VITAL Pool Update - October 2021

Without overstatement we think we have the most loyal delegators one can envision! Since 8 weeks no single slot was assigned to our pool. This is a streak of bad luck. But the past is not influencing future luck, so we hope that the streak is ending soon! Thanks for your patience!

In numbers the livetime luck of the Vital Pool dropped to 70% at a 100% pool performance. This means no single block has been missed. Hard to image which rewards we would have generated with 100% luck or even more. Hopefully time will also show such a scenario some time!

Overall Stats / Delegation Status

Since the last update not much changed in regards to active stake. Based on the missing slot assignment the average ROA of our delegators dropped to 4.16%. For those who joined our pool at the beginning this is still a 5.5% ROA including our initial 7% offer.


Pool Parameters Update / Fixed Cost Sharing

As announed in our previous update we are introducing a Fixed Cost Sharing Model. As Cardano still does not allow to define Fixed Cost below 340 ADA we are sharing 240 ADA of those fixed cost with our delegators. By that we achieve a ROA which compares to a 3.5M Pool. Furthermore the variable cost is changed to 2%. This makes sure that the pool operation cost ist covered and therefore is important to ensure sustainable operation. More details on our offer page.


Highlights since the last update

  • 7. September - Update 1.29 (Ready for Alonzo)
  • 28. September - xSPO Knowledge Share Github created
  • 30. September - Survey/Lottery
  • 4. October - Update 1.30.1


VITAL Pool Update - September 2021

Update regarding the current status of the VITAL Pool. Statistics, relevant changes, and highlights of the last 3 months. We enhanced the value proposition of our pool which now includes CO2-neutrality and a unique Block Insurance. We continue our efforts to get a vital part of Cardano in the most responsible way.


Overall Stats / Delegation Status

In June we won a big delegator (285k). This helped us to mint our first blocks and therefore proofing our setup which was a big milestone as many delegators do not consider 0 block pools.

Unfortunately this delegator decided to leave again end of July which pushed us back to 170k in active stake. In the meanwhile the active stake increased to 280k, which allows us to mint a block on average every 4th epoch.

We minted 7 blocks in total and generated an average live time ROA of 6.23% for our delegators (excluding the 7% ROA in the pool introduction phase)

This is far above the current average. For comparison, the top 100 pools by saturation generated ~4.7% on average during the last 10 Epochs.


Best Rate Offer / Pool Parameters Update

The best Rate Offer still runs until end of September. Since the introduction we were not always able to achieve 5% higher rewards than the top 100 pools. In the end it turned out we had to share 100% of the fixed cost to achieve or almost achieve the benchmark rate. Based on luck the real returns over-achieved the benchmark with the above mentioned 6.23%.

Calculating out luck we are generating 4.87% on average as long as the Best Rate Offer still runs.

After September the Best Rate offer will be discontinued and we will introduce a 100 ADA fixed cost + 2% margin configuration. This will generate 4.23% on average. As the lowest allowed fixed cost is still 340 ADA we will share 240 ADA with our delegators. As soon as the protocol allows lower fixed cost we will hand apply the according pool parameters on chain.

After this change the pool will generate profits for the first time. Everything until now was a pre-investment to achieve a delegation which already allowed us to achieve a stable basis for the future.

Through the change we will generate a 0.5% lower ROA (compared to the top 100 pools). The ROA will increase as the pool is further growing:

  • <1M: 4.23% ROA
  • 2M: 4.54% ROA
  • 3M: 4.66% ROA

When reaching >3M we will break through the AVG Top 100 Pool as those pools are still based on a 340 ADA fixed cost.


Sustainability

Through the introduction of the 100 ADA fixed cost the pool gets economically sustainable. Without generating profits we are not able to support our mission which makes this an important milestone for us. The low fixed cost should still make the pool an attractive choice for new delegators, while the 2% margin will generate income as soon as the pool further grows.


Highlights of the last 3 months

  • June 10th – 7% offer was exhausted (2000 ADA add-on rewards were fully paid out)
  • June 15th – Best Rate offer was communicated through the website
  • June 20th – Pledge increased to 40k
  • June 20th – Purchase of rainforest trees to offset all CO2 emissions of the pool for the next 60 years
  • June 25th – Discussion Channel was introduced: https://t.me/joinchat/k7SjxqFCfC41NGRk
  • June 28th – FIRST BLOCK MINTED. End of being unlucky. We should have minted 3 blocks already but never were elected.
  • June 28th – First donation to Lobby16
  • June 28th – Introduction of the Africa/Ethiopia Relay
  • July 1st – Introduction of the Block Insurance. If we miss a block based on technical issues we stand in and pay the rewards from our pocket.
  • August 13th – Publication of the Delegators Knowledge Check
  • August 19th – Series of technical Articles published on the forum
  • August 27th – We are now part of 5 Alliances (MDP, CSPA, xSPO, CNBG, CDP)

Technical Update

Since the beginning we are running a failover approach which allows us to switch from one Block Producer to another in case of issues. The failover was in the meanwhile automated and we shared the required approach with the community


Future Outlook

Another round of Delegation was announced by IOG this week. In the next IOG newsletter the registration form will be published. We know already that this time community contributions will be important and that there will be a way which allows other SPOs to vote individual pools as well.

We created accounts on Facebook, Instagram and LinkedIn additionally to the Reddit and Twitter account. We will use these channels to communicate our values and differentiators. We believe in our offering and think the main reasons why we did not found more delegation so far is because we are “talking” to less about our unique offering. We plan to run a series of post where we will highlight each differentiator one more time to generate some awareness.

Additionally we will run a survey with a gift which is meant to educate delegator about our differentiators to generate additional visibility for our pool.



VITAL Pool Update - June 2021

This update takes a focus 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 according 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%)
  • Summary

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.

Detailed calculation:

  • 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%
Payout timing

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.

Offer duration

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


Summary

  • 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)


VITAL Pool Update - May 2021

This is our first pool update in this format. The VITAL Pool was registered at 22nd of February 2021. Within those almost 3 month a lot happened and we’d like to share our current status and thought.

The most important good we have are our delegators and from various conversations with some of you I collected feedback. Some of you like our mission, some of you like unique approach of generating constant rewards even as a small pool. We have a solid basis of 30 delegators and can’t wait to continue our journey with you!

So what’s next?

Topics covered in this article
  • Overall Stats and current Status
  • What happened so far
  • Getting sustainable
  • Mission Driven Pools
  • Technical Update - Hybrid Cloud
  • Future Outlook

Overall Stats and Current Status

Pool Stats

Currently we have 130k Live Stake from 30 Delegators with still 0 Block generated.

Our lifetime stake (sum of active stake per epoch) is at 1 mio ADA currently. On average this is enough to mint 1 block. Unfortunately luck did not turn in and we were not elected as a slot leader so far. Like in the casino past is not influencing future. Based on the 130k active stake our chance to be elected is 13% every epoch. So on average we will get our block in 7.7 epochs.

7% ROA contingent

1277 ADA are still available. This equals 64% of the fund. The other 36% are either paid out or reserved for payout

Every epoch we will pay out 93 ADA (with the current active stake). There is remaining contingent for 13.7 more epochs if we do not mint any block until then. If we mint a block this will add additional epochs since some of your rewards will come from Cardano’s native rewards.


What happened so far?

  • 22nd February 2021 – VITAL Pool registered on Chain
  • 2nd March 2021 – Upgraded Architecture (2 Relay, 2 Block Producer)
  • 3rd March 2021 – Announced 7% ROA Offer
  • 11th March 2021 – Transparency of Rewards Calculation
  • 12th March 2021 – Mobile App provided
  • 22th March 2021 – Website UI Relaunch
  • 1st April 2021 – Part of the Mission Driven Pool Alliance
  • 7th April 2021 – Upgrade to Cardano 1.26.2
  • 10th April 2021 – Article for Stake pool Operators
  • 5th May 2021 – Article for Delegators
  • 10th May 2021 - Infrastructure upgrade to Hybrid cloud
  • 15th May 2021 – Upgrade to Cardano 1.27.0

Getting Sustainable

We did some research in what it means to successfully run a stake pool and what factors are relevant for deciding for a stake pool from a delegator perspective. Base on our planning recommendations we are still in an early stage for the VITAL stake pool and we have 2 key milestones in front of us:

Mint the first block

It is a matter of luck to be selected for a slot. But luck increases with delegation. To overcome this initial hurdle we introduced the 7% ROA offer which already helped us gaining delegation. In 7.7 epochs (average) this first milestone should be achieved. We mind this important because it is a proof that the pool is set up properly and ready to mint blocks.

Getting Sustainable

The second milestone is to get sustainable. The pool needs to grow to be attractive for new delegators. This is primarily the case because in a small pool scenario the fixed cost for running the pool (currently 340 ADA) is eating into delegators rewards. Note: This is currently not relevant for you based on the 7% offer. At some point of time the minimal fixed cost will be lowered by IOG to reflect the real cost of running the servers again. This will make small pools more competitive again. The 7% will bridge the issue until then.

We also requested IOG delegation of 3 mio ADA for 3 month in April. This delegation method is meant to support small pools and increase decentralization. This Unfortunately we were not selected this round. 100 out of 700 pools were selected. To increase our chances for the next round for Q3 2021 we have some improvement ideas focusing on some real differentiators which we will announce throughout the next 3 months. IOG Delegation would help us to reduce the rewards share which goes into operator fixed fees. Currently this is not relevant for you because we are paying out out 7% add-on rewards, but for the time that the IOG delegation would help to make to pool attractive for additional delegators.


Mission Driven Pools

Since 1st April we are an active part of the Mission Driven Pool (MDP) Alliance. Behind the alliance there is a great community with bi-weekly meetings. Our key work is to generate a trusted list of stake pools which fulfill key requirements in terms of donations and transparency. We believe that this is very much in line with Cardano’s mission to make the world a better place for all of us and we are really happy to be part of this!


Technical Update - Hybrid Cloud

Release updates were installed as recommended by IOG. Additionally we challenged our architecture in terms of decentralization needs. Most of the Pools are running in Cloud environments on some VPS infrastructure. This means there is some kind of centralization into the cheapest providers on the market like Digital Ocean. We believe that decentralization will be improved by also have some servers running outside of those big hosting environments. Best decentralization comes from a huge variety of hosting locations.

For this reason we changed our hosting into a hybrid setup. Additionally to the 2 public relays in Germany and Finland there is now a self-hosted private relay in Austria. This is not registered to the block chain to avoid being targeted in DDOS attack scenarios. Also one Block Producer is moved from Finland to this Austrian based private hosting location. We still keep one Cloud server in Germany as a Hot Standby Block Producer.

Complete Setup:
Relays: Austria (private), Germany, Finland
Block Producers: Austria (private), Germany (standby)

The new servers are running on power efficient hardware (15W TDP, AMD Ryzen 4900U). Both servers are using 8 cores and 24GB RAM. So they are very well prepared for the future. Of course the new private hosting location is also running on Eco-Energy, is USV Backed and has a Fiber 100MB internet connection. Samsung Pro NVME SSD and Snapshot Backup to an external SSD device are used to minimize recovery times in a disaster scenario. New servers are following the same Security Considerations as the existing cloud installation.


Future Outlook

The key highlights you can expect are:

  • Continuation of the 7% offer
  • Decrease of fixed cost as soon as possible by the network
  • Focus on additional differentiators and communication of those
  • Implementation and communication of factors which further increase our chance for IOG Delegation for the Q3 Round.

Stay tuned for our next Pool update! Thank you for delegating with us!