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• IOHK will withdraw all of its staking pools except for 1 at the end of December to encourage decentralization of Cardano.
• ADA’s new delegation strategy will be based on purpose pools and incubator pools.

Tim Harrison, Director of Marketing and Communications for IOHK, has offered details about ADA’s new delegation program for Cardano. Harrison said that since Shelley’s deployment, nearly 1,200 staking pools have been created. However, a “sub-optimal” k value has prevented further progress in this area.

In order to improve and encourage the creation of new staking pools, IOHK will increase the parameter k to 500. Currently, the parameter has a value of 150, limiting the size of the pools to 210 million ADA. In addition, the company in charge of the development of Cardano announced that it will withdraw all but one of its public staking pools, as Harrison stated:

This is both a symbolic and practical move – we want to maintain a public presence as a pool operator as well as benefit from the technical and operational experience involved.

Encouraging decentralization in Cardano

Furthermore, IOHK will follow a delegation approach aimed at redistributing the ADA funds it holds to the community. 15% of the ADA held by the company will be distributed to new staking pools called: purpose pools and incubation pools. The Director of Marketing and Communications for IOHK explained in this regard:

We shall use this ada to support our long-term vision, support Cardano’s growth and reaffirm the values we espouse, while maintaining the financially responsible position required from us as a commercial organization.

Purpose pools will receive support from the company if they are determined to “support (IOHK’s) broader mission” of economic inclusion, decentralization, and technological sustainability, Harrison said. These pools will be selected based on different criteria such as their mission, technological capabilities, and geographic location.

Moreover, IOHK will place special emphasis on those staking pools in developing countries that can benefit from blockchain technology, pools that use renewable energy, pools with philanthropic goals, among others:

These are pools that not only create tangible value today, but also aim to deliver societal impact tomorrow. That’s a bold ambition, but it is what drives us already, so we want to use some of our ada holdings to support ecosystem players who share and live by similar values.

On the other hand, the incubators will be small pools selected to be supported with the aim of “maximizing diversity” of ecosystem participants. IOHK has also clarified that the staking pools can be both incubators and purpose pools; one is not exclusive of the other.

Those interested in being selected as part of the new IOHK strategy will be able to participate from December 10th in the “Call for Delegation”. With this, they will be able to send their applications to the company. The calls will be maintained during 2021 and will be held quarterly. IOHK is expected to provide more details on December 3 in a monthly update, as Harrison mentioned:

We hope this new strategy will help identify and encourage some of those pools and ‘pioneers’ – a word we may have overused in 2020 but one we feel remains valid – and help accelerate our growth into 2021 and set us up for many successful years ahead.