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Cardano (ADA) Leveling the PlayField on Shelley- More Opportunities for Smaller Stake Pools

Tim Harrison, the director of marketing and communications at IOHK, on November 24th via a blog post has given an insight on IOHK’s plans regarding Shelley. Shelley’s main net brought staking and stake pools to Cardano. Since the update, the blockchain has witnessed more than 1200 stake pools. Though exciting, some small pools haven’t been able to mint blocks. This is because the k parameter was set to 150. The k parameter defines the saturation level. Stake pools earn their maximum returns at saturation level. At k=150 the saturation level is reached when the pledge amount reaches 209Million ADA.

To level the playfield for stake pools and give smaller pools an opportunity, the k factor will be increased to 500 by December 6th. This will avail more stake pools the opportunity to mint blocks and get rewarded. Essentially, at k=500 saturation level is reached when the pledge amount reaches 50Million ADA. Harrison stated:

“On December 6, we’ll raise the k parameter to 500 – it was set at 150 for the Shelley launch. This will encourage delegators to spread their stake, giving more stake pools the opportunity to make blocks and step into the spotlight. It’s an important move, just one of a number of changes in the evolving ecosystem and staking experience we can expect over the months ahead.”

Additionally, Harrison reported that IOHK will be removing its 20 public pools and leaving only one (IOG) public pool in late December. The majority of the pools will be moved to private pools. He stated that the pools were set up to monitor the network through the early stages.

To push Cardano towards full decentralization, IOHK will be channeling 15% of its ADA holding towards delegation to certain stake pools.

“Our delegation strategy will be based on two elements: supporting what we are calling purpose pools, and encouraging network security, technological excellence and decentralized innovation through incubator pools.”

He reported that IOHK will be delegating primarily to “purpose pools”. These are pools that support IOHK’s mission for example pools that run “…charitable or philanthropic basis, pools supporting underserved or minority members of the community, pools committed to the use of sustainable energy, and so on”. IOHK will also delegate to “Incubator pools” which are smaller stake pools. This is to “maximize diversity” of the pool ecosystem.

Cardano continues strong on the path to full decentralization as IOHK continues to strategize and execute thoughtfully drawn plans.


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