Focus Group - SPOs - 26th March 2025
Data Points
Key Learnings
🏗️ Infrastructure & Operations Challenges
Infrastructure costs are a constant challenge, especially for smaller/new SPOs.
Delegation is sticky; it’s hard for new or small pools to attract and maintain delegators.
ISPO mechanisms can distort delegation and harm network sustainability.
Cloud reliance is high — 90%+ of nodes run on cloud services, creating centralization risks.
🗣️ Communication & Community
Need for improved communication between SPOs and IO/engineering teams.
More consistent updates and clearer communication channels desired.
⚖️ Protocol Parameters & Incentives
The minimum pool cost disproportionately penalizes smaller pools.
Suggested dynamic adjustment of minimum pool cost linked to ADA price.
Support for community voting on both minimum pool cost and minimum margin.
Concerns about the “race to the bottom” in fees and its impact on network health and geographic stake distribution.
Multiple protocol parameters flagged for adjustment: min pool cost, min margin, K parameter, tau, and rho.
🏛️ Decentralization & Resilience
Cloud concentration is a major decentralization risk.
Additional infrastructure needed for dApp processing to avoid central points of failure.
Alternative Cardano node implementations are in development but years away from maturity.
Multiple node versions increase attack surface — rigorous testing is essential.
Potential risks of combining Midnight and Cardano nodes on the same hardware need careful management.
🕸️ Stake Handling
Retired pools can create inefficiencies and challenges for chain density and stake management.
Automating reassignment of stake from retired pools is legally and technically complex.
Ideas like staking baskets or delegation tools could help improve stake distribution.
💼 Business Opportunities for SPOs
Running infrastructure for sidechains (Hydra heads, Midgard validators, Midnight nodes).
Exploring partnerships with new projects and DeFi initiatives (BTC bridge, Encoins privacy tech).
Transaction prioritization services could become an additional revenue stream.
SPOs well-positioned to provide critical infrastructure services beyond standard block production.
⚙️ Technical Improvements
More flexibility and transparency needed in node versioning/testing.
Discussion of running real-time optimized Linux distributions.
Concerns about bugs in the networking layer — importance of community contributions in testing and reporting.
💰 Payment Infrastructure
Direct fiat on-ramps would improve user experience and encourage network use.
Increasing transaction volume (e.g. via BTC bridge) seen as a way to sustainably increase rewards.
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