[Pool Update] Epoch 228 & 229 + Thoughts about k

Hey People!

A short update for the past epoch 228 and the current epoch 229. Last epoch we unfortunately had no luck and did not produce a single block, although statistically we should have produced two. But let’s not talk about it too long, because in epoch 229 the calculation of the schedule looks very good.

Checking leadership log for Epoch 229 [ d Param: 0.46 ]
2020-11-12 01:21:48 ==> Stolen by BFT for 9417, Cumulative stolen blocks due to d param: 1
2020-11-12 10:42:25 ==> Stolen by BFT for 43054, Cumulative stolen blocks due to d param: 2
2020-11-13 09:51:12 ==> Leader for 126381, Cumulative epoch blocks: 1
2020-11-13 14:41:20 ==> Stolen by BFT for 143789, Cumulative stolen blocks due to d param: 3
2020-11-13 23:37:26 ==> Leader for 175955, Cumulative epoch blocks: 2
2020-11-15 01:27:09 ==> Leader for 268938, Cumulative epoch blocks: 3
2020-11-15 13:37:58 ==> Leader for 312787, Cumulative epoch blocks: 4
2020-11-15 21:51:38 ==> Leader for 342407, Cumulative epoch blocks: 5

Note: The times shown refer to the central european summer time (CET, UTC+1).

According to the logs we should produce five blocks this epoch instead of the statistically intended 1.7. This would improve the overall luck of the pool and also yield some good rewards for this epoch. Another very good news is that the k-parameter will be increased from currently 150 to 500 on the 6th of December. For those of you who don’t know: The k-parameter determines the saturation point of the stake pools. The saturation point refers to the amount of ADA after the rewards of a pool can’t get any higher even if the stake further increases, thus diminishing the rewards of the delegators. It is used to set the desired number of pools within the Cardano network. What this means in practice is, that the saturation point will lower to about 63.6M ADA. The increase in k should therefore lead to a redistribution of stake within the stake pools, which is a very good thing for all smaller pools.

But here is the problem: There are operators in this network which will just spin up more and more pools as k increases further. This has the major disadvantage that it contradicts the idea of a decentralized network. In a perfect world, one pool operator would operate exactly one pool. Therefore we would have exactly as many different operators as different pools. Its your choice as an informed delegator and participant of the network to choose the pool that best fits your ideas and values.

Let me make one more thing clear: This is just my idea of the network and how things should be. I do not want to denounce or expose anyone. Everyone can and should represent his own position as long as it is within the rules and guidelines of our community. Because the only thing that matters within the network is the community, the people behind each single ADA which do have a voice in this network.

In the Cardano network we do have a mechanism for the aforementioned problems of operators spinning up multiple pools: The a0 parameter. This parameter determines the influence of a stake pools pledge on the rewards. This means, that stake pools with a low pledge will basically get lower rewards.

But I think you already see the conflict, which results from this: If a0 is set too high, smaller pool operators, which can not provide this high pledge, are driven out of the network. I think this is also not the idea of an open, decentralized network, where everybody can participate. But in the long run I am pretty sure, that we will find a good balance of these parameters and this is the strength of this protocol. It is changeable and adaptable to the current situation.

If you want some more information about the change of k, please refer to the official blog post: Parameters and decentralization: the way ahead

That’s all I wanted to say to you today. Thanks to all my great delegators and talk to you soon! 🙂