IOHK have announced that the K parameter which sets a soft cap on the total number of stake pools is increasing from Epoch 234 (Sunday 6th December) from 150 to 500, with a goal to further increase to 1000 in March 2021.
The announcement explains the rationale:
First and foremost, the rewards sharing mechanism of Cardano aims to reward people fairly for supporting the platform in a sustainable way, not as a short-term windfall. One of the main goals of staking has always been to encourage and reward the long-term holders of ada: the people who are committed to the success of the ecosystem.
In the longer term, the system can be successful only if it is widely decentralized. Philosophically, the design of the rewards scheme aims to encourage a wide and diverse set of stake pool operators. This secures the platform more effectively against attacks, spreads any available rewards more evenly across the community, and makes the system more resilient to change.Tim Harrison, Marketing and Communication Director IOHK
This changes the saturation level for pools as follows (based on 31.9 Billion ADA in circulation:
- K at 150 (current):
31.9 x 1000 / 150 = 213 million ADA saturation per pool
- K at 500 (Dec 6th 2020):
31.9 x 1000 / 500 = 63 million ADA saturation per pool
- K at 1000 (March 2021):
31.9 x 1000 / 1000 = 32 million ADA saturation per pool
The effect will therefore be to increase delegation to a larger number of pools, as saturation levels are lowered.
This promises to benefit the overall ecosystem as Cardano will become more decentralised.