We are all quite excited as we come to the end of the first epoch since the launch of Shelley, and we’re all looking forward to that first allocation of rewards. After all, it’s one of the primary reasons we jumped on the opportunity to find a stake pool and delegate our ADA out of the gate. So, what should we expect?
Decentralization will take time. Slow and steady makes for a strong network.
The first thing we need to be aware of is the d parameter. The d parameter represents the proportion of the block that is generated by stake pools, like Cardano Canucks. Currently, the network is supported by IOHK (i.e., it is centralized with IOHK). The goal is to decentralize the network, so that it is supported by stake pool operators. We started with d=1 (fully centralized with IOHK), and over time, d will be reduced to 0, at which point the network will be fully decentralized across the stake pools.
What’s the timing?
The rate at which we move from phase 0 through phase 3 has been a topic of considerable discussion over the last few days. The IOHK team will create and set a parameter called alpha (α), which represents the rate of decay of the d parameter. The example given by Charles Hoskinson is if they set α=0.025, it will take about 200 days to get to d=0, or end of Phase 1. The idea is that every epoch will decrement d by a minimum of α , so it’s possible that it’ll be faster, but likely they’ll keep the pace. Charles also introduced a notion of network health. The overall rationale is that they’ll monitor the network health at each epoch and reduce d by α to ensure the network is stable and there are no issues. If an issue occurs, they may stay at the same d value for a couple of epochs.
The IOHK team will announce the α value in a blog post scheduled for August 14th. We’ll definitely let everyone know the outcome via our social channels, with a follow-up via email. In addition, we should expect d to remain at 1 for at least the next epoch. Part of this is because a bug that has been identified related to how some exchanges are using the Cardano APIs, delaying the ability for people to retrieve their ADA from those exchanges. Also, 1/3 of stake pools did not appear in the Daedalus wallet until a patch was released (2.0.1) several days after the Shelley launch. So, to resolve those issues and ensure that everyone has a fair chance to delegate their ADA, they’ve decided to wait one more epoch.
Charles also mentions that the d parameter doesn’t substantively impact profits of staking. It shouldn’t matter if d=0.9 or d=0.
THE BOTTOM LINE
This is what we should expect:
- Decentralization will take time for a strong, stable network
- Starting decentralization (lowering the d parameter) won’t happen until one more epoch (the week after next)
- The d parameter doesn’t substantively impact payout of rewards
This is all by design, and the whole world is experiencing this for the first time. We’re all in this together and the best we can do is disseminate information as we receive it, as we did during theShelley launch.
All of this information is based on the talk that Charles Hoskinson gave yesterday: