What Makes a Good Cardano Stake Pool?

What makes one better than the other if you have two stake pools to choose from? In the section below, we’ll get into more detail about how to pick the best stake pool and other aspects to consider.

Highest Node Uptime

Basically, if the stake pool’s nodes aren’t always online and a block can't be minted, you could miss out on rewards. Check out a pool’s “luck” metric to see what their server uptime looks like. If it’s below 100% (say 95%), then this could be an indication that the pool isn’t running optimally and is at risk of missing blocks. Remember, this is an average over time, so new pools will have pretty dramatic numbers here. However, if a stake pool mints all its assigned blocks, it will eventually average 100% over the long term.

Competitive Fees

A stake pool has two types of fees: fixed costs and margin. Most pools charge a 340 ADA fixed cost and a 0-10% margin. You want to choose the pool with the most competitive fees for what they are offering. Most of the plain vanilla stake pools charge approximately 2%. However, some pools might provide additional services and can charge up to a 10% margin. Pools will sometimes use extremely low margins to attract delegators, but just keep your eye on the fees as you go, as they might increase them without letting you know. We’ll get into more detail on how to choose the best stake pool in Cardano section further down.

Oversaturation

Currently, the peak saturation is 64 million ADA in order to foster decentralization, mitigate stakers from only staking to popular stake pool operators, and encourage delegators to stake with other stake pools. Once a pool is oversaturated, returns start to decline. Pools just under the peak saturation rate generate the highest returns.

Single Stake Pool Operators

Operating stake pools can be pretty big business, and many stake pool operators are openly or secretly operating multiple stake pools. But the most secure blockchain has a large diversity of stake pools. This is why Cardano promotes single-stake pool operation and dissuades large corporations from operating multiple pools. Basically, the goal of a truly decentralized blockchain network is to prevent a single point of failure that could potentially shut down the entire system. This is why single-stake pools are favored. There’s nothing wrong with multiple stake pool operators, just as long as it’s within reason.