Where You Delegate Matters
Full disclaimer: In this article, we will explain why we believe it is fundamental for decentralization to maximize the number of entities running a single pool, as it improves the security and trust of the network. We also concede that the Axo (formerly Maladex) ISPO was spread across multiple stake pools. We are as guilty as anybody else.While ISPOs have their merits, we believe the model can be improved and run without sacrificing decentralization. We are working on sharing our reasoning, along with solutions and tools that can help minimize the impact of ISPOs on decentralization and help future ISPO offerings on Cardano.Cardano is a proof of stake (PoS) blockchain. The entire network is dependent on stake pools — reliable nodes run by a Stake Pool Operator (SPO) — to process transactions and create new blocks.It is unrealistic to expect every ADA holder to have the technical knowledge and resources to constantly maintain and keep a node running. Cardano’s ledger protocol, Ouroboros, provides a solution called ‘stake delegation’ to ensure all ADA holders have the opportunity to participate in the protocol. ADA holders can ‘delegate’ their ADA to any public stake pool to produce blocks on their behalf.But why run a stake pool or delegate to one?Participation in the network is incentivized through rewards distributed by the protocol. Below are the four main parameters that dictate rewards:
Pool Reward Parameters
Block production translates to rewards distributed to the pool operator (according to the fixed and variable fees) and delegators who receive a share proportional to the size of their delegation in the pool (minus operator fees).To decide which pool gets to produce a block, the Ouroboros protocol elects (at random) a ‘slot leader’ using ledger data from two epochs ago as the source of randomness. All slot leaders for an epoch are known 1.5 days (1/3 of epoch length) before that epoch starts — this schedule is known only to SPOs.The more ADA staked with an SPO, the higher the chances that SPO has of being elected the slot leader in any given slot (there are 432,000 slots each epoch). You can conceptualize this process by imagining each ADA token as a ‘lottery ticket’; the more lottery tickets, the higher the chances of ‘winning’ a slot leader position. When an ADA holder delegates to an SPO, they are delegating their chances — ‘lottery tickets’ — of becoming a slot leader for that epoch. Delegators are not spending or locking in their ADA as it can be withdrawn, transferred, or spent at any time.To avoid ADA centralizing to any single SPO and unfairly increasing its chances of becoming a slot leader, Ouroboros sets a saturation point (stake cap) for all pools, which is calculated by dividing the total circulating supply (33.6B ADA) by k (500) — at the time of writing the stake cap is equal to around 67.2M ADA. A pool that goes over the stake cap no longer receives any further increase in rewards. As more delegators stake to an oversaturated pool, the rewards per delegator decrease, incentivizing delegators to seek unsaturated pools and spread ADA across many pools.A solution for SPOs approaching or exceeding saturation, as hinted by the Ouroboros protocol design, is to keep increasing the variable fee until the pool falls back under the saturation value. This allows SPOs to capitalize on their popularity by collecting a larger share of rewards but without hurting the network.
Choose Decentralization
The best way individuals can support decentralization on Cardano is to use their ADA.The saturation point caps the number of chances to become a slot leader and, in theory, the amount of ADA any single SPO controls. With k = 500, a fully saturated pool (67.2M ADA) can expect to produce, on average, 57.7 blocks per epoch — that’s 0.27% of all transactions in the epoch processed by a single pool if they reach full saturation.Formula to determine expected block production of fully saturated poolIf an SPO opens multiple pools, the potential ADA they control without being penalized by the protocol is multiplied by the number of pools they operate. If the Multiple Stake Pool Operator (MSPO) can saturate a second pool, that’s an average of 115 blocks per epoch (twice the amount as for a single pool), and so on.Bear in mind that saturating even one Stake Pool takes a lot of ADA, but every time a single entity opens multiple pools, the potential for network centralization increases.One entity controlling more ADA than the 67.2 million stake cap, means there’s less ADA available to fund single SPOs. This increases the barrier of entry, resulting in fewer SPOs and less decentralization.Higher centralization presents an operational risk to the network. If an MSPO makes a mistake or is the target of an attack, it usually applies across all of their pools, magnifying the potential damage.However, the centralization of ADA presents a more existential threat to the Cardano network in the form of counterparty risk.When the system is working fairly, slot leaders process network transactions on a first-in, first-out basis, but a slot leader can manipulate their node to prioritize (ensure a transaction is included) or even exclude transactions if it benefits them. For instance, because the slot leader schedule is known to SPOs, an SPO in collusion with a decentralized application (dApp) may prioritize transactions associated with that dApp that gives them higher transaction fee rewards. The more ADA that a malicious actor controls, the greater the percentage of network transactions they can manipulate.If, for example, an MSPO controlled 33% of the system’s delegated ADA, they would, on average, be the slot leader once every three blocks — that could have a significant impact on what transactions do and do not go through if the MSPO were to act in bad faith.More worrying still, if a single entity or group of entities controls over 50% of the systems delegated ADA they could launch what is known as a ‘51% attack’ and take control of the network.The accumulation of such a large portion of ADA — as of the time of writing >12.58B ADA — may seem unlikely, but it would only take the top 27 pool groups, with the highest delegation, working together to take control of over 50% of the ADA on the network. If centralization increases, the number of pool groups required for an attack decreases.Top 27 Pool groups (Courtesy of the system to operate fairly is far easier when hundreds or thousands of SPOs have an equal chance of becoming slot leaders.Delegators need to be wary when choosing a staking pool. If they decide to delegate to an undersaturated pool in a multiple pool operation, they are contributing to centralizing the distributed ledger and risk hurting the security and fairness of the system. It might also be an inefficient use of a delegator’s capital (read more on capital efficiency).SPOs can pledge their own ADA to the stake pool. This is different from a stake as the ADA is locked into the pool and takes two epochs to withdraw. The protocol rewards the stake pools with a higher pledge, with higher rewards up until the pool becomes saturated. If an SPO splits their pool, they may also split their pledge, which reduces the rewards for delegators in both pools.In an ideal world, the most successful Cardano node operators would increase the variable fee to capitalize on their success without sacrificing decentralization — we are yet to reach this ideal. If the blockchain’s commodity is trust, which is directly derived from its decentralization, then the number of independent entities running pools is its measure.
What is an ISPO?
An ISPO is a novel way to bootstrap and provide capital for the marketing and development of projects on Cardano (or any PoS blockchain). Delegators use their ADA as a vote of confidence in a new project without the risk of purchase — staked ADA can be withdrawn in full at any time. Delegators to an ISPO accept a higher variable fee, forgoing portions of their ADA rewards to receive project tokens. Variable fees can be set anywhere from 0–100%, but if a pool’s variable fee is set to 100%, it is automatically made private and is hidden from some pool sites and excluded from wallet delegation functionalities. For this reason, you may notice that some ISPO pools listed as 100%, are technically 99% pools and you still receive a small amount of ADA rewards.Even though delegators give up more of their rewards during an ISPO, if an individual staked to ISPOs over an entire year (with 99% variable fees), they’d only be forfeiting around 5% of their ADA (in sacrificed rewards), and none of their initial stake.
ISPOs are not the same as MSPOs
ISPOs are often split over multiple pools but key differences distinguish them from MSPOs.Spreading an ISPO over multiple pools with differing variable fees gives stakeholders the choice of how much of their staking reward they want to give up. The variety of choices attracts a wider range of participants.Multiple pools also mitigate the risk of oversaturation from high demand. An ISPO pool is unable to increase the variable fee to discourage delegation, but it can decrease token rewards per participant to encourage movement to its other pools. For this reason, the Axo team decided to keep the number of tokens available in each pool fixed, to incentivize delegation to less saturated MAL pools. When there are fewer delegators sharing in a pool’s fixed MAL token rewards, each individual delegator receives more MAL tokens.ISPOs present unique opportunities for the Cardano community. During an ISPO, the only way to receive a new project’s tokens is to stake the native token of the blockchain it is on — remember, an ISPO is not a sale of tokens, it is a reward for supporting a project. ISPOs create an incentive for people to move their ADA off of centralized exchanges (CEXs) and onto the Cardano mainnet to pursue an opportunity that doesn’t exist on a CEX — driving more capital to DeFi. Capital moving off of CEXs helps reduce the crypto market’s trading volume gap that currently sees 95% of the trading done outside of DeFi.In addition, ISPOs offer the potential for much higher rewards than the standard APY from staking on Cardano. ISPO delegators are among the first to receive a new project’s tokens. Their potential alpha (ROI above standard APY) is directly correlated to the success of the project they are supporting. Not only can investing in an ISPO be a more efficient use of capital, but it incentivizes community engagement and growth while funding a new project on Cardano. New projects also mean more utility on the blockchain, which can increase the value of ADA itself.Finally, ISPOs are temporary, but their impact on the Cardano ecosystem is not. The centralization of ADA across ISPO pools is limited by the number of tokens allocated to the ISPO. After the token supply is exhausted, all of the extra ADA, delegators, and excitement the project brought to the ecosystem remain, ready to be decentralized and distributed to other SPOs, ISPOs, or projects on the network.ISPOs are not a perfect solution; during their limited lifetime, they create centralization of the network. However, they bring more ADA to DeFi and encourage a healthy movement of ADA between pools while providing a low-risk way for stakeholders to support (and potentially profit from) new and exciting projects on Cardano.The Axo team initially looked into the possibility of running our ISPO in cooperation with single SPOs. However, there were many considerations:1. The legal status of SPOs supporting the development of projects on behalf of the project (country of incorporation, the scope of potential liabilities, etc.).2. The technical aspects, how to safely and effectively set up such a system.3. Community trust, most projects at the beginning of their ISPO journey do not necessarily have the deep trust of the community. This makes it difficult to pitch to SPOs.After long consideration and consultation with lawyers, we decided to run the ISPO independently. We hope to work with the community to enable future ISPOs to overcome these obstacles.
Your Choice — Delegate your ADA Where it is Treated Best.
The ADA you own gives you the power to decide the future of Cardano. We recommend doing your own research to make sure you are supporting projects and stake pools whose mission resonates with you.Any SPO with above 1M ADA (1.079M ADA to be precise) in delegation should be able to produce, on average, one block every epoch — as long as their variable fee is <5% and the fixed fee is close to 340 ADA, they would represent a sound investment.But, even an SPO with < 1M ADA in delegation can be a good choice and offer similar returns when delegating long term. Rewards from smaller pools may not come every epoch, and the minimum fixed fee (340ADA) will have a bigger impact, but with fewer stakeholders, the individual share of rewards is larger. Staking with a smaller pool also contributes to decentralization by encouraging more SPOs.Someone needs to be the first to take a leap of faith and delegate to a pool for it to cross into the threshold of consistent block production. Many SPOs struggle to reach their first 1M ADA delegations, but after reaching this threshold finding new delegators becomes a bit easier, so consider helping these smaller pools out when you can.In no particular order, we’ve put together a list of some of our favorite SPOs and a few organizations and resources that will get you started in your search for the right SPO. This list is by no means exhaustive, so we encourage you to continue looking far and wide for great projects on Cardano.
Alliances Supporting a Sustainable Decentralized Cardano
Cardano Single Pool Alliance (SPA)
SPA is an alliance of pool operators who have vowed to only ever run a single pool. Alliance members are dedicated to the goal of true decentralization on Cardano, even at the expense of their own financial gain. Choosing a stake pool from the SPA is a great way to be confident your ADA is supporting decentralization.
Armada Alliance
The Armada alliance was formed to build a sustainable community of decentralized, low-cost, and energy-efficient stake pool operations on Cardano. All Stake Pools in this alliance run on reliable low power consuming ARM and RISC-V servers, globally distributed, with an average pool energy consumption of 60 Watts.
xSPO Alliance
The xSPO Alliance is a group of small-scale SPOs (less than 1M ADA delegated) dedicated to decentralization and working together to grow their pools and encourage more SPOs to open. Supporting an xSPO alliance member is supporting one of the little guys, but note the rewards for delegating with these SPOs may be less in the short term, as they are not guaranteed to produce a block each epoch.
Hosky Rug Pools
A collection of SPOs that have staking incentivized via additional rewards of Cardano’s favorite zero value token.
Useful Aggregators (please note, these do contain some multi pool operators)
Single Pool Operators
BLADE (Margin Fee 0%)
Conrad does a tremendous amount of good for the Cardano community. Even though his pool has previously reached saturation, he has always resisted the temptation to open multiple pools, showing his commitment to decentralization and Cardano. He is also the co-founder of a “little” project called Ada Handle.
NUTS (Margin Fee 4.9%)
Run by Marek Mahut, who has continued to make selfless and important contributions to the Cardano ecosystem. The NUTS stake pool helps fund the creation of critical development infrastructure for Cardano. Without revenue from the pool, a lot of tooling used by many projects in the ecosystem would not exist.
CRFA (Margin Fee 1.99%)
The CRFA team are the creators of Cardano Blockchain Insights. They are committed to increasing access to finance for everyone. They provide low fees and a high pledge (1 million ADA) to ensure high staking rewards are accessible to all.
LACE (Margin Fee 1%)
LACE pool is operated by an experienced software developer and sysadmin, 25% of profits go towards growing the Open Source Software Fund to support projects building on Cardano — more projects equal more decentralization of the network.
SMAUG (Margin Fee 1.99%)
Supporting the SMUAG pool helps fund the development of an invaluable community tool that shows the Cardano network in real-time, allowing users to see the contents of their wallets, track transactions, and stake to SPOs. The team behind SMAUG is also heavily involved with other projects on the Cardano network.
PEGA (Margin Fee 0%)
Pegasus is committed to increasing the security and decentralization of Cardano. Supporting this pool helps fund the PoolTool mobile app, allowing users to explore the Cardano blockchain and track their staking rewards. Applications like PoolTool make the blockchain easier to use and encourage more users to Cardano.
BERRY (Margin Fee 1.5%)
Berry helped bring NFTs to Cardano and started the first stake pool on a Raspberry Pi. He is the creator of Nami Wallet, cofounder of SpaceBudz, a member of the Armada alliance, and continues to build new tools free for the Cardano developer community. Staking to the BERRY pool helps support the many great projects he is working on for the community.
FIKA (Margin Fee 1.8%)
Fika’s Bullish Dumpling educates both English and Chinese speaking audiences about Cardano and hosts online Cardano community events. Her famous Twitter spaces showcase upcoming projects, as well as putting the important questions to key figures in the ecosystem. She is particularly passionate about getting the Chinese-speaking population invested and involved in Cardano.
JACK (Margin Fee 0%)
Jack supports Cardano with content made live in his mom’s basement! Jack runs an educational YouTube channel teaching subscribers about Cardano and covering the latest Cardano news.
OTG (Margin Fee 1.25%)
Off The Grid (OTG) pool is a founding member of the Armada alliance. They use solar power, batteries, and Starlink to run their Cardano node completely off the grid. They are also committed to helping other single SPOs run on more efficient ARM-based computers.
MALU (Margin Fee 1.25%)
MALU pool is working toward a core tenet of DeFi, connecting the unconnected and banking the unbanked. MALU pool is creating social change in West Papua while promoting decentralization by helping to connect more people to Cardano.
HEART (Margin Fee 2%)
ADA HEART stake pool is committed to the Cardano community. They remain a low-fee stake pool specifically to drive accessibility to staking and therefore encourage more stakeholders to join the network.
PGWAD (Margin Fee 0%)
PGWAD pool is a member of the Armada Alliance and operates with a 0% variable fee and currently receives IOG delegation. The team is focused on privacy-focused, distributed deep learning. They are involved in a number of projects, including, DeepchainAda, a trustless DL Training.
QCPOL (Margin Fee 0%)
QCPOL is a 0% variable pool fee, created for the sole purpose of contributing to the decentralization of nodes on Cardano. Simon, the SPO, is also the creator of the excellent Cardano tipping bot.
TANGO (Margin Fee 2%)
Tango pool is using rewards to build DApps for the Cardano community. Their suite of high availability APIs and developer tools provides users with fast and reliable access to the Cardano network so they can focus on building and growing their own products. Currently, they are offering their DApps for free.
NASEC (Margin Fee 1%)
NASEC’s educational YouTube channel covers the more technical aspects of the Cardano blockchain to improve the knowledge and understanding of delegators on the network. NASEC is also working on the reimplementation of the Cardano Node software, translating the Shelley Network mini protocols into Python for the community to use for testing the security of the blockchain.
GMBL (Margin Fee 3.14%)
Gimbalabs builds technical, educational, and community infrastructure for the Cardano community.
PEACE (Margin Fee 2.4%)
PEACE is a team hyper-focused on privacy and decentralization. They are involved with GimbaLabs, and help to run Dandelion Link, a community service designed to allow anyone to start building on top of the Cardano official APIs, without the need of syncing the ledger locally.
247 (Margin Fee 0.5%)
24/7 operates a low fee highly accessible pool. The team is also actively contributing to open-source projects in Cardano’s ecosystem.
UNDR (Margin Fee 2.99%)
UNDR is run by Pal Dorogi, who is a prolific contributor to Cardano via all his submitted Gists and technical comments.
EASY1 (Margin Fee 1.12%)
Giovanni Gargiulo runs an eco-friendly Cardano node. He also runs an educational YouTube channel about Cardano and how to operate a stake pool at home with non-expensive hardware.
SHAMROCK (Margin Fee 1.5%)
Paddy Shamrock is the co-founder of two free tools for the Cardano community — Building on Cardano, a tool for tracking the Cardano ecosystem, and Poolpeek a stake pool aggregator.
LOGIC (Margin Fee 2%)
Logical Mechanism develops DApps on the Cardano. Notably, he is currently developing for Tokhun and Drip Dropz.
STOIC (Margin Fee 0%)
STOIC pool operates a solar-powered Bare Metal stake pool and runs an educational Youtube channel on staking and interacting with the Cardano blockchain.
ADAPH (Margin Fee 3%)
ADAPH is run by the Filipino software development company (SAIB) behind Hosky-Swap, IdentityToken and Custom Submission Node.
STKH1(Margin Fee 1.8%)
The Stakhanovite team has been invested in Cardano since day one and ran one of the first stake pools ever registered on a public test net. They also help to translate Cardano content, such as IOG blog posts, into French.
TAILS (Margin Fee 0%)
TAILS stake pool, via MermADA minting, mint Cardano NFTs for projects. They also donate 50% of monthly block rewards to the Coral Restoration Foundation and Sea Shepherd.
ANP (Margin Fee 0.1%)
Eystein Hansen has been a contributing member of the Cardano community since 2017 and was a stake pool pioneer.
PSB (Margin Fee 1%)
Co-founder of Cardano BSD Alliance, promoting the use of BSD operating systems in the Cardano ecosystem.
CSCS (Margin Fee 1%)
CloudStruct is committed to making professional enterprise-level architecture and reliability available to the cryptocurrency masses with the click of a button through their online services. They also support the Electronic Frontier Foundation (EFF) to protect online privacy and rights with donations from pool rewards.
APE (Margin Fee 2.5%)
APE pool is run by a community member ADAape who is the creator of the Wild Warriors NFT project and also a frequent commentator. The APE pool is part of the SPA and 10% of profits are invested into small business owners in the developing world through
EURO (Margin Fee 0%)
EURO is run by the creators of the incredible Cardano Tools website that provides a suite of NFT related tools from browsing, to minting, to burning.
STAYK (Margin Fee 1%)
The STAYK team are decentralization maxis. Stakeholders receive the Stayk coin for delegating, but when a stakeholder moves from a saturated pool, an MSPO or an exchange/custodial wallet to the STAYK pool they are rewarded with double the Stayk tokens to incentivize further decentralization. They are also helping the Danish population to learn about Cardano.
AAA (Margin Fee 3%)
The Lovelace team are active contributors to the Cardano community via GitHub.
VEGAS (Margin Fee 2%)
Vegas runs a bare metal stake pool and is one of the most experienced and prolific developers and minters on Cardano. Most recently he has done a lot of work for Hosky, including creating the famous doggie bowl.
SPEC (Margin Fee 2%)
SPEC pool funds the development of several projects on Cardano including the and SPEC pool donates 20% of pool fees to charity and puts the remaining 80% back into the pool a pledge so that each epoch rewards increase.
SWAG (Margin Fee 2%)
Low fee pool with a high pledge of 300,000 ADA, committed to keeping pledge inside the pool for the next ten years. Also a long-term member of the community.
AHL (Margin Fee 1.8%)
AHLNET is a bare metal stake pool, and the operator, Ola, is a core developer of CCVault.
SHARP (Margin Fee 2.5%)
SHARP pool supports .NET Development on Cardano and the development of C# based tools with 5% of the rewards going to the Cardano Sharp treasury.
AOAUS (Margin Fee 1%)
AOAUS is a bare metal stake pool operating in Australia, its remote location helps to contribute to decentralization as it is located far from the majority of ADA nodes. The team also maintains ADA Tools.
CENT (Margin Fee 2%)
The CENT team are the developers of Cardano Blockchain Intelligence. Their tool enables users to drill into the Cardano blockchain data, contributing to a transparent network.
BLOXB (Margin Fee 1%)
BLOXB pool supports BloxBean to develop open-source projects aimed at solving tooling issues and development challenges on blockchain protocols.
BNTY1 (Margin Fee 1%)
Professor Jesse Smith is a technology educator and the founder of Crypto Bounty a blockchain research and development lab.
DOG 🐶(Margin Fee 0%)
DOG pool runs a bare metal stake pool and donates a portion of their earnings to canine charities around the world. They are open and transparent about the donations they give and post receipts on their website.
HAZEL 🐱 (Margin Fee 1%)
HAZEL stake pool supports no-kill cat shelters and rescue organizations. It is also co-run by Nils Codes, a YouTube educator and the co-creator of on Cardano, a community integration tool.
SEAL 🦭 (Margin Fee 0%)
SEAL stake pool donates a minimum of 10% of pool profits to seal and other wild animal shelters and sanctuaries around the world.
CHEF (Margin Fee 1%)
CHEF pool donates 50% of each epoch’s margin to Action Gainst Hunger in Africa, a charity that takes decisive action against the causes and effects of hunger.
SAPIO (Margin Fee 1%)
SAPIO pool is committed to giving 25% of its profits to Not-for-profit organizations. They also help translate important Cardano community infrastructure like ADApools and PoolTool into Greek.
21ADA (Margin Fee 2%)
21ADA donates 21% of pool profits to the Run For Water charity, working in rural Ethiopia to bring fresh water to communities.
MONAD (Margin Fee 4%)
Monad is the creator of the innovative unsigned_algorithms NFTs and his stake pool uses relays in several countries.
APEX (Margin Fee 1.99%)
An active member of the community, running multiple redundant relays across Europe. APEX is currently blessed with IOG delegation but they do give 50% of margin rewards to charity.
1LOVE (Margin Fee 1%)
Very active community member — admin for the Cardano Community discord, a mod on Reddit, and admin of Cardano Telegram!
There are currently 2971 active stake pools on the Cardano network, this list is just the tip of the iceberg of what is out there. Don’t end your journey here. Keep exploring and supporting single SPOs, and always remain open to new pools coming online and contributing to decentralization. Delegate your ADA where it is treated the best.