Community and stake pool reactions to the Shelley Incentivized Testnet

The Incentivized Testnet (ITN) has been running since mid-December, and the results have produced some fascinating insights into stake pools and a steep learning curve for the blockchain engineers at IOHK, as well as the companies and individuals setting up stake pools, and ada owners. The strategy of using a fast development team writing in the Rust language to act as pathfinders for the heavyweight Haskell developers looks to be paying off. IOHK now has an enormous amount of information about the use — and misuse — of the protocol to take to the next stage: the Haskell testnet. Alongside that, the Cardano community has shown what it is capable of — supporting, experimenting, and providing solid feedback throughout.

Before the ITN went live on December 13, 158 stake pools had registered with the Cardano Foundation and were setting themselves up. Yet, within three days, the number of pools had shot up to 325. By the end of January, the total was well past the 600 mark. There had been some scepticism when IOHK chief Charles Hoskinson talked of 1,000 stake pools last year, but we’re well on the way to that total.

As Scott Darby’s world of stake pools animation shows, the nodes are spread from Brazil to South Africa and Australia; from Japan and China to San Francisco via Europe — and, with nodes in Bodø and Fauske in Norway, we’re even in the Arctic Circle.

Many from the crypto press remarked on the fast results: CryptoSlate pointed out that the testnet had 10 times more pools than Eos or Tron within a week. NewsBTC summed it up with the headline: ‘Cardano testnet success shows how decentralization should work.’ The headlines, of course, don’t tell the whole story, and there were plenty of bumps in the road. But it’s going well, and we’ve received positive feedback about the improvements made to date (with more to come). That said, the network’s success isn’t just about what we do: it’s about the work of stake pool operators. Here, we take a look at the stake pools bringing this decentralized network to life, and explore the business of running a stake pool.

Stake pool tools

Thanks to the efforts of the Cardano community, anyone can delve into the workings of the system and explore what is happening. AdaPools, run by the Cardanians group alongside its pool, has a dashboard based on data from IOHK’s GitHub registry with tools such as a mapping of decentralization, notifications of saturation, and a test for whether a pool is forked and off the main blockchain. Cardano Pool Tool run by StakeLove is based around a table that can rank staking providers by 16 measures, from pool name to ada staked to return on investment.

The information shown in these tools comes from the blockchain data. Beyond that, the decentralized nature of the blockchain means we cannot know the identity of stake pool operators until they reveal themselves through their pool’s website or social media. So, the biggest pool early on, with 737m ada staked — twice as much as any of the IOHK pools — had ZZZ as its ticker but, initially, its name was simply its identity extracted from the blockchain. ZZZ soon split itself into several pools and revealed its name as TripleZ, based in Japan.

People staking their ada may prefer to know more about who’s running their pool, but they might not. This is one of the things that IOHK — and ada holders because Cardano is going to become their network once it’s decentralized — will get a feel for from the ITN. There are various forums where all this is being discussed, such as on Telegram and the Cardano forums. It’s been fascinating to see the debate inspired by the testnet, much of which reflects debates within IOHK about how best to build a community-driven, decentralized network and the role that incentives should play. The balance between community contribution and personal profit motive has been discussed at length. So, too, has how much the community should police itself. This is new territory, and, through the community, we’re able to test our assumptions about how blockchain social dynamics play out, and to what extent the protocol should be responsible for preventing adversarial behavior.

Community and operator reactions

Alongside the technical learnings, gathering community feedback and input has been an essential part of the Incentivized Testnet, to help us on the journey to deploying Shelley on the mainnet. Even before stake pools had set up their nodes to join the testnet, users began to provide feedback and have their say. Max, a Cardano ambassador, ran three ‘What the pool?’ interviews in the run-up to the testnet launch on his Gerolamo blog, and has since added a fourth. The Cardano Effect also interviewed four operators. Another website, Stake Pool Showcase, asked five standard questions and encourages pool owners to sign up and make their case:

• Who operates the pool?
• What is your history with the Cardano project?
• What is the setup of your pool?
• What are your plans for the future of your pool?
• Why should people delegate to your pool?
  

The answers demonstrate a range of operators. In terms of size of stake, the nine listed by February ranged from 1 ada to 50 million ada. Eight of the pools were run by one or two people who worked in computing and most dated their involvement with Cardano back to 2017. Three did not give their names, one stating: ‘The pool is run in an anonymous fashion, in order to make it impossible to influence me. This is part of the security, to make it much harder to attack the pool.’ They were in places such as France, Honolulu, London, Manchester, and Norway.

As well as giving information about their experience, most listed their hardware set-up and seemed to know what to expect from a testnet: ‘Of course, within the testnet the pool can only run as stable as the software stability allows, but I will do my best — and, moving forward, code stability will improve for sure.’ Another said: ‘We have been tinkering with the settings all the time and have achieved very good uptime in the last few epochs — after a lot of lost sleep.’

One operator was sensitive to the power expenditure of running cryptocurrencies: ‘Overall, I am very pleased I still only draw 35-45 watts in day-to-day operations, so it's eco-friendly.’ A second was running a backup server on a Rock Pi single board computer, which uses as little as 10W, as demonstrated at last year’s IOHK Summit. Looking beyond the testnet, another pool operator raised the challenge of governance in the Voltaire era of development and saw smart contracts as the way forward: ‘We have Marlowe for a financial DSL [domain-specific language], why not a legal DSL to help with governance issues?’

The Cardano Shelley Testnet & StakePool Best Practice Workgroup on Telegram received several mentions as the place for operators to go for tips.

All in all, as Kyle Solomon at AdaFrog told this blog: ‘Being a stake pool operator has been both a highly challenging and amazingly fulfilling journey. The most important takeaways I’ve learned as a pool operator are: first, that the protocol is very close to a production quality that achieves IOHK’s original goals for Cardano; and second that the Cardano community is utterly and hands-down amazing. Even though we compete amongst each other, every pool operator is eager to help one another.’

The next post in this three-part series will delve deeper into the experiences of the stake pools and what’s been learnt.

As with everything IOHK does, we cannot give advice on how you use your ada and we’re not recommending any of these pools. As always, though, please keep getting in touch and let us know your thoughts.