[4ADA] … and the price of success
As you may have noticed, our [4ADA]-1% pool has been storming the ranks in just a short time, up to the point that it is now facing a slight oversaturation.
What does this mean? Our total staking size has reached >1% of all ADA at stake. In other words, the pool has reached a 1% market share.
In the Testnet protocol it however has been defined that a stakingpool, including all its delegators, can only receive rewards up to a market share of 1%. Regardless how many blocks it produces, the total rewards at the end of each epoch are capped at the level of 1% of the total staking rewards of all pools combined for that epoch.
Specifically for the [4ADA]-1% pool this means it now appears we cannot collect more than a total of 34.2k ADA after each epoch (provided we have produced enough blocks to earn this amount). So, our pool rewards can no longer keep up with its growth in staking volume.
At present, this means a theoretical loss of 10~15% of the reward potential for each delegator, compared to delegating to a smaller pool which manages to produce all of its allocated blocks.
While this may worry some delegators, it should also be reassuring for them to know that at least they are delegated into a pool with a proven excellent track record.
Nevertheless, in the long run it is not a good idea to stay in a oversaturated pool for a very long time.
Which is why we have been working hard here at staking4ADA in order to propose an alternative: [4ADA2] !
Please read on in our next blog post for more details.