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%)
  • 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 Validator)
  • 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 fulfil key requirements in terms of donations and transparency. We beliefe 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 validator is moved from Finland to this Austrian based private hosting location. We still keep one Cloud server in Germany as a Hot Standby Validator.

Complete Setup:
Relays: Austria (private), Germany, Finland
Validators 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!