VITAL Pool Update - June 2021
This update focusses on concluding the 7% ROA Offer and announcing how we continue to provide competitive rates to our delegators. The new offer will also be reflected in the other areas of the website soon with the accoring terms in more detail.
Topics covered in this update
- Concluding 7% ROA Offer
- Introducing Best Rate Offer (AVG TOP 100 + 5%)
- Introducing New Rewards Parameters (0-100 + 1.5%)
Concluding the 7% ROA Offer
On March 3rd we announced the 7% ROA offer. Since then we were able to provide an over-the-average rewards rate which was and still is paid out every epoch. This offer helped us to grow the pool and we achieved a total active stake of 485k. Recently we won a big delegator which will help to generate our first block earlier. Anyways this also means that the rewards contingent for the 7% offer will be exhausted earlier. For this reason we want to outline how the 7% offer will be concludes and what you can expect after it.
The current epoch 271 is still generating full 7% rewards. The next epoch 272 will consume the remaining contingent of 351 ADA which will cover 82.8% of the rewards. This means that Epoch 272 will generate ~5.8% rewards from the remaining contingent if no block is minted. If there is a block minted the offer will be extended accordingly and we will share calculation details in another update.
- Currently Remaining Contingent (per 9.6.2021): ₳ 1039,59
- Reserved Epoch 269 (11.6.2021): ₳ 116,58
- Reserved Epoch 270 (16.6.2021): ₳ 147,05
- Reserved Epoch 271 (21.6.2021): ₳ 423,97
- Forecasted Epoch 272: ₳ 425,00 (but only 351,99 remaining)
Introducing Best Rate Offer (AVG TOP 100 + 5%)
We are serious about being transparent with our delegators. The truth is that in Cardano’s current reward scheme a small pool cannot provide competitive rates compared to big pools. For this reason we are preparing a new offer to compensate the issue.
The logic is simple: We pay you a 5% higher reward than the average Top 100 pool (by active stake). This allows you to not worry about which individual pool provides the best rate at a certain time and hop to other pools if the active stake is reducing or the pool is changing parameters. We will update the best rate every epoch, so you will keep getting best in class rewards.
How does the calculation work?
- 1. Evaluate the average returns of the top 100 pools ordered by active stake. In Epoch 268 this results in 4.9158%
- 2. Add 5% on top: 5.16%
Based on the fixed income sharing approach the fixed income will be shared if there was at least one block generated in the according epoch. Based on the current active stake of 500k there are 3 blocks per month on average to be expected (1 every 2 blocks). This leads to an average of 10 days between individual rewards payouts.
We commit to the growth of our pool and will continue this offer for at least 3 month or an active stake of 3 million. Until then it should be possible to reduce the pools fixed fee which allows us to let Cardano take over the rewards distribution natively. We will then just update the fixed cost parameter of the pool every epoch.
Introducing new rewards parameters (0-100 + 1.5%)
The above described best rate offer describes a dynamic fixed cost which is used to produce benchmark return rate on average. Additionally we are limiting the maximum fixed cost which we keep as an operator to 100 ADA. This reflects the real run-cost for the pool in a better way and we believe that many pools will also reduce the fixed cost as soon as this will be possible. To still make the pool sustainable the margin is increased to 1.5%. This shift from fixed cost to margin better supports the growth of the pool.
Note: 340 fix + 0% = 100 fix + 1.5 at 22M active stake. This means that up to 22M active stake we will be even cheaper than a 0% pool.
The following chart demonstrates how the returns will be influenced by the active stake of the pool during the Best Rate offer with the new Pool Rewards Parameters
- The 7% ROA Offer will generate it’s last rewards in epoch 272
- From Epoch 273 the Best Rate Offer will be applied (5% above TOP 100)
- It provides the rate by sharing the fixed income of 340 ADA to delegators
- This way our small pool does not pay less rewards compared to the biggest pools
- A maximum of 100 ADA remains to the operator if the Best Rate is over-achieved
- In this case also the delegators returns will exceed the benchmark (of 5.16% for the calculated epoch)