Cardano Governance Proposes 55.9% Cut to Minimum Pool Fee
The live proposal would lower the minimum fixed fee from 170 ADA to 75 ADA, potentially improving rewards for delegators using small pools.
Cardano governance is considering a 55.9% reduction in the minimum fixed fee that stake pools can declare, a change that could improve rewards for delegators using small pools.
The live proposal would lower the Cardano protocol parameter minPoolCost from 170 ADA to 75 ADA. It was submitted Sept. 11 at 4:27 p.m. ET (20:27 UTC) and is scheduled to expire Oct. 11.
DReps and the Constitutional Committee would decide the standalone protocol-parameter change. Stake pool operators would not vote on it.
“This proposal recommends lowering the Cardano protocol parameter minPoolCost from 170 ADA to 75 ADA,” Cerkoryn, the proposal’s author, wrote.
The fixed cost is deducted from a pool’s gross rewards before the remainder is distributed to delegators. Because the charge is the same regardless of pool size, it takes a larger share of rewards from pools that produce fewer blocks.
Lowering the protocol floor could make smaller pools more competitive, but it would not require operators to reduce their fees. Pools could continue charging 170 ADA or more, so delegators would benefit only when individual operators adopt the lower charge.
An earlier proposal paired the same fee reduction with an increase to a Plutus memory limit. It expired Sept. 1 after receiving support from 34.5% of stake-pool stake, below the required 51% threshold.
Cardano’s minimum fixed cost fell from 340 ADA to 170 ADA on Oct. 27, 2023. Even 178 epochs later, 64% of productive pools still declared the former 340 ADA fee.
Among sub-reliable pools holding 1 million to 3 million ADA, 117 of 219 continued to declare 340 ADA. About 91% of those pools were classified as single-pool operators.
Among sub-reliable pools holding 1 million to 3 million ADA, a 170 ADA fee absorbs about 27% of pool rewards, while a 340 ADA fee absorbs about 54%. By comparison, 733 productive pools with at least 3 million ADA held 21.18 billion ADA, or 97.4% of the analyzed staked supply.
The proposal is presented as an interim step while Cardano considers longer-term changes involving a proportional minimum margin. Transaction fees supplied less than 1% of staking rewards over the 73-epoch period examined.
The proposal remains live and is scheduled to expire Oct. 11.
