The last two epochs our stake pool was very unlucky. In this blog we explain why we were able to forge just one block with 8 million stake.

Unfortunately as stake pool owner and operator we have no influence on the assignment of slots and overlapping of slots.

Influencing factors on slot assignment

We know that certain factors influence the outcome of the slot assignment. On some of these factors we have influence such as the amount of stake and our stake pool pledge. Past epochs performance is for an important part dependent on slot assignment, which is based on a lottery.

None of above factors were bad at the start of epoch 222, we were actually picking up with our stake pool performance with some good epochs and 8 million stake.

100% of the blocks were forged by our stake pool on basis of the slot assigned.

Reason behind extremely bad performance

What did cause the extremely bad performance of our stake pool in epoch 222 and 223 ?

The Cardano network is still not fully decentralized, currently we are only for 44% decentralized in epoch 224. What does this mean? Not all slots generated by the Ouroboros protocol will be assigned to stake pools. An assigned slot gives the stake pool the possibility to forge a block. Being able to forge a block as stake pool is dependent on the connectivity to the network and a working setup that is able to produce blocks. With every epoch the decentralization increases, currently with 2% per epoch.

  • In epoch 222 we had a decentralization of 40% or 60% of the slots were not assigned to stake pools
  • In epoch 223 the decentralization was 42% or 58% of the slots were not assigned to stake pools
  • In current epoch 224 the decentralization is 44%  or 56% of the slots will not be assigned to stake pools

As a result of the percentage of slots not being assigned to stake pools, there is a possibility for overlapping. In the case of overlapping the assigned slots are also part of the percentage of slots that are not being assigned to stake pools. Your stake pool should get slots assigned according the statistics but they are immediately taken away from you. This is exactly what happened to our stake pool twice in a row which impacted our stake pool performance negatively in epoch 222 and 223.

Reduction of stake pools or coincidence?

Overlapping can happen to any stake pool, but it seems this happens especially to smaller stake pools. The question here is if this is an intended way to reduce the number of stake pools or is this just bad luck or coincidence? Initially IOHK planned for ~150 stake pools and currently there are almost 1200 stake pools.  With no smart contracts available yet on the Cardano mainnet, the amount of transactions fees is simply not enough to reward all these stake pools. Majority of the slots assigned seems to go to the pools with the majority of the stake since they guarantee a better security for the network than a smaller stake pool.

Why does the CF still promote that everyone can run a stake pool?

What is the idea behind this? As a stake pool we invested almost three years in this project, from the moment that Cardano was listed on the first exchange we invested time and participated in ITN and HTN. We are currently building on a community solution on our own expenses and are investing time and resources to develop on the Cardano blockchain.

Still many things are unclear to us and many other stake pool operators . IOHK has not been very transparent about their plans related to the number of stake pools and support of certain stake pools in an early stage by the CF. This support gave these stake pools a competitive advantage over other stake pools.

We are not convinced by the campaign of the CF, in our opinion this is definitely not contributing to the quality of the network besides that it increases the competition between smaller stake pools that are all fighting for stake. The recent move of stake from stake pools that were supported by the CF in an early stage to other stake pools was unexpected and can be seen as a positive sign. Better late than never, smaller pools that receive support from the CF will never be able to gain the moment and spin off that the early supported stake pools had.

What is the idea behind promoting starting a stake pool. Many professional run stake pools are not able to cover their infrastructure costs on basis of the rewards per epoch. What is a professional run stake pool ? A stake pool run by an operator with proficient knowledge of linux and automation. The stake pool consists of multiple nodes in different geographical regions, has active monitoring and alerting, provides best security practices, has a hot backup for its stake pool and at least one hidden node and is running preferably on bare metal servers.

Clarity about the future of stake pools

We are continuing with our operation with the same commitment, but the current situation is not only raising questions with us. We would appreciate if IOHK would give more clarity on our raised questions. Why keep promoting that everyone can start a stake pool and what is the goal regarding the number of stake pools.

Epoch 224 and onward

Epoch 224 is more or less in line with the expectations. We are looking forward for more of these epoch so we can increase the ROS for our delegators.

We need all support we can get to get our stake pool back on track, additional stake would help. In case you’re looking for a transparent and integer stake pool, consider staking with us.

Thanks, Ron