Cardano Slashes Stake Pool Fees in Major Win for Community

• Cardano has decided to respond after an overwhelming response to its first on-chain governance poll. 
• Cardano has decided to cut the stake pool fees significantly. 
• Despite being a major win for the community, the news garnered mixed reactions.

Cardano recently made a historic move towards its vision of complete decentralization with its first on-chain governance pool. As a test, the Proof-of-Stake (POS) network proposed changing two of the most critical parameters in the ecosystem. 

After receiving an overwhelming response from the community, Cardano, staying committed to its user-driven governance, has decided to listen to its users, ushering in a transformational era where the community’s voice shapes the network’s direction. 

Cardano Listens to the Community

In May 2023, Cardano proposed changing two of the most critical parameters on the network:  The k parameter, which defines the optimal number of stake pools on the network, and the minPool cost, which determines how much ADA per Epoch a pool can take as a minimum fee. 

Recognizing the pivotal role of these parameters, 50% of the network’s users participated in the vote, staking over 10.85 billion ADA, or approximately $4.1 billion, in support of their preferred proposal actions. 

The voting results revealed that over 27% of the participants favored increasing the network’s stake pool limit to 1,000 and reducing the minimum ADA requirements for pool entry by half to 170 ADA. 

Responding to this feedback, the Cardano Foundation supported the results and agreed to halve the minimum pool costs as a ‘gradual first step.’ The network detailed that since block records have decreased from 1,800 to 500 ADA, the 340 ADA minimum pool cost has a much stronger effect, especially for smaller pools that generate only one or very few blocks per epoch. 

The decision holds significant implications and fosters a level playing field within the Cardano ecosystem, marking a milestone for the community and network’s participants. However, despite being a major win, the news garnered mixed reactions. 

Cardano Community Reactions

Many users and stake pool operators celebrated Cardano’s decision to cut the minimum pool fees by 50%. However, some community members questioned the necessity of this mechanism, considering Cardano’s design philosophy. 

While the PoS chain argued that the minimum pool costs were introduced to prevent attacks and ensure pool operators had a minimum budget to operate servers, members pointed out that there was no mention of minimum Pool costs in any of Cardano’s early research papers, despite their meticulous attention to detail. 

On the Flipside

• Before the redelegation phase, over 45% of voting participants advocated increasing the k-parameter to 100 and halving the minPool cost to 170 ADA. 
• Charles Hoskinson believes that by the summer of 2023, Cardano could surpass Bitcoin, Ethereum, and every other cryptocurrency in decentralization. 

Why This Matters

Cardano’s decision to reduce the minimum pool costs underscores its dedication to decentralization, community engagement, and user-driven governance.

Read how Lace changed the game for Cardano Staking:
Cardano Staking Game-Changer: Multi-Pool Delegation with Lace

Find out what is Staking:
What is Staking? Crypto’s Most Common ‘Passive Income’ Strategy Explained.