Choosing a Pool
1. You want a pool which is run by technically proficient operators. You want to be sure that the people running your pool actually have the experience to keep a server up and running 24/7 without any downtime, or can troubleshoot it if there are any issues.The main risk is that when the pool is scheduled to make a block the pool is down, which means you will not get the rewards for that block. This is one of the reasons that some pools may have a lower return than others. I should note here that lower return is the ONLY risk you have with staking with an incompetent pool – you never have to give up control of your money and it never leaves your wallet. If anyone asks you to send money to their pool they are trying to steal it! We will never ask you to send us money or for your private keys.
2. You want a pool which has enough staked to it to make blocks on a consistent basis. Statistically speaking a pool of any size should be able to make blocks eventually, but with a larger stake the rewards will be more regular. As the pool grows the rewards will stay fairly constant until such time as they reach a maximum called the ‘saturation point’ which is currently around 209M ADA, but will be changing to around 62M ADA on December 6th. After this the pool’s rewards will be maxed out and the relative return will diminish. How much the operator pledges will also have a factor on the potential return, however that factor is fairly small with the current network parameters.
3. You want a pool with reasonable fees. This is where you will see a large variability, with some pools having extremely low 1% fees, and others having 10% 20% or even higher. What this means is that for each epoch, the operator gets that percentage of the total rewards that the pool earns, then the rest is distributed to the delegators proportional to their stake. It should be noted that for fees less than 5%, the amount of impact to the delegator is fairly minimal, for example if the pool earns 5.5% ROA, and the pool is charging 2% fee, the effective ROA which the delegator would see is 5.39%.
How to Get Involved
Great question! The quick answer is get engaged.
We are always looking to provide content to the community as a way to promote adoption of the platform as well as gain the trust of the community and attract stake to our pool. Your questions are a great way for us to get an understanding of what people want to know and/or need help with. Also, if you have a question, then many others have the same question. By engaging in the way, we’re increasing awareness and knowledge for the entire community.
Finally, tell us if you have any suggestions. We are open to hearing new ideas and consider each one that is proposed to us. Our goal is to create a great experience for our delegators and build a vibrant community.
The rewards that you get each epoch is based on the number of blocks that our pool creates during that epoch, compared to the number of blocks we would be expected to create based on our stake. Since the slot assignment is random, it will vary epoch to epoch.
At the time of writing this, our luck in the slot lottery has actually been very good, having an average annualized return of over 7% (compared to the network average of about 5.5%). Even though our average luck has been great if you look at our individual epoch performance, we range from a low of 3.8% to a high of 10.8%.
As you can see this is a huge fluctuation, and would account for the large difference in rewards you are seeing from epoch to epoch. Over time however these fluctuations will average out.
If you want to see this in more detail, check out our pool on adapools.org: https://adapools.org/pool/4deb0ba979fe7af5a5a4896ef68cdae029ad116542555cb422f46348. This page will give you a bunch of stats, and will also show a graph visualizing the returns epoch over epoch.
The pledge amount does have an affect on the amount of rewards a pool will receive, but at current levels the difference between minimum and maximum return is not extremely large, and it requires a very large pledge to make a difference. If you are interested, there is a technical article by a member of the community here: https://www.reddit.com/r/cardano/comments/hnm3l6/shelley_incentive_parameters_what_you_need_to/