Cardano (ADA) Foundation not Letting Stake Pools Exploit Loopholes

Cardano Foundation points to how there has been an exploitative fee change by certain stake pool operators. Further stated, in response, they have stated that they have withdrawn their delegation from the pool. Also, stated that they are reviewing the rules for staking to ensure only deserving stake pools receive CF delegations.

The Cardano Foundation’s objective is to advance world-changing technology. Not letting stake pools exploit loopholes.

In response, users stated, close the loophole. Penalize SPOs who do that without a vote of support from all delegators.

Others were worried and stated:  How can I know if I’m in a stake pool that’s doing this?

The problem has been summarized like this:  “After the foundation delegated their stake, a pool raised their fixed fee to 3400 ADA and their margin to 99%. As a result, all the rewards would go to the pool owners at the expense of the delegators. In response, they decided to re-delegate to a different pool.”

Now it is becoming important to monitor the pool actions which you are delegating to make sure they are acting in the best interest of their delegators.  Some tools help to monitor this.

For clarity, Stake pools are either public or private. The public stake pool is a Cardano network node with a public address that other users will be able to delegate to and receive rewards. Private stake pools only deliver rewards to their owners.

“Stake pools are run by a reliable operator: an individual or business with the knowledge and resources to run the node consistently. ADA holders can delegate to public stake pools if they wish to participate in the protocol and receive rewards but do not wish to operate a Cardano network node themselves.

The more stake that is delegated to a stake pool, the greater the chance of being selected as a slot leader. Each time it is selected and produces a block that is accepted onto the blockchain, it is rewarded, and these rewards are shared between the stake pool operator and stake pool delegators.

Extensive research and development have gone into ensuring a fair, competitive marketplace that proportionately incentivizes participation, and rewards the investment of time, energy, and resources.”

The key technical parameters influencing stake pools and the rewards received are the Pledging mechanism, desirability index, saturation parameter (k), decentralization parameter.

It is important to note that the job of a stake pool operator is to ensure reliable 24 x 7 operation of a network node.