Whales4ADA – Swimming In Murky Waters?

If you are/were delegating your ADA-stake to our W4ADA pool, you may have noticed that its size has gone down quite a bit over the last few epochs. In this blog post I would like to explain the possible reasons and inform you about some upcoming changes around the W4ADA pool.

 

Swimming Between Icebergs…

What is it that they say about icebergs; you can only see the 10% blocks you get, not the 90% you’re not getting?🤣

Since epoch 221, block production against expected blocks has been as follows:

Epoch Expected Minted Lost/Orphaned Result
221 6,6 4 2 61%
222 7,1 4 1 56%
223 7,3 8 0 110%
224 7,6 1 0 13%
225 7,8 5 0 64%

 

Obviously, such terrible block assignment drove ROS below 5%. True, we lost 2 blocks in epoch 221 which could have been avoided, but apart from hitting a single unavoidable orphaned block in epoch 222, we have been nailing every single block ever since.

And the story is well known by now: most delegators do not try to seek explanations behind disappointing ROS results; they’ll simply move their stake to another pool with much better recent results(*).

 

…Against The Current

Looking at the pools in the upper ranks, there simply doesn’t seem to be much sympathy for 3%+ pools, regardless of their size. Within the top-100, besides IOG’s and Emurgo’s own pools and some private pools, the only 3%+ pools are Ambassador pools (most of which Japanese), as many delegators prefer to stake with a well-known figure they sympathize with, and do not seem to mind their preferred pool’s total rewards (Bloom’s monthly rewards for example, so far have exceeded 69,000 ADA or approx. 6900USD!).

 

By No Means Stranded!

Given its current size of approx. 6.5M and the currently negligible effect of high pledge on a pool’s overall attractiveness (wallet ranking and ROS), W4ADA admittedly is a lot less attractive at 4%. W4ADA will therefore soon be re-positioned in order to again make it fully competitive, by significantly lowering both its pledged amount (currently 2M) and variable fee–at least as long as it sits below 10M.

At this point I would like to stress once again, that variable fee only has a minor impact on yearly ROS (the difference between a 4% pool and 1% pool of equal size is only 0.16%). Similarly, the difference between a small and large pool largely only resides in the volatility of their rewards; their ROS in the long run is virtually the same, however rewards from a small pool can be surprisingly high or low from one epoch to the next, whereas larger pools tend to have a much more regular/predictable rewards flow.

As soon as W4ADA’s new parameters have been decided, you will be the first to know!

Happy staking 🌞

Jos.

(*) I am still of the opinion that chasing pools with best recent ROS results is poor tactics, since the laws of statistics dictate that periods of great results are always followed by periods with not so great results, as the Shelley protocol implies that all pools will show very similar ROS in the long run (assuming their minted vs. assigned ratio is equal). If someone really wanted to chase the highest possible ROS, it is therefore probably smarter to actually wait until after a ‘winning streak’ to switch to a pool with good reputation who has just been going through a series of disappointing epochs. But quite frankly I think sticking with a preferred pool is your best option.