The other day I read a telegram message from a SPO, who was letting other people know that his pool got saturated overnight. By a single whale. Just a single whale! Saturated his pool overnight!
As a new kid on the Cardano block I had a hard time understanding this. To me it sounded like a luxury problem at first because I can only dream about having that much delegators staking at my pool. I could only wish my pool gets saturated as quickly as possible. And then I’ll figure out how to deal with it! .. But what exactly are my options when I get into this situation? How can I control this?
Saturation is just a mechanism
First let’s get something clear. Pool saturation by itself is not a bad thing. It’s a mechanism Cardano uses for motivating people to not all use the same pool. As the total amount of staked ADA for a pool increases, so does the saturation. When a pool crosses the saturation threshold it becomes over-saturated and the rewards paid out to that pool will decrease. This is a bad thing for delegators and thus they get motivated to move their stake to another pool, which benefits decentralisation while still allowing freedom of choice. Pretty clear huh?
This process is as designed by IOHK so it’s completely normal for people to leave over time, and for others to join. There’s something very wrong with the fact that one single whale could blow up a pool by over-saturating it. Overnight. Whether it be purposely or not. It made me wonder why we are in fact staking to individual staking pools. To me it would make much more sense to stake to the network instead. This way you could have the network decide what stakepool ‘wins’ a stake, based on the same way the network currently decides who becomes slotleader. Only in this case the pool with the highest saturation has the least chance to ‘win’ the stake.
In an ideal world
The Cardano network is an open system where your stake is your vote. It’s all about decentralisation and by allowing you to decide helps in the process of becoming even more decentralized. I get that. At the same time it makes me wonder if this much freedom could get in the way of the Cardano ecosystems health. In an ideal world everything should be in balance and that should also count for this situation. So why can’t we have the best of both worlds? People should be allowed to choose whatever stakepool they want to use, just the way things are right now, but whenever a stakepool crosses a saturation threshold, the network takes over and all ADA that is passed that threshold will be delegated at a stakepool that is chosen by the network. Just like I described earlier. In this situation you would still allow people to have a clear vote, while pools being over-saturated are no longer an issue. As a bonus it will benefit small pools because they will obviously have more chance to ‘win’ a stake. How about that?!