IOHK Will Change Parameter K And Will Improve Decentralization

IOHK will change the Parameter K and therefore it will influence the staking rewards for Cardano users starting from December 6, 2020, and in March 2021 as we are reading in our Cardano ADA news.

The parameter K that IOHK will change will be increased to improve the decentralization and to also force users to switch to smaller staking pools. IOHK marketing and communications Director Tim Harrison presented the roadmap of key points in Cardano’s decentralization. With the launch of Shelley, the Cardano ecosystem moved towards two major milestones in the development which is the introduction of decentralized finance and the transition to a fully decentralized network.

The last milestone is a part of the last era for Cardano, Voltaire. The introduction of the Catalyst project and the sustained reduction of parameter K are the main factors that will move the network towards the goal. However, Harrison presented a change is another factor that is intended to rewards the long-term holders of the coin. IOHK will increase parameter K for the reward system. Once Shelley was deployed on the main net, IOHK started with k=150 limiting the pool size at 210 MM ada. After monitoring the activity on the network in recent months, the decision was made to adjust the parameter.

Harrison pointed out that K is not equal to other parameters in the ADA network since the modification of K requires active user participation. The users that are staking now have to be active and to choose new pools to stake their coins as Harrison explained:

“ (…) we plan to implement the k change in a staged manner. First, we shall move to k=500 at Epoch 234 (21:44 UTC Sunday 6th December 2020). The move to k=500 will give small- to mid-range pools that are currently struggling, an improved opportunity to attract delegation. It will also have the effect of limiting pool size to 64MM ada, which means over 100 of the largest pools will become saturated. You can redelegate at any point between now and the change.”

Based on this, IOHK recommended that ADA delegates choose new pools to stake especially if the group surpassed 64 MM ADA. The recommended period is before or during epoch 223 on December 6. The users can check the level of saturation of the pool with the Daedalus wallet. IOHK’s Director of Marketing and Communication added:

“This mechanism limits the delegation that can be rationally made to any pool and spreads delegated stake more evenly across a larger number of pools.”