Pools of the Cardano network are the central part of the blockchain due to the speed of information distribution through the network, transaction processing, and because the stability of newly created blocks depends on them. Unlike other POS-based blockchains, Cardano pools have their own personality.
Many pool owners are interested in more than just getting rewards or supporting decentralization. Some SPOs donate part of their profit to charity, and some create and develop projects that enrich the ecosystem. It's vital to support small pools that make the ecosystem and the world a better place.
The low stake is a key problem for small pools as this is resulting in blocks not getting assigned to them. As a result, the pool operator spends money on maintaining servers without having any profit. Delegators who want to support the pool's mission that have also delegated to it, deprive themselves of rewards for an indefinite period until the pool gains a sufficient amount of stake. This situation is an unambiguous Lose-Lose.
We offer a Win-Win solution to this problem which will allow small pools to survive until they reach a critical mass of stake to mint blocks on every epoch. At the same time, delegators will not deprive themselves of delegation rewards and, at the same time, will be able to support pools they like.
We call this solution "Pool Boost." Furthermore, it will actively use the ADAPlus functionality for mass payments. The idea for the mass payments solution won funding in Catalyst Fund6.
ADAPlus will create "transshipment" pools, the purpose of which is to regularly distribute 100% of its profits to wallets of small SPOs registered in the Pool Boost service. Anticipating criticism of the creation of multipools, we will clarify it below, but let's describe the principle of the service first.
SPOs can participate in the Pool Boost service if they fulfill definite criteria:
SPOs can fill out their profile by describing their mission and the pool's benefits to the world or the Cardano ecosystem. This information is publicly available on the website. Visitors can register without filling in any personal or contact information and enter the service using their staking key. As soon as their wallet is delegated to a "transshipment" Pool Boost pool, delegators will be able to vote on the site with the power of their wallet for one or more pools they like. These votes are counted at the epoch change. All transshipment pool rewards are automatically distributed to SPOs' wallets with the pledge by percentage votes received. Thus, small pools receive financial support while maintaining decentralization and network operation but do not mint any blocks. Delegators receive rewards regularly and understand that they are supporting the SPO.
Then, the most exciting thing happens. As soon as the Pool Boost service has delegators who voted for three epochs in a row for the same pool and the summary amount of their vote is sufficient for the pool to start making blocks regularly - we ask them to re-delegate their wallets directly to that pool. If delegators confirm redelegation and, in fact, make it, then subsequent awards, instead of payments to the pool, will be divided among the delegators who have fulfilled their promise. Delegators receive additional rewards for three additional epochs for staying and continuing to support the pool directly. It motivates delegators to directly maintain the selected pool further.
Yes, these are multipools, but there are two things to keep in mind. First, 100% of profits will be put solely towards supporting small SPOs and motivating delegators to re-delegate when the time comes and to start supporting pools directly. Secondly, Pool Boost pools are just a transit point that helps the pools and their delegators not to miss rewards. For example, several delegators with a total amount of 100k stake will, in fact, not help anyone because the probability of a block is too small. The SPO continues to work with expenses only, and delegators do not receive any rewards that they would receive in pools with a sufficient saturation. We will create an additional pool only if the existing pool reaches a level of full saturation that can negatively affect the delegators' rewards and the profit to support SPOs.
We provide maximum transparency and keep voting results in the blockchain. Each user will have their unique random identifier in the system, which only they know. After the epochs change, all votes are posted to the blockchain in a transaction's metadata. The metadata will contain the distribution of votes by delegators, listed by their unique IDs. Thus, the anonymity of the votes is ensured, and there is no explicit connection between the vote and the stake key.
At the same time, SPOs cannot poach delegators directly and do not take offense at delegators who may change their priorities to support other pools. Each delegator can check the history of his votes on the blockchain. Nobody can alter reports once they are stored on the blockchain. We are creating the so-called Proof of Existence, which you can familiarize yourself with on our other working project: CardanoWall.com.
All profit from Pool Boost pools is distributed to support the participating SPOs and their delegators. We are not building Pool Boost for commercial purposes. Instead, our goal is to help small pools maintain operations by attracting delegators, ensuring a source of income that will allow them to cover the cost of servers. Thus, SPOs start fulfilling their mission without waiting for a critical mass of stake to accumulate.
The idea described above will generate income for SPOs, with which they can immediately start fulfilling their promises. For example, suppose users vote for a mission-driven pool that declares that it wants to help an orphanage financially. In that case, an SPO can fulfill its promise and create Proof of Existence / Proof of Donation through the CardanoWall service. CardanoWall allows SPOs to upload media materials and create Proof of Existence of any files that may contain confirmation of the provided support. Mission-driven pools that regularly reaffirm their mission will receive more trust and support from delegators. If mission-driven pools do not provide evidence for a month, the Mission-Driven flag will be removed from their profiles.
If a pool changes its parameters, which do not fit our criteria, it is automatically dropped from the list of participating pools. The same happens if the pool has accumulated enough stake by itself or has received support from CF or IOG. The power of delegators' votes for this pool will be distributed to the remaining pools. We will also ask delegators that were actively supporting the SPO with enough stake to re-delegate directly. If the pool meets the criteria again, for example, after the end of support from CF or IOG, it can again become a listed member of the Pool Boost.
Because, in that case, delegators would have to pay fees for such transactions. Complicating the voting process demotivates delegators. Voting through the site counts their vote instantly. Delegators can change their vote in one click or even distribute their votes to support several pools simultaneously. For transparency and accuracy, only reports on the distribution of votes at the end of the epoch are necessary. Reports will be posted in the blockchain when a new epoch starts.
To fulfill the same criteria that we ask SPOs: 5000 ADA pledge and 2% fee.
After the launch, we plan to start working on governance, where participants can vote for new ideas and changes. We technically control the Pool Boost servers, but they serve the community and support small SPOs. Governance will work the same way as delegators' votes. All votes are received centrally, but will all be stored on the blockchain for transparency and fairness after voting ends.
Unlike our other "ADAPlus - Pool Market" project, there is no commercial goal here. As mentioned above, all income is distributed to support SPOs to grow into pools that regularly mint blocks every epoch. The funds received from Catalyst will be spent on the development and maintenance of the platform, server equipment for the site and pools, the initial pledge, and staking in Pool Boost pools. Thus, even funds from Catalyst, while development is in progress, will be making profits that will be distributed to support small SPOs.