- The Cardano Foundation introduced a major overhaul of its delegation strategy.
- The new delegation strategy focuses on decreasing pools and increasing rewards.
- The community voiced their reservations about the network turning centralized with the new strategy.
Cardano has found itself amidst a fresh storm, not stirred by external forces but by the internal currents of its community.
As the network ventures deeper into smart contracts and advanced technology stacks, the Cardano Foundation has decided to orchestrate a strategic overhaul of its delegation strategy to improve the quality and effectiveness of how pool operators create blocks.
However, the Cardano community isn’t greeting the move with open arms, as concerns bubble up about the transformation inadvertently leading to an unwelcome wave of centralization.
Cardano Foundation’s New Direction
On Friday, October 13, the Cardano Foundation announced a major makeover for its delegation strategy. After successfully running seven delegation rounds, meticulously assessing over 1,700 applications, and only handpicking 351 pools to grace the network, the company decided to evolve and meet the surging demand head-on.
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Here’s a brief outline of the changes the Cardano Foundation has approved:
- Cardano is moving from its three-month delegation period to an extended 12 months.
- The new strategy will work on reducing the number of delegated pools to amplify the rewards allocated to each pool.
- Aiming for greater inclusivity, Cardano will remove single-pool requirements and allow large multi-pool operators to join the fleet.
- Delegation recipients will no longer be chosen arbitrarily; the Cardano Foundation is transitioning to a more data and insights-oriented selection process.
- In the event of increased costs or fee hikes by pools, the Cardano Foundation commits to revoking their delegation.
- Pools seeking a delegation role can formally apply through application forms.
In addition to the changes, the Cardano Foundation has announced launching its stake pool, CAG, funded by the organization’s personal assets and wallets to better understand the network’s inner workings.
While the Cardano Foundation aimed to stir excitement with its new strategy, the development sparked a wave of skepticism and criticism from the community. Many were not entirely thrilled about the Cardano Foundation’s new direction.
Cardano Foundation Receives Community Backlash
The Cardano community was quick to voice its frustrations with the new delegation strategy. Concerns primarily revolved around the fear of centralizing the network by introducing more ADA and fewer pools.
Many saw the overhaul as a deviation from community consensus, as most community members expressed support for reducing the ADA per pool and increasing the number of pools to enhance network decentralization. However, the foundation has taken a contrary path by increasing the ADA amount and the delegation duration.
Users also raised red flags over the potential impact on decentralization by allowing multi-pool operators to apply, asserting that their participation could overshadow the role of independent Stake Pool Operators (SPOs). The prevailing sentiment asserted that the shift benefited a few insiders and whales.
Whether the Cardano Foundation will heed these concerns and reconsider its new delegation strategy remains uncertain. Still, the consensus among the community is palpably unimpressed with this new direction, prompting calls for a reevaluation of the strategy.
On the Flipside
- IOG recently received heat from the crypto community for overbearing its influence by holding most of the Genesis Keys.
- After receiving an overwhelming response to its first on-chain governance poll, Cardano decided to halve the minimum pool costs from 340 ADA to 170 ADA to encourage smaller pools to join the network; however, the new delegation strategy could hinder that.
Why This Matters
Delegation plays a crucial role in Cardano’s operation and the overall health of its Proof-of-Stake (PoS) consensus. The Cardano Foundation’s initiative of decreasing pools on the network in favor of rewards will hinder the network’s decentralization and minimize network users’ options to secure and operate.
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