Choosing a Stake Pool from a Protocol Standpoint

I have shared with you before the Off-Protocols Considerations you need to take in choosing a Stake Pool. Now, I’ll be guiding you guys to successfully choose a stake pool that you want from a Protocol Standpoint.

There are plenty of stake pools available in the network. Just by thinking about which one to choose is so draining but you don’t want to stake your ADA to a pool that isn’t performing well or to a suspicious pool. Do you?

Here are the things you should consider:

1. Pool Margin

For those who have been staking for quite a long time now, I’m assuming you already know what this means. To put it simply, each pool gets rewards when it’s able to mint a block every after epoch. Lets say for example the amount of total rewards is 2000 ADA. Now this 2000 ADA rewards is deducted by the general fixed cost amounting to 340 ADA. This fixed cost is the minimum amount set up by the Cardano community to finance the pool in the long run.

Now you’re left with 1,660 ADA and it is then deducted by the Margin Pool/Variable Fee before distributing it to the delegators. This fee is set by the pool operators as a way of compensation from running the pool. Looking into or, you will see a lot of pools with their corresponding margin % ranging from 0-100.

It is important to note that 0% Margin Pool is very suspicious and it is recommended to not stake your ADA with pools having 0%. On the other hand, you shouldn’t also stake your ADA to a pool with 100% Margin Pool. This means that 100% of the rewards after deducting the fixed cost goes to the pool operators leaving you with nothing. I recommend staking to a pool with 2 to 5% Margin pool or in other words, I recommend you to stake your ADA with BBHMM.

2. Saturation Point

Recently, the K level was changed to 500 from 150. What these numbers represent is the number of stake pools that will get a reward in each epoch. What makes these number so important is that when it was 150, the saturation level was over a 100M. With the recent change, the current saturation level now is at 64M. This means that stake pools with over 64 Million Ada in it will get less rewards.

So you might want to stake your ADA with a smaller pool not only to earn more rewards but also to promote decentralization.

3. Pool Pledge

Pool Pledge is the amount contributed/delegated by the Stake Pool Operators to their own pool. Why this is important is because stake pools with greater pledge amount have higher chance of earning more rewards. Who doesn’t want to earn more right?

4. Rank

Personally, rank isn’t that much of a big deal. You can see the ranking of the pools when you check on, or any other sites. Why this is not so important for me is because staking your ADA to a pool containing an amount over the saturation point does not promote decentralization. If the network becomes centralized, the value of the network goes down.

You should definitely consider staking your ADA to smaller pools. That way, you are not only promoting decentralization but your ADA also has a higher chance to grow along with the pool.

5. Blocks per Epoch

Pools that are able to mint blocks per epoch are pools that are performing well. A pool will earn rewards when it’s able to mint a block after an epoch which is then distributed to the delegators. Take note that the number of blocks minted each epoch isn’t constant, which means that if this certain pool was able to mint a block for the last epoch, it does not guarantee that it will be the same for the next.

That’s basically it. We would appreciate it a lot if you would consider staking with us – BBHMM Stake Pool.

Additional information about our pool:

BBHMM belongs to the Cardano Single Pool Alliance. The alliance’s primary goal is to promote True Decentralization for the Cardano blockchain.

Each member of the alliance has unselfishly decided to forego the potential profit of running a second stake pool in the hope of making Cardano one of the most resilient blockchain against any colluding or coordinated malicious attack from national governments, hackers, or the creator of the protocol.

Each member strives to make his/her single pool profitable. However, when a respective stake pool reaches saturation, its stake pool’s operator channels help another SPA pool to reach saturation.


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