Epoch 211 & 212 – One Block Is All That Matters

Rewards are calculated differently

Pool rewards (including delegation rewards) from these epochs will be based on their theoretical block production, not on their actual block production.

Theoretical block production is the produced number of blocks the pool in theory would get assigned based on the size of its active stake. For example, if a 100M pool normally would produce all of its assigned 20 blocks, but in epoch 211 for whatever reason only produced a single block (because it did not get more blocks assigned, or because it was offline most of the time…), its rewards will still be as if it produced those 20 blocks.

To put it differently, pools during these epochs will be rewarded based on their apparent performance set to 1. This different calculation method is in place until Shelley’s decentralization factor has reached 0.8 or lower (at least 20% of all blocks on the network produced by pools), which happens from epoch 213 onwards.

So, in epochs 211 and 212, it does not matter how many blocks a pool produces. As long as it produces at least a single block, their rewards will be calculated as if they produced the exact number of blocks they were supposed to.

Why eliminate randomness?

The reason for eliminating the random block assignment during the first few epochs is that IOHK wanted to give all pools a more fair headstart with regards to their ranking in the wallets. Otherwise, having a coincidentally low or high block allocation in the first epochs could have a dramatic impact on chances of pools to attract delegators early on, and put them in unfair positions on the starting grid so to speak.

On the downside: all small pools which are not lucky (or big…) enough to produce at least a single block, will stay rewardless. Which does tend to create a gap between small pools and bigger pools. But, at least this way small pools are on a level playing field among each other, and so are the bigger pools…

Complicated, isn’t it? Let’s hope we can all quickly move on to a more decentralized network, with a more straightforward rewards mechanism.