CIP-0075 | Fair Stake Pool Rewards

[TobiasFancee]

New pull request for CIP-0075 because I renamed branch. I also made changes to meet new CIP-0001 requirements.

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(rendered proposal in branch)

[rphair]

Cross-referencing #422 (review) regarding subjective language in the proposal title.

[rphair]

In my opinion the question of subjective language in title has been addressed in reply to the review comment above (in short, there aren't practical alternatives to this kind of language).

I've edited the title (also in the branch) because there is no such word as "Stakepool" ... not suggesting we do this in the entire document though; we just don't want high profile spelling errors to keep causing other spelling errors.

[rphair]

It would be nice to get all the Discussions: in as few places as possible, but with this CIP subject matter being split between this PR and #422 it's perhaps unavoidable that the discussion would also be split...

[rphair]

Since the discussion on the Cardano Forum is fragmented, references to community discussions could also include this link itself and/or some of the ideas mentioned in this separate discussion thread: https://forum.cardano.org/t/cip-improved-rewards-scheme-parameters/112409

[rphair]

p.s. probably not the literal link itself, which is already in the preamble for #422.

[rphair]

@TobiasFancee also just noticed this markdown has the same header rank problem we already fixed for your other CIP in #422 (review):

[rphair]

Suggested change

	# Abstract
	# CIP-0075: Fair Stake Pool Rewards
	## Abstract

... and likewise demoting the headers all the way down to a more web-friendly outline (in which pages only have one H1 and major sections are H2's) ...

[rphair]

Suggested change

	# Motivation
	## Definitions
	## Motivation
	### Definitions

... etc ...

[rphair]

Suggested change

	## The Current Rewards Equation
	### The Current Rewards Equation

etc.

[prometheus-pool]

I think it would be great to mention in this CIP the trade off to removing the unsaturated pledge benefit penalty. Without this part of the reward sharing scheme it seems the protocol would no longer incentivize convergence to k pools since there is no benefit to consolidating stake to k pools if you can get the same rewards at another pool. There are advantages to converging to a specific number of pools such as ensuring that running network infrastructure remains economically viable and that the number of pools doesn't adversely effect network performance. The unsaturated pledge benefit penalty also still results in valuing pledge unlike minPoolCost, so it may perhaps be unfair to lump these both together as anticompetitive.

I think it would also be beneficial to discuss the trade off in reducing a0. It looks like there is currently around 1.3b in private pools earning close to maximum rewards via pledge benefit, but there is around 5x that amount being staked by 0 pledge CEX pools or auto staking wallets like adalite. Private pools make up around 5% of the total stake in the system and their additional rewards come from having skin in the game, while the other entities I've mentioned have 25% of the total stake in the system with 0 skin in the game. I think it is worth pausing to consider that reducing a0 will be giving a raise to these entities with no skin in the game when we actually probably want to give them reason to delegate the ada they control elsewhere, to people that do have skin in the game. Increasing k will also reduce the disparity between those earning maximum rewards now and those delegating to pools with high pledge, helping to mitigate the issue you point out without giving a raise to those with no pledge.

[KtorZ]

Has any of those implementors agreed to be listed here? I hardly think so. As a reminder in CIP-0001:

Implementors must sign off on the plan and be referenced in the document's preamble.

Note also that implementors should preferably be individuals, not entities. Otherwise there's simply no accountability.

[rphair]

(note at CIP meeting time)

[rphair]

Following on last review it's become apparent at the CIP meeting today that this & all other RSS CIP's should only be merged with a status of Inactive (also noted in #422 (comment)).

[TobiasFancee]

@KtorZ @rphair I've fixed the headers and removed mention of entities with genesis keys. I've set status to "Project Area Not Enlisted for CIP Process" Let me know if this is okay or if "Inactive" would be preferred for status.

[rphair]

@TobiasFancee this is proceeding in parallel with #422 so likewise I'm ready to approve this after a similar (probably final) round of format changes.

Also likewise, please rename the project folder from CIP-Fair_Stakepool_Rewards to CIP-0075 before we merge it. nerd_face

[TobiasFancee]

@KtorZ @rphair I've made the requested changes. As with CIP-0082, let me know if there are any more changes needed to merge. Thank you guys for your help throughout this process.

[rphair]

you're very welcome @TobiasFancee and as with parallel #422 I would say this is ready to merge at or before the next CIP meeting (@KtorZ therefore I'm also marking this one Last Check).