INITIAL POOL STAKE OFFERINGS IN CARDANO: Maladex
This article is a subsection of a larger article “INITIAL POOL STAKE OFFERING IN CARDANO: a critical overview”
- This is not financial advice. I have no training whatsoever in the finance sector and I am in no way or capacity a licensed financial advisor.
- I recently became an ambassador for Flickto, which is also running an ISPO.
Maladex — reviewed by Maxpwr
Ladies and gentlemen, the crown jewel of the unique approaches. The timeline on the start of this ISPO is fuzzy, but I recall that Maladex decided to reward early delegators to their pools, even before the official launch of the ISPO. Unquestionably generous. Despite the complicated formula, the reward calculator failed to accommodate the fast growth of stake delegated to the pool, leading to very low reward rates for E296–300. The rates had to be manually brushed up (the 5x increase), partly based on data provided by some.ONE. who alerted the team to the outflowing stake owing to the unexpected low rewards. No big deal, as the team was sensible and acted swiftly to reassure the delegators that rewards would be tweaked. However, it shows the importance of having a working reward calculator from the start, so that there aren’t any bad surprises.
Maladex used a crafty method to reduce the impact of whales on token distribution, promoting a lottery worth 10% of the airdrop per epoch — one 5% prize and five 1% prizes per pool per epoch. It may not seem like it, but these prizes are huge! To qualify you need to stake more than 1000 ADA. Five percent of the tokens distributed per epoch in each pool go to one person! That’s huuuuge! They diluted the power of the existing whales by creating random new whales and baby whales. It’s a very interesting approach and I am curious to see how token distribution compares to other ISPO’s. With 6 people winning per epoch, an average of 2000 wallets per pool and an expected duration of 54 epochs for the ISPO, only about 15% of the delegators will win a prize (if I didn’t screw up anything here). It’s hard to judge what is the real effect of the lottery without running simulations or looking at the distribution of tokens in the delegator population. A decidedly negative and foreseeable aspect was the division of the stake in multiple wallets with 1,000 ADA to farm the lottery.
Unlike other ISPO’s, Maladex did not distribute tokens through the total stake accumulated in the pools, obviously distinguishing 5% and 99% pools, but opted to airdrop tokens per pool. This was done to motivate delegators for moving to less saturated pools and counter oversaturation, it was very effective and as you can see in Fig. 6, also very rewarding. The large fluctuation in the reward rates is due to the movement of stake to unsaturated pools as they opened. In practical terms it helps to even out the saturation among the pools, but it comes at the cost of rewarding delegations unevenly. An acceptable loss to reward those who actively manage their stakes? Perhaps.
Most of the information was easily available, and as soon as the calculator was up it ran like clockwork. Rewards broken down per epoch and showing the stake counted at the delegation snapshot.
It took over six months of closely following ISPO’s to put this together and ultimately for the benefit of the whole Cardano community. Please contribute. Funds raised will be used to buy an engagement ring. Wish me luck!