operators, then these could do more harm than good.
It was also mentioned that minimum fixed fee is a fluctuating parameter that has to change over time.
When it was set at 340, the value of $ADA was 1/10 of what it is now.
Also, min fixed fee and K are connected, so if min fixed fee changes to 30 ADA, then K has to go to 750.
I feel the biggest challenge small SPOs actually face is marketing.
Many SPOs are regular people or from tech backgrounds, not marketing experts.
Marketing is expensive if you can't put in the hours to do it yourself.
There are ways the playing field could be levelled.
My alternative suggestions to IOG / Emurgo / CF instead of changing min fixed fee and k:
Lower tau ➡️ increased rewards for all.
Tau determines how much of rewards go to the treasury for Catalyst proposals.
If min fixed fee is time sensitive, tau should be too.
Tau is currently set to 0.2 , so 20% of all rewards go to the treasury before any $ADA is paid out.
When ADA was 1/10 of the price, this made sense. If the value of #Cardano is going to go up over time, Tau should be lowered.
While catalyst is necessary, this could be too much.
There are many quality of life improvements that could be made wallet side to break the advertising hurdle:
➡️Randomized pool ranking on load
➡️Open line of communication between delegators & SPOs
➡️Pool portfolios (curated & user made)
➡️User ranked delegation (if pool retires)
The discussion between IOG employees and Cardano SPOs followed Chatham House rules for a more open conversation.
This is beneficial for the community, so no names will be mentioned and there will be no conflict, just discussion 🙂
I think there are already a lot of SPOs that have aped into setting up a pool on a cloud provider without doing the maths on rewards and overheads.
These were the proposed changes:
Min fixed fee from 340 $ADA➡️ 30 ADA
K from 500 ➡️ 750
These changes are not final, but it seems like this is the direction IOG wants to move in. There was an SPO survey after the call to give feedback 👇
input-output.typeform.com/to/T90SMRXA
The #Cardano speeds are back!
It's officially game over.. The parameter changes & adjustments have started to kick in. Other than insignificant squabbles & infighting, I don't really see anything else that could slow us down.
Cardano about to do crazy numbers. Trust.
GNP1 commenced in Oct 2020. With excellent infrastructure, a proven record of block production, fantastic reward incentives and > 4000 USD donated to charity it defies belief that we are struggling to get above 350k in delegation. Parameter change is needed NOW!
@benohanlon
We'll see more centralization of stake to the large (multi-)pools operated by corporations and YouTube personalities because of the @SundaeSwap #ISO .
I hope this will be temporary but we need changes in the fixed min fee to make a more fair marketplace for #Cardano stakepools.
Nobody is challenging @SundaeSwap ISO process nor any other democratic systems. Because certain network settings there is interference between different network metrics. In reality, this correlation should not be that pronounced. Shawn called them out long time ago. Respect.
Saying #Cardano stake pools should provide other value is essentially saying the network's fees are too high.
That's fine, but I'd argue it'd be more efficient to just drop fees and squeeze pools to be more efficient and not "create" spurious value.
Also, SPOs have ways to reject an update. Doing one of the things Andrew described would still cause damage and the network might stall for some time until a majority of SPOs align with which parameter settings to move forward.
We lost our good whale (not beloved @cardano_whale) because Ouroboros doesn't like us and plays games with our luck. Bottom line: with small pools (<5M) you will get good times and bad times, but it will average out in the long run. Give us a chance to survive people!
#Cardano
