Cardano Shelley Incentivized Testnet pre-Summary
So today 29ᵗʰ of November 2019, at 12:00 UTC Cardano Blockchain has been snapshot-ed to mark a new era for a Cardano distributed ledger technology and ADA cryptocurrency. In upcoming weeks Shelley Incentivized Testnet will be launched and ADA holders as well as Stake Pool Operators will be able to earn real rewards which will be transferred back to Cardano mainnet as it upgrades to the new decentralized consensus protocol Ouroboros Praos.
This article is using the numbers from different ecosystem as well as not-yet confirmed parameters for the testnet; however I will publish updated article once more information becomes available which should be on the 5ᵗʰ of December 2019.
Ouroboros Praos aims to bring real decentralization to Cardano Blockchain and to be 100 times more decentralized than Bitcoin Blockchain. Total amount of stake pools should oscillate around a 1 000 mark. Some portion of this number will be people self-delegating to themselves on a low-power devices.
More serious commercial Staking as a Service providers however are already emerging within the ecosystem looking on biting into this almost 26 billion large pie of ADA.
If we assume that about 30% will not be delegating their stake (Tezos has about 75% participation after about a year of PoS consensus) and 10% will be self-delegating, the total addressable market for stake pool operators will remain at 15,6 billion ADA. If we assume that 400 people will be self-sufficient, then given the game theory parameters, each well performing pool out of a remaining set of 600 should be able to acquire stakes of about 26 million ADA.
Stake Pools will be in a competition with their fee structure, however given the target of 1 000 stake-pools, game theory parameters should prevent over-delegated stake pools from gaining more monetary rewards; which should, in theory incentivize people to re-delegate to a different pool once their becomes saturated. Also we can make an assumption that not all stake pool operators will provide sufficient quality. Let’s say 10% will perform poorly. That leaves some 90% of pool operators who provide good quality service, 540 pools will thus be splitting a pie of 14,820 billion ADA, because we theorize that poorly operated pool will have only half of 1/600 stake delegated to them.
So what does this all mean? If you participate in Cardano Shelley Incentivized Testnet as a Stake Pool Operator; you should tweak your pool parameters in such a way, that you will have delegations and pledge totaling about 27,5 million ADA; if you achieve this goal during a testnet, you may consider yourself to be a winner in a Cardano Shelley Incentivized Testnet race for delegates!