As a pool operator, KOPI’s responsibility to our delegators is to provide consistent rewards.

KOPI would also like to provide the best bang for buck setup to maximize your rewards.

To do so, KOPI needs to:

• Provide an optimal pledge
• Minimize operating costs to provide low fixed fees
• Set a margin that preserves delegators’ rewards

Let’s address these three points in details:

(1) Pledge

The size of our pledge reflects our commitment to both the stake pool and the Cardano eco-system.

In an ideal world, all the stake pools will have as large a pledge as possible, so that the delegators can receive maximum reward.  This is because the larger the pledge, the larger the rewards, while keeping all other parameters constant.

However, this is impractical due to two points:

• To have a large pledge, the operator must buy the required amount of ADA. Not all operators can afford these purchases. To this end, the Cardano eco-system ends up with fewer small-size operators and more large-scale multi-pool operators. This is unfortunately against the spirit of decentralization and the promotion of small-business operations.
• The marginal increase in rewards tapers off dramatically with increasing pledge. As an example, the  extra rewards generated by a 2m pledge vs a 200k pledge is visible, but not significant.

(2) Fixed Fees

Fixed fees should ideally reflect the operating costs of the stake pool.

Operating costs include the costs of hardware, cloud-hosting, web-hosting, electricity, broadband, etc.

In the interest of delegators, it is the operator’s responsiblity to minimize costs without compromising on performance.

It will be fun for a stake pool to run the fastest CPU, with the fanciest GPU, until you realize these enhancements add substiantial costs and only contribute minimally to pool performance.

Similarly, it will be technically awesome to run a pool with fifteen relays on all six continents, until you realize it comes with both financial costs and computing costs. And again, its contribution to pool performance is minimal.

Remember that Cardano does not require a computing arms race unlike BTC.

The Chinese saying “不管黑猫白猫，捉到老鼠就是好猫” is particularly relevant here. It does not matter if it’s a black cat or a white cat, as long as it catches mice, it is a great cat!

As long as performance is not compromised, KOPI will use the 80-20 rule to minimize our operating costs and maximize your rewards.

(3) Margin