Picking a Cardano ADA Stake Pool

The Cardano Shelly ITN is about to launch this week. If you're one of the lucky few who had ADA in their Daedalus or Yoroi wallet on November 28th 2019, you can earn staking rewards off of that ADA on the ITN over the next few months by staking it with a registered stake pool.

There's a few factors you want to consider before picking a Cardano Shelley stake pool.

Fees

What is the stake pool charging you for their service? There's a few options you can play around with using IOHK's rewards calculator. Fees are all calculated per epoch (24h) so if a pool is charging you 5%, that percentage will be taken from all the rewards from all blocks created during the last epoch. The pool takes 5%, you take 95%, simple. Stake pools can also charge a fixed fee, an amount a pool is guaranteed to make every epoch as long as they're producing enough blocks. The fixed fee is taken from rewards before the percentage calculation. Some pools don't have a fixed fee, other have only set a fixed fee and no reward percentage. Use the rewards calculator to find the best deal.

Pool Reliability

Staking is a long game. Some pools are advertising uptime guarantees and running on resilient networks with battle tested firewalls, monitoring, etc. run by experience IT professionals. Do your research before you commit to a pool. (Plug: Unspent Pool is run by an IT professional with 16 years experience in Network Administration and Software Development. We run a distributed, redundant virtual network on cloud servers. https://unspent.co) There's a few other professional stake pools. Find one that makes the most sense to you.

Reward Saturation Levels and Percentage of ADA Staked

This last one hasn't been tested yet. There's a new configuration option on the Cardano blockchain that will theoretically limit the percentage of total rewards any pool receives for an epoch. This is one of the ways IOHK hopes to incentivize decentralization. The reward saturation levels are currently set at 1/100, meaning that rewards for any pool are capped at what a stake pool would collect if it represented 1% of the total stake and produced 1% of the blocks. Staking on a pool that represents any more than 1% should result in lower distributed rewards than staking in a pool representing exactly 1%. Does that mean that you should move your stake to another pool if it becomes too popular? Yes but stake pool operators have already considered whale attacks where a single large stake holder could flood a pool, making it undesirable for a few days and causing the stake holders to abandon the pool. The problem with this attack is that it's only viable for a few days since the whale would also loose potential profits from the attack. If this happens it's probably a good idea to stay put and not waste your ADA re-delegating. If you're looking for a new pool, look for one with less than 1% stake.

Delegation Fees

Delegating to a pool costs about 0.7 ADA. It's low enough where you can leave an unreliable pool and join an amazing pool with ultra low fees but it's probably not something you want to do every day. Consider your options before staking.

Rafael @ Unspent Pool [Ticker: 1UP] | www | telegram | twitter |%5 Reward Fees, No Fixed Fee