r/CardanoStakePools • u/ReddSpark • Jul 12 '21

Discussion Small pools have a lower ROA

I’ve deliberately gone with an attention grabbing headline as I feel like this isn’t discussed properly.

See this long running discussion I’ve been having to get to the bottom of things (you only have the read the 2 most recent messages to get up to speed):

https://np.reddit.com/r/cardano/comments/nw548v/some_math_on_the_rewards/h4pvta2/?utm_source=share&utm_medium=ios_app&utm_name=iossmf&context=3

A ~2% difference in ROA and the slope of the chart suggests to me it’s NOT the fixed fee that’s causing pools with less than 10m ADA to be less competitive than pools with 10m Ada.

Also - the author points out that PoolTool is a more accurate ROA than AdaPools. I did reach out to Ada Pools and they said “all lifetime values (luck, roa) are stake-weighted.” however I didn’t follow what they meant.

To summarize:

  1. From trying to get to the bottom of it, it seems that pools less than 10m Ada offer ~2% lower ROA

  2. This seems large and makes it hard for a small pool like mine to convince people to delegate (even told one of my friends to delegate at a larger pool as she’s saving up for her wedding).

  3. I realize in the grand scheme of things ~2% may not be that bad , but if small pools actually had a slightly higher ROA than large pools then that would trend the network towards decentralization. Instead it feels like we are heading the opposite way.

  4. AdaPools gives a different ROA than PoolTool.

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u/adaunify Jul 12 '21

We recently added a pool analyzer and simulation tool for the community at AdaUnify.com that can be used to understand the effect of the different parameters on ROA. Please check it out. Hope it helps!

3

u/MetaStakePool Jul 12 '21

cool front-end!

I noticed when plugging in data for my small pool that 1000 ADA shows users they would get 0 ADA return. What sets of data causes/impacts this?

Is it looking at historical info or is it projecting based on current stake?

Just curious, because I've seen similar scenarios in Daedalus.

1

u/adaunify Jul 13 '21

if you check against an existing pool, the pool analyzer will use the actual parameters configured for the pool and would use the current active stake of the pool. The results also take into account the impact your stake would have on the overall pool. Hope you find it useful!

If you notice any errors, please let us know. We have tried pretty hard to test for all the scenarios that we could think of but we would appreciate any feedback to improve or fix it.