Since it’s inception, the Cardano Foundation (CF) delegation was one of the most anticipated events by stake pool operators. This is for good reason as the CF delegation gives 15 million ADA in delegation for 3 months!
Last week, the CF delegation has been re-distributed to a whole new set of pools. Just how good is this delegation and can it really make a stake pool self-sustainable? Read on to find out:
Is the CF Delegation enough?
A lot of people believe that getting the CF delegation will definitely make any pool self-sustainable. Unfortunately, this is far from the truth. Cardano is currently littered with former CF delegation recipients who are barely able to survive. Getting the CF delegation is not a silver bullet to becoming a successful stake pool operator (SPO). The SPO need to do much more.
Effect of the CF delegation on new pools
While all pools who receive the delegation will benefit financially, not all are able to attract new delegators. I noticed this is especially true for new pools who have not yet established a strong presence in the community. Although not impossible, it is very difficult to establish a commanding online presence within 3 months before the CF delegation moves on.
Is 15 Milliom ADA too much?
The Cardano Foundation has been criticised for delegating too much ADA to a small number of community pools. Critics argue that instead of donating 15M ADA to 50+ pools, they could split the wallets and donate a smaller number of Ada to more pools (e.g. 3M Ada to 250+ pools). While this sounds logical (albeit a lot of work for the people managing the wallets), in practice, I have seen first hand that it is not that effective. While the 3M Ada will almost ensure regular block production, by itself, it is not a big enough factor for delegators to start moving to your pool. 15M on the other hand, gives delegators more confidence to join your pool.
The importance of Marketing
We all know Marketing is important but a lot of CF recipients seem to forget this after getting the delegation. Some recipients rest on their laurels and enjoy the sudden windfall— doing nothing except reap rewards every epoch for 3 months. They do get a lot of ADA rewards but only during the delegation period. With this attitude, it is no surprise that few new delegators join these pools. These few delegators usually leave immediately after the CF delegation leaves.
The sense of urgency
The correct mindset to have if you receive the CF delegation is to hustle and believe that you only have 3 months to convince delegators to join your pool. Hopefully you already have an active online presence and already have things lined up that will make delegators want to join your pool. This can be because of a service you provide, a cause you support or some giveaways that you give. Just take note that these should have real value as delegators will normally not join your pool just to get worthless tokens.
In summary. whether you get the CF delegation or not, you should always market your pool and think of new ways to attract delegators. In this way, you will be in a better position to attract and retain delegators when you get the privilege of receiving the coveted CF delegation. Yes, it is possible for a pool to become self-sustainable after receiving the CF delegation. Just don’t rely on it solely.
As a recipient of both the 3M ADA IOG delegation and the 15M ADA CF delegation, I hope you liked our candid sharing and thoughts about the CF delegation.
On our part, receiving the CF delegation gave WISH Pool a much needed boost. Once the delegation left last week, we increased our pledge to 31k to prove our commitment to Cardano as stake pool operators. Most importantly, we also reduced our margin to 1.9% to ensure all delegators continue to have decent rewards. This is a surprise gift to our loyal delegators who have stuck with us through thick and thin and to new delegators who will be joining us.
WISH Pool is the creator of Cardano SPOT Check, an online resource for Cardano Stake Pool Operators for maintaining their nodes. We are actively helping several Cardano communities and were a recipient of the IOG delegation in 2021 and the Cardano Foundation delegation in 2022. If you like this article, we greatly appreciate if you will delegate your ADA to WISH Pool. You will be earning interest rewards while indirectly helping the lives of disadvantaged children. This is because WISH Pool pledges to give at least 10% of its own profit to educational charities so that successful students can help get their families out of poverty. Let’s help grow the community together!