Dog Expecting Treat

Realistic Expectations for the Start of Shelley Mainnet (Part 3)

We've just made it through an important event, the end of the first Shelley-era epoch. What does this mean and what's coming up next? Read on to find out!

(8/7/2020) NOTE: Recent news from Input-Output Global has made some of the information in this post obsolete. Please click here for the updated information.

This is the third entry in a series I have titled, “Realistic Expectations for the Start of Shelley Mainnet.” If you haven’t read my former two entries in this series, please check them out so you will understand some important prerequisites to our discussion today.

Alright, so we just recently passed an important milestone in the opening stages of the Shelley mainnet and the ability to stake on the Cardano ecosystem. That event was the first epoch boundary of the new Shelley era. Yes, we are now in the second epoch, which will last a total of five days. What happened at that epoch boundary, and what implications does it have for upcoming events in the timeline of the roll out of mainnet rewards? Throughout the first Shelley epoch (I’ve been calling it epoch 1, but many others have started counting from 0), people have been restoring their old Byron-era wallets in Daedalus or Yoroi and then moving the funds out to brand new Shelley-era wallets that have the added functionality needed for staking. Once funds are moved into those new wallets, then it has been possible to look through the list of available stakepools and to pick one to delegate to. If you had a chance to get that far in the first epoch of Shelley — fantastic! — you are way ahead of the game! If you haven’t yet been able to do so, don’t worry as we’re just at the very beginning stages.

As we passed through the epoch boundary from the first to the second epoch, something very important happened. A snapshot of the stake distribution for the various pools was taken. This snapshot will be used at the beginning of the next epoch (epoch 3, by my counting) in order to proportionately award slot leadership positions to pools that will then start sharing in the process of forging blocks. As I mentioned in the first part of this series, stakepools will not make blocks for the first two epochs of the Shelley-era. Further, as mentioned in part two, the hand-off of block production can be likened to a relay race in which the Byron-era nodes slowly transfer the “baton” of block-production to the stakepools. This will insure the stability of the network during this decentralization process.

Open Daedalus and head into the Delegation Center of the wallet. If you click on the “Info” tab along the top navigation bar, you get a summary of what percentage of blocks are produced by stakepools. As I’ve mentioned, Daedalus confirms that here in the second epoch, stakepools are not yet producing any blocks and will not until after this epoch ends. This panel in Daedalus essentially reports what I described as the “decentralization parameter” or d. Currently, d=1 and this means that stakepools make no blocks. Stakepools will make all the blocks once d=0. As we go through the next epoch boundary, there is a plan to move from d=1 to d=0.9. Once this happens you should see the Info tab update to say that 10% of the blocks are being produced by stakepools. Also, even though stakepools will only produce 10% of the blocks, they will still get 100% of the rewards (minus treasury distributions, of course) since the Byron-era nodes producing the other 90% of blocks cannot receive Shelley-era rewards.

A very important thing to remember is that with stakepools only producing 10% of the blocks in the next epoch, there will actually be very few stakepools lucky enough to prevail in the random slot lottery to get the few leadership positions available. It is very likely that only the the pools with very high stake delegations will get that opportunity. If you’ve staked to a pool that doesn’t produce a block in the next epoch, it is not a cause for concern and does not necessarily mean there is any problem with that pool. There is yet much ada that has not been staked and so your pool is likely to continue to fill up. It’s probably best to just stay where you are and see how things go over the first several epochs. Always keep an eye on how your pool is doing using the many tools available online like,, or the Pegasus app, to name a few examples.

Remember that pools are still RANDOMLY ranked in Daedalus. The ranking order has absolutely no meaning yet. This ranking will be updated at some point to reflect the relative desirability of the various pools, but this has not yet happened. Also, the ranking of your pool will be random among the other pools that also have not yet forged a block until they get the opportunity to make one. So, the ranking process, once it is implemented, still will not become active for your pool until it has forged a block. Also, the rewards for the blocks that are forged during the third epoch (the next one coming up) will not be paid until the end of the fourth epoch/start of the fifth epoch boundary. That’s right, no rewards are paid out at the end of the third epoch. At the end of the third epoch, the rewards distribution will be calculated, but rewards will not be paid until after another full epoch passes. This is why you won’t see rewards until August 18th. Also, if you did not make a stake delegation to a pool in the first Shelley epoch, you will not see rewards until later than that. Please refer to the “Delegation Cycle” figure I posted in the first part of this series. If you make your stakepool delegation now here in the second epoch, you will see your first rewards five days later (August 23rd) at the end of the fifth Shelley epoch.

With this information now provided, I come to the next significant difference between the incentivized testnet (ITN) and Shelley mainnet. In the Jormungandr software that was used in the ITN, stakepool operators had a tool that would produce a leadership log for each epoch. This meant that when the slot leadership positions were determined in the random lottery that happened at the beginning of each epoch, pool operators could immediately use this tool to query how many slot leaderships they had been awarded for their stake. These slot leaderships are the opportunities the pool will have to propose a new block for the chain. Not only could operators see how many opportunities they would have, but also the exact times those opportunities would arrive for the entire epoch. In the Shelley mainnet, there is no such tool for the Haskell nodes. So, here’s what this means. When we get to the next epoch boundary, pools that had stake delegations at the end of the first Shelley epoch will participate in the slot lottery for 10% of the block production. The thing is, no one, not even the pool operators themselves will have any idea how many or even if they were awarded any slot leaderships at all! We will only find out once the pool actually forges a block. In the ITN, pool operators would often tweet out the number of slot leadership positions they had been awarded at the start of a new epoch. This was a way of verifying the actual performance of the pool since no one besides the pool operator could see the leadership log for that pool. Hopefully, Input-Output Global (IOG) will eventually provide a feature upgrade for operators to see their leadership logs at the start of a new epoch with a future release of the cardano-node software.

This is where we’ll end things once again for today. I’m not yet done with this series, so keep checking back for more important updates! Do you have any questions or comments? Did I get something wrong? Drop a comment or send me an email using the contact form! Also, if you found this article helpful, please consider passing it on to your friends. Thanks!

Update: After publication of this post I became aware that there is a conversation within IOG about possibly postponing the decrement of d to 0.9 to a later epoch than the originally planned third epoch. This would be due to the stakepool display bug in Daedalus 2.0.0 (that is now fixed with 2.0.1) and the fact that several exchanges have not yet implemented Shelley compatibility. I will keep you updated as events unfold, Be sure to follow me on Twitter.

Update: IOG has decided to proceed with the original plan and will decrement d to 0.9 at the start of the third Shelley epoch on August 8, 2020.

Update: IOG has suddenly changed its plans for how d will be decremented in the upcoming epochs. These changes will be the subject of an upcoming blog post.


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