Stakepool governance & Incubation

Build software for stakepool governance enabling evolution into Decentralised Stakepool Organisations that add purpose and value for Cardano

4 Devs, and others from KOALA pool, currently planning and team building. Additional proposals from catalyst fund 1 looking to unite.

WHY?

If the aim is to replace the economic systems of nation states, Cardano will need many campaigners and ambassadors – people who are invested ideologically, not just financially. We aim to broaden and deepen Cardano's ideological investment by empowering stakeholders to model pools after the future they want to create.

Cardano Stakepools are full of intelligent people with useful skills, that often care deeply about Cardano and are motivated to get involved, but don't see an easy way to do so in terms of developing the ecosystem. In my stakepool alone, of the first 10 people to join the telegram chat, three were developers offering to help and wanting to get involved. In the first week of the Catalyst program having put up this idea, I have attracted two more developers from the catalyst program as stakers to my pool as they too want to get involved with a pool that does something more.

If we create the tools for stakepool delegators to organise and leverage their collective intelligence, participating stakepools can evolve and self-incubate ideas. They can pool their own reward funds to invest in ideas and create pools that are more meaningful to them, rather than just somewhere to stake their ADA and earn rewards.

Having a diversity of Stakepools will help to distribute stake as it gravitates towards ideas people connect with. Right now, there is little but personalities (and soon performance metrics) to differentiate pools. There are some pools, like mine, that intend to give to charity or build dApps, but with little engagement from their stakers. It is also currently not feasible to verify that the charity spend will actually happen. However, if a pool wallet controlled by a delegator vote can be created, it would be possible for the delegators to decide when and how the charity wallet is spent.

I would like to see decentralisation all the way down – into the stakepools. Currently POS crypto ecosystems are built on stakepools that only serve as the base utility, but they can be so much more! In my opinion, if you assume that one day the world financial system will run on decentralised blockchain technology, the evolution of stakepools into such phenomena is inevitable. This idea highlights that and pushes it along faster.

Stakepools would be empowered to build all manner of services and evolve their own "poolonomics". For example, a pool may specialise as an investment focused pool. Which probably pays a higher pool tax % into pool wallets or smart contracts that funds long term investments in crypto, stocks, and physical world assets or tokenized versions. Maybe it employs a market analyst or a trade algorithm specialist. Maybe it has a trading wallet and stakers within the pool submit trade ideas in the form of smart contracts. An internal vote would occur, and a smart contract trade executed.

Another pool may use treasury funds to develop profitable companies that run on Cardano and return a royalty to the pool.

Another pool may evolve by artists who use their pool to advertise their works, maybe run a virtual gallery containing and selling NFT artworks.

Others may build an internal voting system and combine with other pools with specialist knowledge to form a human backed oracle service.

There are endless possibilities.

HOW?

To begin, there will need to be a minimal set of tools created for internal pool decision making and funds management. And additionally to create pool-roles (paid or unpaid). Along with a pool-plan/white-paper/meta data.

To start with, some simple additions to the Voltaire system such that votes can be instigated by the stakepool operator or stakers such that pool taxes can be collected into a pool treasury, roles within the pool can be created and filled, policies or a plan of action can be agreed on. Such as pool promotion, services, charity spend, etc.

I would also like to see DIDs be an option for use in identifying pool members as single individuals for votes and other poolonomic services.

It is important to keep in mind that stakepools are the backbone of the Cardano protocol, and changes at this level could have unforeseen consequences on the system. Therefore, we propose a creating a number of experimental pools.

An initial roadmap:

In the near future the idea will be made public along with offering KOALA pool and a few others to be DSO experiment pools. If these pools are successful in attracting stakers then a clear desire by the community to pursue this will be demonstrated.

If the idea proves appealing some funding will be sort from fund 2 to scope out the the initial software requirements, consider possible consequences, and facilitate pool members to collectively organise and incubate ideas. It may make sense to utilise ideascale for DSO incubation, with an alteration to allow for pool based groups and voting power being related to amount of stake in that particular pool.

Based on the fund 2 scoping work and pool based proposals/ideas from the individual experimental pools, a base set of on-chain software tools will be identified and agreed upon. Further funding would then be sort to build and roll-out such tools to the experimental DSOs.

This would then be followed by a period of assessment and refinement both in terms of the success of the pools, tools, incubation, and effects on the main chain.

OTHER THOUGHTS

If this proves successful, alongside the current ideascape process a pool based option would be available for operators or groups willing to participate. This could also create a market for stakepool operators to service a group/organisation with a pool based idea.

It is my current expectation that the initial tools required to get started will be relatively easy addition to the Voltaire system, with some votes being limited to stakers within these experimental pools. It will also require multisig wallets or smart contracts to allow for decentralised control of funds relatively soon. There will also be a need to include a time-staked-with-pool component to the voting power due to the potential of large late timing stake vote attacks.

It may be wise to conduct this experiment on an additional side chain to replicant-chain?

This could be pursued as a third-party experiment and software, currently have about 6 developers standing by.

I think there would be some danger that this may cause to the Mainnet Cardano chain if this is developed as a third-party solution. But that is unclear at this time.

It is my opinion that this idea will have a significant impact on the fundamental nature of what stakepools will become in the crypto-verse. and if Cardano is the first crypto ecosystem to be able to offer this open involvement to all ADA holders, it will have a significant impact on the popularity and adoption of Cardano.

The DSOs themselves would be able to fund development of some of their pwn poolonomics, etc. from rewards, or volunteered time for status within the DSO, or may also apply for funding from the treasury.

In the longer term I believe stakepools will need a zone of sanctuary where they can be protected from other pool predatory behaviour, such as a large stake attack on a pool with a new idea, in order to destroy the internal voting and consume the idea for themselves. Or similar many small, seemingly disconnected, delegation basically an inter-pool sybil attack. I believe we will need a stakepool incubation sanctuary. Where pools can be helped and outfitted with tools and new tools developed if required by a new idea. Before being released into the ecosystem.

I expect we would see pool alliances and competitors evolve and compete.

Fund 1: Nada, Fund 2: ~200000 ADA for dev scoping, ideascale service?, and some initial coding over 8 weeks.