Benefits of Creating a Liquid Staking Pool

1. Earning Commission

• Benefit: As the root or operator of the pool, you have the ability to set commission rates on staking rewards. This commission is taken from the pool’s rewards and serves as compensation for managing and maintaining the pool.
• Impact: The ability to earn a commission makes creating and managing a pool financially rewarding. Commission earnings grow as the pool attracts more participants.

2. Building a Community

• Benefit: A well-managed staking pool can attract a large number of participants. As the pool creator, you can build a strong community around your pool, fostering trust and loyalty.
• Impact: A loyal community of participants ensures a steady inflow of assets into the pool, making it sustainable in the long term. This can also enhance the pool’s reputation and attract more participants.

3. Increased Security and Decentralization

• Benefit: By creating a liquid staking pool, you contribute to the overall security and decentralization of the Tangle Network. Larger pools with more participants help secure the network by distributing stake across multiple validators.
• Impact: A decentralized network is more secure and resilient, benefiting the entire ecosystem. As a pool creator, you play a role in strengthening the Tangle Network’s security and robustness.

Risks of Creating and Managing a Pool

1. Validator Performance Risk

• Risk: If the pool’s nominator selects poor-performing validators, the pool could lose rewards or face slashing penalties. This could lead to a loss of trust among participants and damage the pool’s reputation.
• Mitigation: To minimize this risk, pool operators should conduct thorough research and choose validators with a proven track record of reliability and performance.

2. Security Risks

• Risk: Pools can be targeted by malicious actors who seek to exploit vulnerabilities in pool management or validator selection.
• Mitigation: Pool operators should implement strong security practices, such as regularly auditing pool operations, ensuring proper governance mechanisms, and closely monitoring participant behavior.