What is a Fair Reward for Cardano Pool Operators?

We have seen many interesting but also hot debates about the K parameter and its size. It influences many things including the rewards of operators and some people think that it should be increased. Let’s discuss it.

What is the K parameter?

The K parameter determines the desired number of pools in the Cardano ecosystem. The parameter does not define the maximum of pools that can be registered and that can produce blocks. At the time of writing, the K parameter is set to 150 while there are over 1200 registered pools that can hypothetically produce new blocks. In reality, approximately 400 pools succeed in producing at least one block in every epoch. The K parameter sets the so-called saturation point. The saturation point is the maximum number of ADA coins that can be delegated to a pool and at the same time rewards grow with the number of delegated coins. Once a pool exceeds the maximum the reward begins to diminish. Thus, every operator tries to approach the saturation point in order to maximize the reward. There are basically two ways to achieve it. Firstly, the operator might be rich and use its own ADA coins so she does not depend on delegated coins. Secondly, other ADA holders called stake-holders or delegators, decide to delegate their coins to a pool. Usually, a total pool stake (all ADA coins delegated to a single pool)…