Cardano Foundation Announces its Delegation Methodology

ZUG, 07 OCTOBER 2020. The Cardano Foundation is pleased to share its delegation methodology in accordance with our transparency principles, and in line with our promise to communicate to the wider community during each part of the delegation process.

As an independent Swiss foundation, it is the Cardano Foundation’s job to ensure that the Cardano blockchain achieves sufficient decentralization, to increase stake pool operator engagement and empower individual stake pools, and to support the staking and delegation infrastructure delivered through Shelley.

Since the delivery of Shelley, the Cardano blockchain and its ecosystem partners have achieved more than 1,300 active stake pools, operated and maintained by dedicated and talented individual stake pool operators (SPOs) — who collectively, have enabled over 50% of the total ada (₳) circulating supply to be staked.

This tremendous feat has made Cardano one of the most decentralized blockchains to date in an incredibly short space of time, and it is a true testament to the strength and participation of our valued community. It is also indicative of the wealth of technical talent we have within our community — particularly promising ahead of the launch of native tokens, smart contracts, and decentralized applications.

The Cardano Foundation has supported the community with various initiatives, such as the Stake Pool School, a resounding success with over 3,000 participants successfully completing the course.

In the spirit of transparency in which the Cardano Foundation was founded, we are now pleased to publicly share our delegation methodology. Our delegation preferences and methodology has been carefully designed to support the ongoing decentralization of the Shelley mainnet, by supporting and involving new individual stake pools. We will support stake pools of all sizes and regularly engage in a dialogue with our SPO community through our Community Management team. Our methodology will further evolve and develop over time.

The Cardano Foundation’s delegation methodology

For stake pools to be eligible for delegation from the Cardano Foundation, they must fall within the following criteria (data sourced from a self-hosted passive node):

  • Hold between ₳25,000 and ₳2mn as a pledge,
  • Operated by a stakepool operator that only runs one pool (difficult to verify but best effort attempt),
  • Have a normal operating cost of less than 5% variable rate, and a fixed rate of around ₳340,
  • Does not have a high number of ada already staked (less than 5% saturation),
  • Have validated blocks successfully in the past,
  • Have not been delegated to by the Cardano Foundation in the last four rounds.

To randomly select stake pools to delegate to, the Cardano Foundation will use a third party randomizer to choose from eligible pools according to the criteria listed above. As and when Daedalus implements non-myopic rankings, we shall implement this approach to stake pool selection.

Going forward re-delegation shall occur approximately every three epochs. Should an epoch end on a weekend, re-delegation shall be completed the following week.

In total, the Cardano Foundation has multiple wallets from which we will delegate our ada assets. Our ada assets are equally distributed across our wallets. Single wallets will be used to delegate to one pool at a time.

The first 10 stake pools the Cardano Foundation re-delegated to are, in alphabetical order:

  • ADAU,
  • AGIO,
  • AZTEC,
  • BEAVR,
  • CASP,
  • COSD,
  • LOOT,
  • WAAUS,
  • ZETIC,
  • ZONE.

As we test and gain access to more secure custody solutions, we shall add more wallet addresses and delegate our stake to a wider number of stake pools. We will be communicating our updated delegation preferences every three epochs.

Together, we can make Cardano more decentralized

As an ecosystem, we should be immensely proud of how much we have already achieved. Our official ‘Operating a Stake Pool’ Forum community, and the ‘Cardano Shelley & Stake Pool Best Practice’ Telegram group which has almost 4,300 users, are two of the busiest and most engaged segments of our community.

Here and across other channels, we are delighted to see and participate in regular deep technical discussions, and gather welcome feedback from our stake pool operators.

However, we are always looking to improve. We want to understand how we can attract more stake pool operators, simplify and enhance the onboarding journey, and make the operation of stake pools more attractive to a wider audience.

If you have suggestions and feedback on how this process could be enhanced, join the discussions on our Forum, and help us build a solid foundation for decentralization on Cardano, and contact our Community Management team.

Likewise, we encourage each and every Cardano ecosystem participant with the skills and desire to become a stake pool operator to read our guide to becoming a stake pool operator, and sign up to the stake pool school.

Learn more about staking, delegation, and consensus on the Cardano blockchain in the following articles:

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Publication date: 
10/13/2020 - 11:48

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