- Cardano Foundation has made a pivotal change by reducing the minPoolCost parameter for ADA staking from 340 to 170, aiming to revitalize the economics for small staking pool operators.
- This strategic move is set to attract more participants to the ADA staking ecosystem, bolstering one of the largest Proof-of-Stake Layer 1 networks.
In a significant development, the Cardano Foundation (CF) has adjusted a crucial parameter in the ADA staking domain, slashing the minPoolCost from 340 ADA to 170 ADA, effective as of October 23, 2023. This 50% reduction is poised to have a profound impact, particularly on the operations of small ADA staking pools, and is anticipated to lure new enthusiasts into Cardano’s robust staking ecosystem.
As a result of the SPO-Poll and a subsequent evaluation by the Parameters Committee, the Cardano Foundation has successfully submitted a transaction on the Cardano mainnet to lower the minPoolCost parameter from 340 to 170 ada.
— Cardano Foundation (@Cardano_CF) October 23, 2023
The minPoolCost parameter, integral in the Cardano network, represents the amount deducted from pool rewards prior to their distribution. Post-adjustment, it now stands at approximately $44 per epoch, based on current ADA prices. The Cardano Foundation, a Swiss-based non-profit overseeing Cardano’s development, explained that this decision was the outcome of careful deliberation, involving a poll among stake pool operators (SPOs) and an in-depth evaluation by the Parameters Committee.
Introduced alongside the mainnet launch of the Shelley hard fork in August 2020, the minPoolCost parameter plays a crucial role in safeguarding the network against Sybil attacks, while ensuring pool operators maintain a minimal budget for operating their ADA staking hardware. Alongside the K-ratio, minPoolCost aims to incentivize collaboration with smaller ADA staking pools, contributing to a more decentralized network.
A Boon for Small Pools: Striding Towards Greater Decentralization
The Cardano Foundation elucidates that this parameter adjustment will effectively lower the “floor price” for small pools, diminishing the entry barriers to the Cardano staking arena. According to data from Staking Rewards, October 2023 is witnessing a surge in activity within the ADA staking ecosystem, with its staking market cap soaring past $6 billion and a remarkable 128.21% upswing in the “Staking Tokens Trend” metric.
Currently, the staking ratio of Cardano stands over 63%, indicating that nearly two-thirds of all ADA tokens are delegated to staking pool operators. This demonstrates a collective effort in securing the network’s Proof-of-Stake architecture, fostering a resilient and decentralized blockchain ecosystem.
This transformative move by the Cardano Foundation underscores its commitment to nurturing a thriving staking community, paving the way for an inclusive and decentralized future in the Cardano ecosystem.
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