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%.