How to choose a stake pool?
What criteria should I consider?
First of all, it is important to get to know the basic parameters. On the basis of these, you can already make an initial selection in order to find a suitable Cardano Stake Pool for yourself.
The main thing here is to be able to distinguish cleanly functioning stake pools from other stake pools.
A pool that is not online when it is supposed to write a block does not get any rewards. So it doesn’t bring much as a staker.
-> Rule: The pool should be online 99.999% of the time & communicate it that way.
A pool that is saturated (=saturated) does not get any more rewards.
Therefore, it does not bring much as a staker.
-> Rule: Saturation should be below 60%.
A pool that does not produce any blocks does not get any rewards.
So it doesn’t bring much as a staker.
-> Rule: A pool should produce at least one block every few epochs.
A pool that has too high costs leaves less rewards for the delegators.
-> Rule: A pool should charge a maximum fixed fee of 340 ADA & a maximum margin fee of 5%.
This parameter is often underestimated or neglected. Yet it should be the decisive factor once you have found a few pools where the other parameters are correct.
To understand this parameter, one must understand that staking is a kind of lottery in which the stake pools participate every few seconds.
Now this lottery is fair in the long run, but in the short run a pool can be rather lucky or unlucky.
The Lifetime Luck parameter reflects this circumstance. And it does so like this:
So it makes sense, when changing pools or when staking in general, to choose a pool with Lifetime Luck below 100% (provided all other parameters also fit).
The return, provided the above conditions are met, is always about the same (long term), at about 5% per year (in ADA).
-> Large pool -> more blocks -> more frequent rewards -> is divided by many delgators
-> Small pool -> less blocks -> less frequent rewards -> will be divided by few delegators
Now we move on to the advanced parameters. Here, major differences between stake pools can be identified.
Who operates the pool? Is it a centralized organization like a CEX (Centralized Exchange) that already has 8 pools full & is now filling the 9th?
Is it a nerd who installed a node on his laptop as a side experiment for fun, which is online but I know nothing about it?
Or is it a small group / a person who runs the whole thing cleanly & transparently & is at work with the necessary seriousness & transparency?
The title says it all here.
Is there a lively and accessible community for the pool?
(For example, a Telegram or Facebook group)?
Are events (online & offline) held, does the community meet?
Delegating my stakes to smaller pools (even though a block may not have been produced yet) promotes the decentralized idea & thus the core of the Blockchain and Cardano approach.
Which is now finally the best Cardano Stake Pool?
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