A Sobering Reality for Cardano Stake Pool Operators & Owners

Added May 2, 2019

To put context around this post one would be served well in reading Stake pools in Cardano by Prof. Aggelos Kiayias 1 & Preventing Sybil attacks by Lars Brünjes, Ph.D. over at IOHK's site first 2.

Also the Cardano stake pool slide calculator where these numbers came from is available on GitLab.


A sobering reality, on the quantity of ADA pledge that Cardano's protocol dictates to get a stake pool listening displayed to Cardano stakeholders for a potential delegation choice in wallets.

Sybil Attack Protection at Stake Pool Level Stake pool owners are expected to pledge an amount of stake to their pools that has an influence on the rewards for their stake pool, and consequently on the position of the stake pool in the listing displayed to stakeholders. Since this pledge cannot be shared between multiple pools, creating n viable stake pools will require funds linear in n.

"Stake pool owners are expected to pledge an amount of stake to their pools that has an influence on the rewards for their stake pool." 3

Given:

4.5% - Incentive (inflation) Per Year
0.25  - Sybil Security Level (a0)
1,000 - Number of desired pools (k)

Operator variables, baseline:

0 - Pledged to Pool % of Capacity
0 - Pool cost in USD per epoch (5 days)
0 - Pool fee (profit margin) %

6,848.637709 - BASELINE Non-myopic 'Desirability Number'

Operator variables, 1% pool fee:

0 - Pledged to Pool % of Capacity
0 - Pool cost in USD per epoch (5 days)
1 - Pool fee (profit margin) %

6,780.151332 Non-myopic view
-68.486377 'Desirability impact'

Operator variables, 1% pool fee & 4% pledge:

4 - Pledged to Pool % of Capacity (1,244,499 ADA)
0 - Pool cost in USD per epoch (5 days)
1 - Pool fee (profit margin) %

6,850.719695 Non-myopic view
-2.081986 'Desirability impact'

To have any chance of becoming a desirable stake pool operating at 1% fee and 0 costs, given the parameters above, requires a pledge of at least 1,244,499 ADA, doubtful that your pool will ever be saturated.

Sobering isn't.


The Cardano stake pool slide calculator where these numbers came from, code available on GitLab.

Note, due to a lack of understanding in regards to negative numbers, the above calculator no longer displays lower numbers as negative.



See, You Need to Pledge to a Cardano Pool. Here is Why for what the variable pledge can do for your pool, & Cardano is secure against Sybil attacks if and only if Whales secure it.





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