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Cardano Community Outraged by Cardano Staking Cartel in Shelley Testnet

A large number of staking pools in the Cardano community have formed an alliance on the Shelley Incentivized Testnet. Other members have criticized the alliance for promoting centralization.

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Key Takeaways

  • Group of stakepools formed on Cardano called ISPPA.
  • Pool operators produce around 12%-13% of the blocks in the network.
  • Community fears such coordinated efforts could lead to centralization.

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A group of roughly 30 stake pools has formed an alliance on Cardano’s Shelley testnet to make block production more efficient.

However, the group, called the Inter Stake Pool Peering Agreement (ISPPA), was criticized by the Cardano community, with many saying that it goes against the decentralization principle on which Cardano was built. 

ADA Stake Pools Band Together

Several stake pool operators on Cardano’s Shelley Incentivized Testnet have banded together to form an allegiance.

The group—called the Inter Stake Pool Peering Agreement (ISPPA), explained that the allegiance involves connecting the pools and relay nodes into constantly-exchanging data.

This, the group said, means that all the nodes in the group will form a huge cluster located all over the world, adding a fourth layer of communication on top of Cardano’s existing three. 

“The main intention of this agreement is to test for and try to achieve an even better networking infrastructure and propagation of blocks than with each pool operator running on his own during the ITN,” the group explained on their official website. 

One of the members of the group posted Reddit to explain how it works, saying that it wasn’t any different than making private networks on the testnet.

The member also noted that this was not an exclusive list of preferred peers, so other stake pools were free to connect to any other peer on the network.

Community: Against Decentralization Principles

ISPAA’s formation hasn’t been well received, however.

The Cardano community took to social media channels to criticize the group for going against Cardano’s central principle—decentralization.

The first argument against ISPPA was that it consisted mostly of large pools with huge amounts of ADA to stake on the network. According to ISPPA’s website, the pool operators in the group produce between 12% and 13% of the blocks in the network at any given time.

While ISPPA said that it had no plans to expand, and was keeping the group only in the Shelley testnet, many wondered what would stop the group from banding together more pools and eventually forming a coordinated attack on the network. 

Some Reddit users pointed out that the 31 pools in ISPPA currently stake around 1.2 billion ADA, which is just under 10% of the total amount of ADA currently staked in the Shelley Incentivized Testnet (ITN).

With around 1,000 pools operating on the ITN, the group’s dominance on the network practically excludes the majority of staking pools from creating blocks. 

There has yet to be a response from IOHK, the company behind Cardano, or any of its product managers to the issue.

Until then, the Cardano community will remain divided over whether this is a blatant disregard for the basics of decentralization or merely a group effort to make the block production process on Cardano more efficient

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