The calculator shows how much reward can be expected for Pools with different parameters and different settings of the Cardano network. The calculator also estimates how much variability in the return can be expected by running a Monte Carlo simulation.
The calculator uses Monte Carlos simulations to create a distribution of possible reward outcomes. The number of Monte Carlo simulations is currently set at 500. This is a reasonable balance that I found between accuracy and speed of execution. From a strictly scientific method this is quite a low number of simulations and something in the range of 10,000 is probably more appropriate. For this reason you will see that the Expected Reward (in Section 5) can deviate from the Average Simulated Reward (in Section 6).
Monte Carlo simulation assumes that there will be the same amount of reward to distribute across all pools throughout the year. For this to happen the fees from transactions need to increase substantially.
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Key metrics of a Pool. Solved by applying the Reward formula and then extrapolating it to an annual return. No simulation is done at this step. The Annual pool reward can vary significantly for smaller pools. See next section 6
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|5.6||Annualized Pool Reward||0.00%|
Monte Carlo simulation run on the pool's economics by randomly generating 500 scenarios and computing the Average and the different percentiles of those scenarios.
This is useful to judge the expected return of a Pool and what type of variability can be expected due to luck. The range between 90th and 10th percentiles indicates that you have an 80% chance of the yearly return falling between those ranges.
|Metric||Pool Operator's Return||Delegator's Return||Total Pool Return|
Table below shows the last Monte Carlo Simulation over 1 year (73 epochs). This table illustrates the type of calculation that goes into each of the 500 simulations. Tick the checkbox to see the detail.
Comparison of the reward distribution for pools that you have tried. Wider bars mean that there is more room for luck to get a high reward, or a low reward - this is normally the case for pools with a smaller stake. Narrower bars indicate more certainty in the amount of the reward that the pool will generate. Note that this assumes that the pool is set-up correctly and will produce blocks in ALL its allocated slots.
Try different pool ids in Section 0 for this analysis to populate
|Pool Ticker||Simulated Reward Distribution|
Staking rewards for delegators and stake pool operators come from two sources:
A fixed percentage (ρ = 0.3%) of the remaining ada reserves is added to that pot. (fields 1.10 and 2.2). Reserve is the difference between the ADA max supply of 45bn and current supply, which is constantly increasing. (fields 1.6 and 1.7)
The following formula outlines how the rewards mechanism works. The available rewards amount, transaction fees, plus monetary expansion, is denoted by R. First, the share of all available rewards that a specific pool can receive is determined, as follows:
Note that z0, σ and s are all relative, so they are fractions of the total supply, as they all lie between zero and one.
During each epoch, rewards are distributed amongst all stakeholders who have delegated to a stake pool, either to their own stake pool, or another pool. These rewards are auto-generated by the protocol itself, and are not managed by the stake pool operators. Rewards come from two sources:
The rewards that are produced by this formula are are adjusted by pool performance: We multiply by β/σ, where β is the fraction of all blocks produced by the pool during the epoch.
For a perfectly performing pool, one that produces all blocks that it can produce, this factor will be one, on average. The actual value will fluctuate due to the stochastic nature, or random process of the Ouroboros Praos consensus algorithm.
After pool rewards have been calculated and adjusted for pool performance, they are distributed amongst the pool operator and the pool members, or people who delegated part, or all of their stake, to the pool. This happens in 3 steps:
Disclaimer: this is a prototype and is based on our interpretation of how the Cardano monetary policy and the Reward calculation works to date. No guarantees are given to the accuracy of the predictions