Blog and Education

StakeHodlers metrics reporting

A quick update to let our current and future delegators know that we are experiencing some strange reporting anomalies between our pool failover software, JorManager (hat tip to Andrew Westberg at BCSH for this very fine piece of software), and PoolTool.io (StakeHodlers is a proud Patreon supporter of PoolTool.io, as this is a very important, independent data source to help delegators make informed decisions about where to delegate their stake). If you’re seeing the assigned blocks for the current epoch not quite making sense, you’re not alone. Rest assured that this is only a reporting issue and that the StakeHodlers backend stakepool machinery is humming right along. We hope to resolve the reporting issue as soon as possible and have been working with both Andrew and Mike to see if we can track down the issue.

About our names…

In the crypto lore, mostly borne out of Bitcoin, we believe, someone once transposed the L and D, turning the words hold, holder, holding, etc, into hodl, hodler, hodling, ect. 🙂

StakeHodlers was created with the recognition that we are all Stake-Holders in the Cardano ecosystem, but with the fun and crypto-ness of that early transposition that has taken hold (or hodl) in the cryptoverse since it was first written. Thus, instead of StakeHolders, we are StakeHodlers!

Our first pool, much like many first musical albums (remember those?), was named after our organization, StakeHodlers, with its appropriate ticker, STHDL.

Our second pool takes advantage of the pronounciation of hodl: hodəl. The ticker HADAL sounds like hodəl, but it pays homage to our favorite cryptocurrency, ADA.

So there you have it… everything for a reason!

StakeHodlers-2 (HADAL) is now live!

For a variety of reasons, our new pool has taken longer than expected to go live. Ticker HADAL is now available and accepting delegated stake. The pool has a margin of 2.75%, which means that 97.25% of the rewards go to the delegators. The STHDL pool will remain operational, but for those currently delegating to it, we recommend redelegating to HADAL to take advantage of lower pool margin.

Note that there are currently two instances of HADAL when you search for the ticker in either Daedalus or Yoroi. We are trying to correct this with the pool retirement mechanism and will post an update here when the second pool has been successfully retired with a retirement certificate on-chain.

In the meantime, despite the potential confusion of two pools with the same ticker, we decided to open up HADAL to allow delegators to take advantage of lower margins. In Yoroi, you can recognize the correct version of HADAL by the PoolID: 443ce6c7541640062e46df72375e07d30a72aa6247b8edde998b3f8d517bcc76. In either Yoroi or Daedalus, you will see one instance of HADAL with actual stake in it. The other instance of HADAL should continue to have no stake assigned to it, unless someone makes a mistake and delegates to the inactive pool. The other telltale sign that you have the correct version of HADAL is by its performance. The active instance of HADAL is on the first row of pools in Daedalus, as of this writing. The inactive version is ranked in the 600+ range on Daedalus. It should be very obvious which one is active, but let us know if there is any doubt and we’ll help you out.

Update on New Pool

Quick update on the new pool that we’ve promised. Cardano Foundation approved the pull request earlier today and the new pool shows up in both Daedalus and Yoroi. Unfortunately, two copies of the pool show up, each with a different Pool ID, so this needs to be corrected before we can open the new pool up to delegation. At the moment, you will likely be able to delegate to either or those new pools – if you can do the detective work to figure out which ones they are – but we don’t recommend that as we will not start the nodes associated with the node pool until the duplication issue is corrected. Also, one of the two new pools will either be deleted, or have its name voided, so it’s best to hold off until we have clarity. As soon as these issues are resolved, we will post the details on the main StakeHodlers page.

Community Staking Visualization

First, big hat-tip to Clio1. The team over there did an excellent job on this visual! It looks like they have some great educational content as well, so please go check them out.

The following visualization was posted on Reddit, and should be very interesting for anyone involved in staking (either pool operators or delegators). It shows the flow of stake, available within the Shelley Incentivized TestNet, across the top 200 pools, over the first 80 Epochs (80 days, in this case). Things to keep in mind as you’re watching the visualization:

  1. The huge institutional whales who had ADA concentrated in pools on the extreme left chose to remain saturated for a while. Most of these were likely IOHK pools, staked with only IOHK-owned ADA.
  2. As the community learned more about delegation over time, the majority of pools tended toward falling under the saturation level, which has changed over time as the network stabilized and more pools became reliable at producing blocks.
  3. Delegators learned through experience that small and medium sized pools provide long term rewards that are similar to the largest pools, so the histogram smoothed out.
  4. As pools grew (especially the early ones), they tended to go through a cycle of shooting above the saturation level, until a subset of the pool’s delegators realized that they could achieve greater returns by redelegating their stake to smaller pools. Such moves inevitably help both the delegators that moved, and the delegators that remained in the previously oversaturated pool.
  5. This demonstrates excellent community self-organization, and is a clear demonstration that at least a portion of the game-theory, upon which the Ouroboros protocol is based, is working well.

Enjoy! (Note that you can manually move the slider, but I suggest you watch at the normal visualization speed at least once, all the way through to get a true sense of stake flow over time.)

Here’s the link, for those who want to go directly there. https://public.flourish.studio/visualisation/1493064/

What is a Stake Pool?

(Note that this description became too long to leave it on the main page of the site, but delegators found it valuable, so we moved it to the blog and have referenced it from the main page. This is a very simplified description, and as such, it uses some analogies that are not entirely accurate, but provide an easier to understand description than the mathematics upon which the Ouroboros consensus protocol is built. If future demand warrants, we can do a much deeper dive into the protocol details, although there are currently many detailed descriptions available on the web, and not very many simplified descriptions.)

First, a word about Cardano. Without getting into details such as smart-contracts and advanced identity solutions, Cardano is a system (called a blockchain) – with mathematically proven trust built in – whose basic job is to accurately and permanently record your monetary holdings and transactions so that what is yours remains yours, without the possibility of censorship or seizure, and with many advanced features and benefits over our current financial/economic system. Why should you care about censorship or seizure, even if you live in a “great country”? Think of being forced to leave your land in a war-ravaged country in order to protect your family, only to return after the war to find that the government seized your land because someone else modified municipal land-records and falsely laid claim to what was once yours. How would you prove that the land is still yours? The Cardano blockchain would allow you to do so, as well as ensuring that the money that you would have had to leave behind if it were in a traditional banking system, was not left behind.

Sounds great, eh? So what is this thing called a stake pool?

The automated rules by which Cardano operates (called network protocols) require things called stake pools. In concert with the Cardano network protocols, a stake pool is the thing within the Cardano blockchain that makes sure that your next transaction is recorded and secured, once and forever. The process of recording and verifying your transaction is called producing a block, and blocks make up the blockchain. These transactions are completed using ADA, the currency used on the Cardano blockchain; already accepted by merchants, and convertible into most other currencies, worldwide.

As an example, if Rohit needs to pay Sally 400 ADA for groceries that she bought for him at the store, Rohit would transfer 400 ADA from his electronic wallet to Sally’s electronic wallet, and this wallet-to-wallet transfer would be witnessed and verified by a stake pool, which you can think of as somewhat similar to an electronic public notary.

Now, let’s say that Rohit actually holds 1 million ADA in his wallet, and Sally only holds 10 thousand ADA in her wallet. In this case, Rohit has a lot to lose if the network doesn’t operate properly, but Sally has much less to lose. Because of this, the network protocols are designed to assign more opportunity to protect the network to those with more ADA. But what is needed to protect the network? In short, the network is protected when blocks are properly created within the blockchain, in accordance with the best interests of the entire user base of the blockchain we are considering (the Cardano blockchain, in this case). Another way of saying what we just said is that the network protocols assign more opportunity to create blocks to those with more ADA.

But “creating blocks” sounds like work. Why is it a benefit for a large ADA holder to do more work? Well, that’s because when you do more work to protect the Cardano network, you are rewarded with more ADA! If you own lots of ADA and you are technically capable of running IT infrastructure, you could run your own private stake pool and potentially earn great rewards. But that also means doing actual work to setup the computers and networking gear required to run a stake pool, as well as ensuring that the pool is monitored, 24 hours a day, 7 days per week, and that regular maintenance is performed to keep it all running smoothly! All of that takes a non-trivial investment of time, energy, and money.

Something that we have yet to mention – but is important to understand – is that a stakepool requires stake in order to be recognized as a block creator (known as a Slot Leader, in the Cardano technical parlance). Stake is simply an amount of ADA someone controls for the purposes of validating transactions on the Cardano blockchain. Note that this is much different than controlling ADA with the power to spend it. When an ADA holder delegates an amount of ADA to a stake pool, the owner still owns the ADA and can spend it whenever he/she wishes. It is impossible for a pool to spend delegated ADA, because when ADA is delegated, it is the weight of that ADA that is transferred, not the actual ADA itself. The collective weight of all ADA owned by all delegators to a single stake pool determines the chance that the pool in question will be selected to produce one or more blocks in an amount of time called an epoch. An epoch on the ITN has a 24 hour duration, whereas an epoch for the Shelley Main Net will have a 10 day duration.

Continuing our previous example, let’s say that both Rohit and Sally are equally capable of running computers and networking equipment. And let’s say that the network protocols will regularly assign the ability to produce a single block per day to a stake pool that has 1 million ADA delegated to it, and that the network pays a reward of 100 ADA for producing a block on the blockchain. Rohit could simply start his own stake pool and regularly start earning 100 ADA each day. At the same time, even though Sally has the expertise to run a stake pool, she only has 10 thousand ADA to delegate to her pool. Sally may be assigned a block to produce every several weeks, but how can she get the 1 million ADA delegated to her stake pool so that her pool can also start regularly earning 100 ADA each day? Well, she can convince friends and relatives to delegate all of their ADA to her stake pool. Her parents delegate 500 thousand ADA; 9 college classmates each delegate 10 thousand ADA; and 4 people at work each delegate 100 thousand ADA to Sally’s stake pool. Among those 16 delegators, Sally now has 1 million ADA delegated to her stake pool, and each of her delegators keep their ADA in their own wallets. Everyone’s money is safe; available for spending whenever they need it, and they all split the 100 ADA per day rewards awarded to Sally’s stake pool!

That is fundamentally how stake pools work, and how they tie together delegators and users in the Cardano blockchain. This is a very simplified description, and there are many other things to understand that make Cardano the only blockchain that has a mathematically provable secure Proof of Stake protocol.

It is best to have many pools of roughly equal size to ensure that the network is secure and properly functioning. If there were only a single node and it went down, the block chain would not function. It gets its security and redundancy from the fact that there are many, many stake pools (block creators), thus tremendously lowering the risk that any one node going awry could bring the network down. To promote this, there are reward caps and other rules applied across the entire Cardano network and blockchain. These rules prevent any one stake pool from becoming too large, thus keeping the control of the network heavily decentralized, and controlled by no single entity. This eliminates downtime; keeps the community in control of the smooth operation of the Cardano system, and allows you to continue to own what you own, including your identity!

About the CoolPool Consortium

During the Shelley Incentivized Testnet phase of the rollout of the next chapter of the Cardano ecosystem, several stake pool operators decided to work together for a variety of reasons. While the overall Cardano Community is second to none, it is also very large, and constantly communicating with more than a handful of other pool operators has become difficult as the testnet has progressed. In order to make our communications and shared learnings more efficient, we decided to create the CoolPool Consortium within the larger Cardano Community.

Our intent of the CoolPool Consortium is as follows:

  1. Retain our independence as pool operators, yet share knowledge and best practices among all CoolPool Consortium members;
  2. As we develop proven, data-driven best practices within the CoolPool Consortium, give those best practices back to the larger Cardano Community so that other stake pools benefit, thereby strengthening the operations and security of the overall Cardano ecosystem in which we’ve all invested time, energy, and money.
  3. Provide a safety net on which each CoolPool Consortium member can rely, if there are ever operational emergencies.
  4. Collective marketing and socialization to assist all CoolPool Consortium member pools.
  5. Promote both geographic and cultural diversity within the CoolPool Consortium.  Cardano is a global phenomenon with a mission of inclusion, rather than exclusion, and the CoolPool Consortium believes in aligning with that mission.

We are proud to belong to the overall Cardano Community, and we strongly believe in Cardano’s mission and bright future in promoting positive change to the world in which we all live. Thank you for taking a few minutes to read about our initiative.

Please click on any CoolPool Consortium member link below for additional details on a particular stake pool.

AHL

ANGEL; LIGHT; SION

CLEAR

LAT1

SADA; CROWN

STHDL; HADAL

ADA stock-to-flow analysis would be interesting…

We strive to write these blog posts for a mixed audience. Some of you may be non-technical and be interested in crypto-currency and decentralized blockchain technology at a basic and practical level, such as what is staking and how do I stake my ADA currency. Some of you may be heavily technical from a programming and system-architecture perspective. Some may understand advanced mathematics, such as high-dimensional spaces and how geometric concepts like orthogonality (eg: right angles) can be applied to something understandable only in the abstract (eg: an 87,342 dimensional space), rather than something that can be visualized, such as three-dimensional spaces, comprised of length, width, and height dimensions. And still some of you may understand economics and the current financial system really well. Whatever your bent, we strive to strike a balance and be as accurate as possible, while not muddying the main concepts and messages with too much unnecessary detail. (Those who hangout in technical circles can often find themselves in the midst of a technical “holy war” over details, only to lose sight of the forest for the trees.)

This author does have a heavily technical, mathematical, and managerial background. One thing that the the years have taught is that there is tremendous value in exploring thoughts with communities. Questions are often more valuable than answers, in this regard. Eventually answers become important, but if you are not answering the right questions, you can be wasting lots of time. Also, people within communities bring different strengths and perspectives, and even though we’re all intelligent, posing a question to the community may yield a faster and better answer than if you were to ponder in isolation. It’s in that light that these thoughts and questions are offered for further exploration and discussion.

The Cardano project has always been one that I relate to. It is heavily researched; it is agile; the team has been making good decisions (which often means hard decisions), and they have an excellent philosophy and principles. Perhaps even more important, the main team has led by example, which has helped a robust community to form around them. This is exciting stuff! It is this type of confluence that leads to a truly sustainable community mission, one that really takes hold and builds lots of momentum! These are some of the reasons why I chose to invest time and energy into forming this stake pool.

But enough introductory remarks and onto the main idea…

A gentleman with a YouTube channel called The Cryptoviser raised some interesting thoughts on a recent post, found here:

He has a moderate but growing following at the moment, and seems to be working steadily with a balanced perspective. I like some of the questions he’s raised in the past. In the linked episode (above), he talks about the currently available supply of ADA, and how the remainder of the reserve will be released.

This hit’s at something that I’ve been thinking about for a while. Most of us agree that the path to any currency’s price appreciation is through increased utility. The more ADA is used in the real world, the more valuable it will become. Too much time spent on price predictions is silly. The price will be what it will be, when it will be. Still, we’re humans, and we enjoy seeing our holdings increase in value. We also enjoy clear understanding, so discussing price and price modeling is worth some amount of time.

There is a growing body of work and discussion around valuing bitcoin using the stock-to-flow model that is used to understand precious metals prices. Thus far, the model has very accurately predicted Bitcoin prices over the longer term. You can find some of this research/discussion in the following link, and this is probably just scratching the surface.

PlanB’s Medium Article

Why doesn’t this same model work for ADA? At the time of this writing, there is an initial supply of ~31 billion, and a “mineable” reserve of ~15 billion. An assumption could be that half of the current value of the gold supply goes to the top crypto currencies. Or maybe there is so much wealth in the world tied up in other stores of value, that it’s reasonable to assume that current worldwide value (used as a noun here) looking for a place to be stored is actually double, triple, or quadruple gold’s roughly 8 Trillion dollar total valuation, when considering the total current gold supply.

Whatever the case, we can arbitrarily choose some “reasonable” value that we could expect ADA might hit at some future time. Say we pick 2 Trillion dollars, so as not to be too greedy and leave room for others to share some of the pie. The next question is: on what schedule will the ADA reserve be released?

From a startup/business perspective, it is reasonable to assume a higher percentage of the reserve will be spent now — on things like community QA and adoption during the initial testnet phases, in order to get the project truly bootstrapped — and less percentage of the reserve at later stages, as the ecosystem becomes more stable and robust. It is also easy to imagine a day when most of the reserve has been spent, with the system operating on transaction fees alone. (Transaction fees flow from those who spend to those who save/stake. It’s impossible to live without spending something, on food and shelter, for example, but this basic model promotes a society that lives within its means, which is probably stabilizing, rather than destabilizing, to a society.) In fact, Charles Hoskinson alluded to something like this in one of his recent AMAs:

So, starting with an initial stock, and using the rough model where reserve is released more heavily at the beginning of a project, and less heavily as the project matures, don’t we find an almost identical situation to the much discussed Bitcoin halving events, where price jumps by an order of magnitude at each such event?

It seems like a reasonable model, and the invitation is now presented to any within the community who have the time; detailed understanding, and financial skill to carry this thought to the next level of detail. I’m sure the community would appreciate your efforts. After all, we, in the community, are all StakeHodlers! 😁

Our Shelley Testnet Philosophy

Busy few days and we’re behind on posting, so wanted to scratch down a few notes so those that are staking with us understand some of the things going on behind the scenes.

Our goals for the Shelley Testnet phase are:

  1. Primary: help IOHK and the community get the CSL (Cardano Settlement Layer) software behaving correctly prior to putting real money on it
  2. Close Second: maintain as close to 100% fully-operational uptime for the StakeHodlers stake pool during the testnet phase, given the current and ongoing state of the CSL (currently jormungandr; later the Haskell-based node). Note that fully-operational uptime is much different than just uptime. The testnet is going well, but there are definitely problems that we’re wrestling with as a community.
  3. Third: education and communication… while there are larger technical issues to resolve, education and communication will need to take a back seat. We are a small operation and need to be smart about applying available resources. We don’t want to drop any of these goals, but there will be times when they are far from being in perfect balance. This is one of those times…


Some Thoughts:


This is a very complex project, and we are all part of it in some way. It is perfectly fine to state reality (today was a frustrating day, for sure), but try not to criticize unfairly, especially if you’ve never been in a project like this. Many folks are losing sleep; harmony at home, and other important aspects of their lives so you, the community, can eventually enjoy a robust financial ecosystem that greatly improves upon our current state of affairs. Progress drives the world forward, but it comes with both costs and great sacrifices by a few, that tend to benefit the many. (We’re mostly referring to the developers at IOHK here. These Engineers are working very hard on some very complex stuff. Solutions to problems in this space don’t just magically appear. They require lots of work; often a tremendous amount of time and brainstorming, and real dedication. Their teams are working exceptionally hard, and we should each thank them as the opportunity presents itself.)


This is a marathon; not a sprint. Well, those who follow Scrum may argue…
Without getting into the details, IOHK reportedly follows something called Scrum, which is a development methodology. This can concisely be defined as “inspect and adapt”, or “fail fast”. This applies to process as well… not just software and systems. In a nutshell, that is what they are doing: release the software that runs the CSL, and when something is discovered that is broken, change it and release new software. Same with process — listen to the community and change what is not optimal or downright broken. Quickly! Rinse; lather; repeat. There are plenty of studies that show that this is the quickest way to get to a mature, robust system. The IOHK teams are operating in a very smart manner.


Testing community-behaviors (part of IOHK’s stated goals, as espoused by their Marketing Director, Tim) is impossible prior to actual release to the community. That’s why IOHK has created the testnet, and that’s why they’re providing incentives for participation. Things will continue to break until they don’t. This is expected for a project this ambitious; complex, and widespread. The community of stakers; stake pool operators, and developers must work together to yield the best final result. It will come, but we must have reasonable patience.


Things under investigation at StakeHodlers:

  1. Best monitoring strategy/automation? This is heavily needed while the CSL is not fully stable, and it should be much less needed as the testnet forces the software through a maturing process. Automation is not the best place to create robustness, but it’s the best we’ve got at the moment. If you care to look at some of the nitty gritty detail, here’s an example issue filed with IOHK: https://github.com/input-output-hk/jormungandr/issues/1470 … and another: https://github.com/input-output-hk/jormungandr/issues/1468 .
  2. Running on non-cloud infrastructure (see comments in item 3);
  3. What mix of cloud/non-cloud provides the best resiliency, while still allowing the community the freedom to maintain the decentralized nature of the Cardano blockchain? Cloud provides economies of scale; ease of use; and helpful redundancies, but there’s a significant amount of decentralization we give up for those usability/efficiency features. Then again, ultimately, network bandwidth is still largely under central control, and probably will be for a long time. Each option has pros and cons, and we’ve been running back and forth on both, trying to figure out the nuances of each for this application…

Staking is now Live in Daedalus!

If you had ADA in Daedalus on 29 November — when IOHK took the second balance snapshot — that ADA is now available to stake on the Cardano testnet. To do so, please go here to download Daedalus and start delegating your stake!

The process is quite easy with Daedalus (much more so than when we were setting up the testnet stake pools and had to manipulate wallets via the command line).

  1. Recover your test ADA into a balance snapshot wallet (a Byron-era wallet) using your 12-word recovery seed phrase. This will show the balance that you had in your wallet(s) on 29 November.
  2. Using a new, 15 word pass phrase, create a new rewards wallet for the Shelley Incentivized Test Net (a Shelley-era wallet).
  3. Once both wallets are created, you should transfer your test ADA from your balance snapshot wallet(s) to your rewards wallet(s). You are now ready to go on the ITN.
  4. Click on the Cardanoish-looking thing on the leftmost navigation pane. See the next picture for reference:
Daedalus Rewards wallet, on the staking screen. StakeHodlers pool (STHDL, # 68) is chosen in this example in which we’re viewing the stake pools screen. The Delegation center shows any wallets that you have on the testnet. After choosing a wallet whose ADA you wish to stake, you’ll be brought here to select a stake pool. There is a small fee (<1 ADA) for delegating stake, but without paying that small fee, you will not be able to participate in the rewards program.

That’s about it. Post a comment below if you have any specific questions or concerns. Happy staking! (I will post a note about Yoroi wallet once that becomes available.)