Parasites on the Cardano Consensus
Parasites are organisms that live, feed and reproduce inside another that acts as a host, which is necessary for them to survive.
Although the definition is from the field of biology, we can apply it to understand how some Cardano stakepool operators act.
The Cardano blockchain has the Proof of Stake (PoS) consensus method, through which the signature of blocks is produced, validated to form the chain. Without consensus there is no blockchain, and if the consensus is corrupted, the blockchain is also corrupted .
The consensus is the direct participation of the stakepool operators plus the delegated participation of the Ada holders, choosing an operator. Needless to say, if consensus is the most important thing to sustain the Cardano blockchain, delegation to a stakepool is a vote for that node operator .
To sustain the network in the long term, decentralization is necessary, that is, the participation of diversity of block producing nodes. The concentration in few operators is harmful.
The MAV, (Minimum Attack Vector) is the indicator that alerts about this problem, since when it is lower there is more danger for a Sybil attack, which occurs when a distributed system is corrupted by the same entity that controls different identities of said network. .
Cardano’s MAV, its evolution by time and updated, you can see it here .
In a clear and definitive document on this topic, The general perspective on staking in Cardano, from Professor Aggelos Kiayias, Chief Scientist at IOHK, explains the problems that can arise, and the suggestions he makes to operators and delegators, to keep healthy the consensus of the blockchain.
An important measure, although not the only one, is the pledge that each operator has for its stakepool. If an operator consolidates little pledge and maintains a delegation close to saturation, his leverage is high, that is, he uses a high proportion of money from others to participate in the consensus. The saturation point is calculated on ADA in circulation / K, today it is greater than 68M ADAs, and from which the rewards begin to reduce in proportion.
We say that if you have a high leverage, you have little skin in the game , which implies less interest in things going well on Cardano.
This whole problem is aggravated when this type of operator manages several stakepools, which is known as a pool splitter, since it gives them more power to execute a Sybil attack.
I can summarize it like this:
SKIN IN THE GAME
⬆ Staking ⬇ Pledge = ⬆ Leverage
⬆ Leverage = ⬇ Skin in the game
⬇ Skin in the game = ⬇ Decentralization
The Cardano Parasites
In the following list, I present to you the Cardano parasites, those that have several stakepools and their leverage is very high.
I considered those multi-pool operators with more than 2 stakepools, and as a reference the leverage of single-pool operators, which today (period 320) maintain a coefficient of 17.
An almost saturated pool, and with a variable margin of 6%, collects almost 3 thousand ADAs every 5 days.
You can see that these parasites with a lot of money in their delegation, and with big rewards per epoch, have a lot less skin in the game than single pool operators, where most of them, with great effort, can sustain their structure in consensus. of Cardano.
Complete listing: Cardano Pool Operators -Skin in The Game
Delegate to single pool operators that add value to Cardano