Delegating to decentralize and build value

In November, we announced our intent to support our corporate mission and encourage network decentralization through a new delegation approach. But to summarize, starting January, we’ll be delegating a proportion of our ada holdings across a range of community stake pools. Our goal? To support positive social change and continue building a more robust, resilient, and geographically distributed Cardano network.

Today, we’re delighted to take the first step in delivering on this strategy by opening our first call for applications. From today, we’re inviting eligible stake pool operators (SPOs) to consider applying. This is an evolving program, and we will refine it over the year ahead. But initially we are encouraging SPOs to gauge their eligibility for a delegation award based on these criteria:

1. IOG will run two programs: one for ‘Incubator’ pools and another for ‘Purpose’ pools.

Incubator pools will be selected based on more ‘technocratic’ criteria. We’ll focus on pools that are performant and competently run by skilled operators who have invested a decent amount of pledge (or invested heavily in the ecosystem) but have struggled to attract delegation. Again, these are guidelines rather than hard rules; we’ll also look positively upon lower pledge pools with clear technological skill sets that contribute to the ecosystem.

Purpose pools will be selected according to the mission and purpose driving them. We will delegate to pools driving positive change by offering educational opportunities, supporting a charitable endeavor, committed to sustainable eco-friendly energy, etc. Or they might be driven by the desire to increase awareness and adoption of Cardano by hosting a stake pool centered on a developing country, holding blockchain meetups, creating non-English language Cardano/developer content, and many other options. Ultimately, it is up to each pool to state the positive change they want to make and how delegation can help them achieve that goal.

2. IOG will select up to 100 stake pools each quarter and delegate between 3 and 4 million ada to each pool. There will be 4 cohorts/selection processes per year (one every 3 months)
3. While we will not discount larger, more established operations, we will prioritize smaller pools (less than 5M ada/with low saturation) for the Purpose pools.
4. We will monitor the block production rate across any pools we delegate to. We want to support skilled SPOs that are committed to deliver on the task their delegators have entrusted to them.
5. We will show a strong preference to SPOs that run single pools. Any operator running multiple pools will need to demonstrate how they are adding community value by doing so. Failure to declare multiple pools at application will result in ineligibility to receive delegation.
6. We will aim to delegate to a variety of new stake pools each quarter. We are focused on encouraging success and autonomy, and we will change our delegation when we are confident that the pool can continue to operate successfully without our support, or a quarter has passed. Unless exceptional circumstances arise, no pool will receive delegation for longer than 6 months.
7. We will delegate on the basis of trust. We look for the same from SPOs and expect them to be transparent in all their dealings and how they represent themselves. We reserve the right to withdraw delegation without notice from any SPO making false or inaccurate claims about their eligibility for delegation. We will look for SPOs that are transparent with their costs and charge appropriately for them. In the short term, you may be prepared to invest your time and energy ‘for free’ (or at an effective loss, after hosting costs), but remember that this is not a sustainable model for the network over the medium and longer term. You are a pillar of Cardano and so you have every right to be compensated by the community.

8. We will seek community feedback as we develop the process to help us both refine program mechanics and the choices we make. Community members are welcome to raise any particular concerns about delegation choices. However IOG reserves the right to make delegations in line with its ongoing decentralization strategy and changes to the program can be made at any time.

Building a decentralized, empowered, self-sustaining and self-governing ecosystem lies at the heart of our mission for Cardano. If 2020 was about laying the foundations of Shelley, 2021 will be about building upon that success through community opportunity and empowerment. Ultimately, our success is down to community and the protocol. But with this new delegation strategy, we hope to play a small but important role in helping to establish the stake pool ecosystem as a blockchain network unlike any other. Power pushed to the edges, skilled and empowered to support and accelerate all the exciting opportunities the future will bring.

We encourage any SPO who feels they meet the above criteria and would like to apply to do so through this form. We’ll also reach out directly to a number of pools we have already identified as strong candidates (based on their community contribution during 2020) and encourage them to apply. We’ll keep the application form open until the end of this year and review applications in early January, with a goal to make the first delegations by the end of January.