Choosing The Best Stake Pools

Things to consider when deciding which stake pool/s to delegate to.

1. Supporting a cause/s

The Shelly phase of the Cardano project has just kicked off on 29 July 2020. The focus of the Shelly phase is the migration from a federated blockchain operated solely by IOHK to a fully decentralised blockchain operated entirely by the Cardano community over a period of approximately six months. Cardano has managed to attract more than 1000 registered stake pool operators to join the ecosystem, and this number is expected to increaase. There is theoretically no limit to the number of stake pool operators that can join in.

These stake pool operators come from all corners of the globe, from one person operations of various different backgrounds and with various different contributions already made to the community, future projects and contributions, skill sets, connections, aspirations, goals, causes, etc that they are passionate about, to large organisations like IOHK, Emurgo, Cardano Foundation, and others.

As a ADA holder, you can consider to base your staking decision on your alignment with the various stakepool operator/s with to help further the growth of the Cardano community.

WAAC Pool is committed to supporting the decentralisation effort during the Shelley phase of the Cardano project. As such, WAAC Pool is committed to ever only operate one staking pool by one individual. 

With the objective to supporting the decentralisation effort during the Shelley phase of the Cardano project, WAAC Pool is a member of The Alliance Stake Pools (Pool Ticker : ALLI, Pool ID : e01133b97103bb932f7896ed1ca1d0ee350e4c8058e101b73d6 ) . ALLI is a helping-hand pool with a mission to help enable low-stake stake pools like WAAC Pool and other smaller stake pools to grow in the Cardano ecosystem. For more information, you can visit https://alliancestakepools.online/

WAAC Pool is also the curator for Cardano Bare Metal Alliance (CBMA). For more information about CBMA, please visit https://cardanobaremetal.com/

2. Low permanent fees and high performance

One consideration to increase potential rewards earned is to consider to choose a stake pool/s that charges competitively low fees.

There are two components to a pool’s fee: a fixed fee and a variable fee. The fixed fee component is set with a minimum amount of 340ADA per Epoch. Stake pools can decide to price their fixed fee from 340ADA per Epoch upwards. The variable fee component is a percentage of the total reward earned for each Epoch. Stake pools can decide to price their variable fee at any value from 0% to 100%. 100% means that the pool is a private pool; no rewards will be paid out to ADA holders who delegate to such stake pools.

Another consideration to increase potential rewards earned is to choose a high performance stake pool/s. In fact, unless the fees discussed in the previous section are set very high, in reality, fees do not impact the amount of potential rewards that ADA holders receive from their stake pool/s as the fees are taken out from the entire rewards earned by all ADA holders who had staked with that particular stake pool/s and so affects only a very small fraction of rewards attributable to each individual ADA holder who have a stake.

It is important to determine if the stake pools have high performance, that is, whether they have been successfully processing a high percentage of all transactions assigned to them in previous EPochs. In order to have a good gauge on the performance of a particular pool/s, it is important to stay on with a particular stake pool/s for a number of Epochs, WAAC Pool recommends at least 3 Epochs, to gauge pool operators’ performance, before deciding to switch to other pools “to chase higher yields”. While it seem smart “to chase higher yields”, the protocol has been designed to, over time, stabilise across stake pools large and small to arrive at a consistent yield for ADA holders as long as the pools selected are performing; that is, the pools are processing a high percentage of transactions assigned to them, regardless of the size of their stake.

As stake pools are able to change their fees (both fixed and variable fees) at any time, some stake pools may resort to changing their stake pool fees just before the next Epoch just so ADA holders have no time to switch to other pool operators. It is quite clear that such actions will be to the detriment of the stake pools in the long run. As ADA holders, you need to find stake pools that do not change fees without notice. At WAAC pool, we have a 340 ADA fixed fee and a 3% variable fee and we will not change the fee structure without giving ADA holders notice.

3. Stake pool saturation equilibrium

To encourage decentralisation of the Cardano network, rewards will stagnate or even drop for ADA holders who are delegating with pool/s that have reached or exceeded saturation.

At the WAAC stake pool, we will monitor saturation closely to make sure we are at high performance. As we are committed to ever only operating one stake pool to support decentralisation of the network, we will alert ADA holders who are staking with WAAC Poo; to move their stakes to other pools if WAAC pool is ever saturated.

4. Why choose the WAAC stake pool?

WAAC Pool is committed to operate a high-performance stake pool to ensure that WAAC Pool is able to process a high percentage of transactions that the network will randomly assign to WAAC Pool in order to achieve the highest possible distribution of rewards for ADA holders who delegate with WAAC Pool.

WAAC Pool is operating on a raw-metal server that not only exceeds the minimum specification required for stake pool operations but is also future ready to support future transactions as the Cardano ecosystem grows.

WAAC Pool believes in the formal method approach adopted by IOHK in the design of the Cardano blockchain. To achieve decentralisation, WAAC Pool is here to contribute our part to the resilience of the Cardano blockchain and is committed to only ever operate one stake pool.

WAAC Pool welcomes you to stake with us, and WAAC Pool will happily bid you farewell when you decide to leave us. Eventually, the Cardano protocol has been designed to game theoretically incentivise / disincentivise actors in the Cardano ecosystem to think for themselves. Only when actors are thinking for themselves will the ecosystem truly grow and realise its enormous potential.