> For the complete documentation index, see [llms.txt](https://productcommittee.docs.intersectmbo.org/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://productcommittee.docs.intersectmbo.org/committee-outcomes/2030-long-term-cardano-vision/insights-collected/focus-groups/spos-focus-groups/focus-group-spos-26th-march-2025.md).

# Focus Group - SPOs - 26th March 2025

## Data Points

* [Session recording](https://drive.google.com/file/d/1c1JXgkKv7aMsxcwSicyz21vqUyXaHLJA/view?usp=sharing)
* [Transcript](https://docs.google.com/document/d/1rKSmLRpUebgb666Qawk801A2qngtFQ4lWAvpOhmscx4/edit?usp=sharing)
* [Notes](https://docs.google.com/document/d/1WEtd5BgWvpkgiKWGP43ww6UpW8EoTquIBMYQwq3um3M/edit?tab=t.0#bookmark=id.9hhm244wqtq)

## Key Learnings

### 🏗️ Infrastructure & Operations Challenges

* Infrastructure costs are a constant challenge, especially for smaller/new SPOs.
* Delegation is sticky; it’s hard for new or small pools to attract and maintain delegators.
* ISPO mechanisms can distort delegation and harm network sustainability.
* Cloud reliance is high — 90%+ of nodes run on cloud services, creating centralization risks.

***

### 🗣️ Communication & Community

* Need for improved communication between SPOs and IO/engineering teams.
* More consistent updates and clearer communication channels desired.

***

### ⚖️ Protocol Parameters & Incentives

* The minimum pool cost disproportionately penalizes smaller pools.
* Suggested dynamic adjustment of minimum pool cost linked to ADA price.
* Support for community voting on both minimum pool cost and minimum margin.
* Concerns about the “race to the bottom” in fees and its impact on network health and geographic stake distribution.
* Multiple protocol parameters flagged for adjustment: min pool cost, min margin, K parameter, tau, and rho.

***

### 🏛️ Decentralization & Resilience

* Cloud concentration is a major decentralization risk.
* Additional infrastructure needed for dApp processing to avoid central points of failure.
* Alternative Cardano node implementations are in development but years away from maturity.
* Multiple node versions increase attack surface — rigorous testing is essential.
* Potential risks of combining Midnight and Cardano nodes on the same hardware need careful management.

***

### 🕸️ Stake Handling

* Retired pools can create inefficiencies and challenges for chain density and stake management.
* Automating reassignment of stake from retired pools is legally and technically complex.
* Ideas like staking baskets or delegation tools could help improve stake distribution.

***

### 💼 Business Opportunities for SPOs

* Running infrastructure for sidechains (Hydra heads, Midgard validators, Midnight nodes).
* Exploring partnerships with new projects and DeFi initiatives (BTC bridge, Encoins privacy tech).
* Transaction prioritization services could become an additional revenue stream.
* SPOs well-positioned to provide critical infrastructure services beyond standard block production.

***

### ⚙️ Technical Improvements

* More flexibility and transparency needed in node versioning/testing.
* Discussion of running real-time optimized Linux distributions.
* Concerns about bugs in the networking layer — importance of community contributions in testing and reporting.

***

### 💰 Payment Infrastructure

* Direct fiat on-ramps would improve user experience and encourage network use.
* Increasing transaction volume (e.g. via BTC bridge) seen as a way to sustainably increase rewards.


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