Cardano has over 40 network, economic, technical, and governance parameters. Some are updatable others are not unless you’re spinning up your own private Cardano chain in your lab.
Most of the time, these parameters just run quietly in the background without fuss or controversy. A handful of them, however, spark lots of debate. https://www.lidonation.com/en/posts/optimal-pool-count/, is one famously polarizing parameter. Our parameter today, pool_pledge_influence (aka a₀ pronounced “a naught”), also falls in this small group of notoriously controversial parameters.
Understanding pool_pledge_influence and Its Role
pool_pledge_influence refers to the amount of ada that a pool operator commits to their own pool. It’s more than just a number; it serves as a social signal of trust and commitment to the network’s health. It’s about having “skin in the game”. The idea is straightforward: if a pool operator is willing to lock up a significant amount of ada, they are more likely to ensure the pool’s reliability and performance. What also makes this parameter fascinating is its influence on rewards — or lack thereof. Since its introduction, pool_pledge_influence has been, and still is, set to 0.3.
pool_pledge_influence on rewards
How exactly does pool_pledge_influence influence a pool’s rewards? pool_pledge_influence is a factor in determining how much work a pool is assigned to do, which influences how much reward that pool and its delegators receive. pool_pledge_influence is not the only factor. In fact, it’s the least important factor.
Herein lies the controversy.###
Many argue that having more “skin in the game” as a pool operator should more directly correlate to your chances of producing blocks. The argument is that the current state of things, where the system heavily rewards other peoples’ delegation to your pool instead of your pledged amount, creates a popularity contest. It may reward social media personalities and influencers more reliably than those that are putting lots of their own ada on the line.
The counter argument is that too much emphasis on pledge leads to the rich having an unfair advantage.
Why you might care
As an ada stakeholder, this might be something to think about next time you reevaluate where you stake your ada. How much value do you put on the ada pledged by your stake pool operator? Does it make a difference if the pool is operated by a corporation or a YouTube personality? How does your opinion change if your operator has multiple pools.
Conclusion
pool_pledge_influence is one of the many Cardano parameters that can be updated and tweaked directly by ada holders. Cardano’s Voltaire on-chain direct governance system allows anyone to propose a minor or major change to the system, and solicit votes for that change. If enough ada holders agree, the change will be implemented. Since that governance system came online, 3 system tweaks have been proposed and 1 has been implemented.
As controversial as pool_pledge_influence has been, it’s surprising we haven’t seen a request to update it. Or perhaps one is around the corner.
No comments yet…