Choosing the proper Cardano ADA Stake Pool For You
There are few ways you can delegate your ADA to a Cardano stake pool and finding the right pool depends on your specific situation. This is a guide on how to stake your ADA through your wallet and also what to look for and what not to look for when choosing a pool.
Choosing the proper ADA Stake Pool For You
Are you having trouble choosing the proper stake pool? If you ask around, you’ll quickly find that everybody gives you a unique answer. Ultimately, it depends on your situation and the way often you’d wish to re-evaluate your delegation.
I’ve narrowed it down to the following points and broken down what to look for.
Do you want to support community projects or charities — Many pools (like AzureADA) are projects that benefit the Cardano community and need support from delegators. Remember, it’s through adoption that ADA has value. Others provide a portion of their earnings to charity so it’s worth knowing whom you’re delegating to and what their mission is.
Saturation — Does the pool have enough room to accommodate your delegation? If it pushes the ‘live stake’ near to 32 million ADA then it’ll soon be oversaturated and rewards will start to decline. This is something you would like to keep an eye on, the smaller the pool, the less often you need to see it.
Small pool volatility — Many small pools don’t have enough delegated stake to consistently produce blocks every epoch. As an example, a pool may be predicted to mint 1 block so any less than 100% luck would equate to 0 blocks and no rewards. The upside is that small pools can have higher degrees of luck, so a pool that’s predicted to mint 0.5 blocks but is assigned 2 slots will have the luck of 400%, and rewards are greatly increased which is why many find small pools more desirable. As a pool grows, this volatility is decreasing.
Lifetime ROA or ROS — This can be very misleading. People often say “look for a pool with 5% or 5.5% ROS” but a low ROS doesn’t mean a pool is performing poorly so you want further investigation. Small pools that aren’t consistently producing blocks can suffer under this metric. Also, any pool can suffer ‘bad luck’ too.
0% Pools — This can be very attractive to delegators; however, the difference in rewards is negligible when compared as rewards fluctuate every epoch due to the variable of ‘luck’, this difference more or less disappears. As an example, let’s take 2 pools with a similar amount of stake but one has a 0% variable fee and the other has 5%. If the 0% pool has 95% luck and the other has105%, the 5% pool is generating more rewards.
Multiple Pool Owners — This is one of the hot topics in the space. Do you want to support operators of multiple pools? Some argue that this is the success of having a powerful brand but to several, this is harmful to the network’s decentralization status and leave it vulnerable to Sybil attacks.
Block Produced Per Epoch — More blocks don’t mean extra money (necessarily), it’s down to the ‘luck’ variable. A pool that mints 30 blocks in an epoch may produce fewer rewards than the small pool that produced 5, so it’s all relative.
Our final advice is to decide on a pool you believe in. They’re all subject to a similar variable of ‘luck’ so essentially are all the same. Many operators give constant updates on the performance of the pool like (AzureADA) and are very active on social media.
Get to understand your pool owner, staking with an operator just because you like them is a perfectly viable reason. It’s your money so the choice is yours.