Cardano & Lorentum
Cardano Cardano
Lorentum Lorentum
Lorentum Lorentum
I’ve been crunching the numbers on Ouroboros’s block‑time distribution and thinking we could build a precise model for ADA staking returns that includes transaction fees, epoch length, and slashing penalties—care to dive into the figures?
Cardano Cardano
Sure, let me know what numbers you have so far and what assumptions you’re making about fee distribution and slashing. I can plug them into a basic return formula and see how the variance looks.
Lorentum Lorentum
Here are the raw figures I’ve extracted from the latest epoch data and the assumptions I’m using: Epoch length: 5 days, 4 000 000 slots, 20 000 transactions per slot on average, average transaction fee 0.003 ADA. Fee pool per epoch: 20 000 transactions × 4 000 slots × 0.003 ADA = 240 000 ADA. Validator share of fee pool: 15 % of the pool, so 36 000 ADA to validators, of which 70 % goes to stakers, 30 % to rewards. Stake pool commission: 4 % fixed, no bonus. Average active stake per pool: 1 000 000 ADA. Slashing rate: 0.1 % of active stake per epoch for misbehavior. So the gross return per epoch before slashing: (36 000 ADA × 70 %) ÷ 1 000 000 ADA = 0.0252 % per epoch, or 0.126 % per day. After slashing: 0.126 % × (1 – 0.001) = 0.1259 % per day. If we compound daily over a year, the effective annual return is (1 + 0.001259)¹²⁰⁻¹ ≈ 0.155 % net. Variance estimate: with 20 000 transactions per slot and 4 000 slots, standard deviation of fee income ≈ 2 % of the mean per epoch, so the daily return variance is about 0.001 %². Let me know if you want to adjust the commission or slashing parameters.
Cardano Cardano
Those numbers line up with the assumptions, though the 0.1 % slashing per epoch feels a bit low for high‑risk pools. If you bump the commission to, say, 5 % and keep the same fee distribution, the daily return would drop to roughly 0.12 % before slashing. That would reduce the effective annual yield to about 0.15 %—still marginal. If you’re looking to see how sensitive the yield is to slashing, a quick sensitivity test with 0.5 % slashing gives you a 0.075 % annual return. That’s a big hit for a half‑percent increase in penalties. If you want a higher return, you’ll need to either increase the fee share, reduce the pool size, or accept a higher slashing risk. Let me know what you’d like to tweak.
Lorentum Lorentum
I’ll keep the commission at 5 % and cut the fee share to 10 % of the pool—so the validators receive 36 000 ADA × 10 % = 3 600 ADA. That’s 3 600 ADA × 70 % = 2 520 ADA to stakers per epoch. Dividing by 1 000 000 ADA gives 0.252 % per epoch, or 0.126 % per day. After a 0.5 % slashing per epoch the net daily return is 0.125 %—the same as before but now the risk is higher. If we reduce the pool size to 500 000 ADA the daily return rises to 0.252 % before slashing, 0.251 % after slashing, and the annual yield climbs to roughly 0.31 %. That’s the sweet spot where risk and reward balance, mathematically speaking.
Cardano Cardano
Looks solid. The 0.31 % annual return at a 500 k stake is the most efficient point on the curve, assuming the slashing stays at 0.5 %. If the slashing risk rises, the return will drop sharply, so the trade‑off is clear. If you can keep the fee share stable and maybe shave a fraction of the commission, the margin could tighten a bit. Otherwise, this is a reasonable sweet spot. Let me know if you want to simulate different slashing scenarios or add transaction fee variability.