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Buffalo soldiers march to the heart of the blockchain

Crypto Bisons is a musical NFT game unveiled at the 2021 summit – and it has far-reaching implications for a host of other applications

28 October 2021 Dominic Swords 4 mins read

Buffalo soldiers march to the heart of the blockchain

You want to demonstrate a unique combination of blockchain functions, bringing real-world elements together with collectibles and smart contracts. Of course you’d like to have a massive cohort of willing creative participants just ready and waiting to develop it. 

It’s time to call in the guitar-playing bisons, obviously. 

Crypto Bisons, a blockchain-enabled NFT game unveiled at Cardano Summit 2021, is based on an original concept from Charles Hoskinson, who, as well as founding Cardano, is a long-time gamer and game designer. He is also the owner of a herd of 500 or so bison. Because, why not?

To see where the idea would go, Hoskinson enlisted the help of by six students at Enjmin*, the national digital game school of France in Angoulême. ‘We said to them, “Have some fun with it and see what you guys can do.” And it’s absolutely remarkable to see, month by month, the level of creativity and the convergence to something that actually has very practical gameplay mechanics,’ said Hoskinson. 

Karim Sellami, who managed the French team, said: ‘The first question that we had as students was not about gaming at all, but what happens in your field when you have so many bison! One day one of the bison had a fall and it made a noise and it was exciting, and then music is born. We thought about what will happen if all the bison discover music.’

But why a game? ‘Multiplayer games are a great use-case for blockchain,’ said Romain Pellerin, IOG technology chief. ‘You have the players, and they need to connect to a system and be logged in somewhere. With blockchain you have your log-in – it’s your wallet.’

Players form bands whose members are bison. Each bison has its own personality, which develops as the game world evolves. And a bison avatar is incomplete without a saxophone, right? Or a guitar. And if it’s a buffalo soldier, it’s going to need dreadlocks too. Well, there’s your collectibles. 

The music the bison bands play is another function of the digital world: it’s algorithmically generated. ‘The original design brief was that we wanted to do something where we combine NFTs, algorithmically generated music and blockchain together with a geolocation component,’ said Hoskinson. 

‘It's a great experiment to take NFTs to the next level. Until recently NFTs were considered static things. They were pictures, videos – it was like owning a letter or something like that. It didn’t change; it was just there and, you know, it could be traded and so forth.’

In Crypto Bisons, by contrast, the way the game object is used over time, from game to game, and even on to other platforms outside the game, affects its usability. ‘And so that's really a great experiment to conduct. You know, this also has very practical infrastructural implications on Cardano,’ said Hoskinson.

And where the bison go, others are sure to follow. ‘The bridging of the physical real world with the digital blockchain world – it hasn't really been done much before. Once that’s done, you can use it as a template for anything in the physical world. It can be artwork, it can be other types of animals, it can be people, places, these types of things.’

Pellerin added: ‘The game objects can be shared across games, not only within games. You could reuse them in different games but also in other entertainment support, your own music, other video games, platforms, and social networks. Finally, the logic and the scenario can be represented as a smart contract to evolve the scenario but also the game object. So we are very ambitious for this game. It’s going to bring great innovation that will lead to standards, because we have to design what is a game object on an NFT standard. And you can have many versions of the game standard, and that will lead to greater research.’

Another thing Hoskinson likes about the game is that players compete against each other in a creative, rather than a destructive, way. The bison just want to play their way into the musical hall of fame.

(* École nationale du jeu et des médias interactifs numériques)

Catch up on all the announcements from the Cardano Summit 2021 website and IOHK’s Twitter.

IOG's third round of delegation gives voice to stake pool operators

Choice of 100 recipients for ada stake based on nominations

27 October 2021 Dominic Swords 4 mins read

IOG's third round of delegation gives voice to stake pool operators

The 100 Cardano stake pools to benefit from the third IOG delegation have been announced. They were chosen from 520 nominations made by stake pool operators, based on contributions to the Cardano community.

All the pools chosen will receive delegated stake of about 3m ada from IOG, in a strategy to encourage a vibrant pool ecosystem. By delegating this large stake to a pool for several months, IOG increases that pool's chances of minting the latest block of data on the blockchain. When a block is produced, the pool earns rewards that are split between the pool’s operators and every ada holder who has delegated to the pool.

Most of the pool operators who got involved – 84% – nominated another pool, and 7% entered just to promote another pool and didn't apply for delegation for themselves. All the pools that received delegation were nominated by other operators.

‘The selection process, although driven by the nominations of all 520 pools that took part, was discretionary,' said Ben O’Hanlon, IOG’s head of community, insights and engagement. 'But we’re clear that the 100 chosen reflect the voice of the community.’

He added: ‘A key difference between proof-of-work and proof-of-stake is that POW extracts value from the network. In POS, stake pool operators have to attract delegation, so they have a stronger relationship with other stakeholders in the ecosystem. This is why nominations are so interesting.’

Participation with others to build, create and educate is one of the salient characteristics of those selected. More than 30 tools and resources created or being developed by SPOs have been added to the Essential Cardano page on GitHub. This makes it easier for people to find their way around the ecosystem, and GitHub users can add their suggestions.

Here is the table of the 100 successful pools.

Whereas the first two rounds of delegation were about giving a leg-up to mission-driven and smaller, or ‘incubator’, pools, in this round pools were asked to nominate contributions by operators that they considered outstanding. Stake pool operators (SPOs) were also asked questions about environmental matters such as green energy use. (Their answers will be published in a follow-up post.)

‘Something that the first two delegation rounds revealed was that SPOs wanted all the good work they saw being done silently to be recognized,’ said O’Hanlon. ‘This is the feedback we heard, and so we acted on it and gave SPOs the opportunity to nominate.’

Although not everyone will agree on every delegation decision, it's important to remember how much progress has been made since the start of the year and what a success the strategy has been. When the staking process was set up, IOG ran 20 public pools to which it delegated the stake from its own ada. All but one of these were retired in December last year and part of the stake was moved to private pools through the delegation process. The first ‘call for delegation’ was on December 10 (Ada Lovelace’s birthday).

In the second round, more emphasis was placed on mission-driven pools, geographical distribution (to minimize connectivity failure), social and community activity (to keep ‘telling the story’ of the Cardano blockchain), and support for the lower-middle-sized ‘core’ of the network.

This third round opened as Cardano achieved one of its key goals – 100% of block production in the hands of the pools. Running a stake pool is a competitive business, and there are no guaranteed outcomes, but IOG has directly supported pools with 300 delegations so far as part of this strategy!

You can discover more about the latest 100 successful pools, and all the 3,000-odd active pools, at Adapools or Pooltool. On these community-built platforms, you can search on each ticker-like name for more information. Their search functions work differently and it's worth spending a bit of time looking at the differences.

Africa is where the tough get going

The ‘developed’ world needs to change. And more resilient countries with younger populations are going to lead the way

26 October 2021 Dominic Swords 17 mins read

Africa is where the tough get going

This month, members of the team are in Africa, meeting entrepreneurs and politicians across the continent. Here are some edited parts of a speech by IOG chief Charles Hoskinson at a recent event in Cape Town.

This is a long tour. We’re starting in South Africa and working our way all the way up to Egypt. We call it the pan-African tour. You know, we’re really passionate in this company. There’s brilliant people who work at IO and they come from all around – 56 countries, 576 employees. 

The heart of the company has always been changing the systems of the world, improving them for everyone, everywhere. You see, blockchain technology is really a larger conversation. It’s about how the world globalizes. How do we make decisions about how we’re going to come together and operate in the 21st century? In prior centuries we stood on the moon, built all kinds of amazing things like planes, trains, and airplanes, and horrific things like nuclear weapons. But there were winners and losers. There were hierarchies. Some people were on top. Some people were on the bottom. We just accepted that as the status quo. 

The 21st century may be the first where we have one global community where everyone in the world – regardless of where they happen to be born, the language they speak, color of their skin, their gender – lives pretty well. Now to get there, we have to have great technology. We have to have cultural changes. We have to kind of grow up a little bit as a species. But most importantly, we have to have the right systems and the right incentives behind the systems. 

The blockchain industry is basically the Swiss army knife of systems and incentives. It touches everything. It touches voting, it touches property rights, it touches something as fundamental as identity. Who are you? Are you a good person? And it asks philosophical questions about who should be the custodians of these things. Should it be a government, a transnational body, a private company like Facebook or Google or Microsoft or Apple? Or should it be something else? The power of decentralization is it gives you a paradigm, if you do it right, instead of ‘Don’t be evil’ – it’s ‘Can’t be evil’. It actually gives you the ability to have inclusive accountability. What’s that? If you don’t trust me, you can verify yourself. So when you vote, normally you trust your government to count that vote, right? Well, wouldn’t you like to be able to check the vote yourself? That’s a pretty fundamental thing, a pretty simple thing. 

You know, the US recently lost another war. And many billions of dollars worth of military hardware disappeared. So if I go to the Pentagon and say, ‘Hey, can you give us some records on all that stuff that just disappeared?’ ’Oh, we lost them. So sorry.’ When it comes time to pay taxes, though, the US authorities can always find my records. Go figure. 

I can’t check any of the data. I can’t check the records. Something so simple as that, in a modern hyper-connected society, 2021. The most powerful country, or so it claims; the richest country, or so it claims; certainly the largest debt country – and it just loses records. Wouldn’t it be nice to live in a world where anything someone tells you you can check it yourself and know that it’s true? Whether it be a credential, your vote, or your money. All these things – work your way through. That is what our industry promises. We’re after inclusive accountability, resilience, decentralization. We’re after rules, terms, and conditions that do not require nation states or corporations to play nice. You just simply can do it yourself. 

Why is this IOG team in Africa? Well, Africa is a really special and interesting continent in that it’s going through a massive upgrade. There are no allegiances to the systems of the past because those systems haven’t historically worked out so well here. So that means over the next 10, 20 years, every single thing – from how compliance works to how stock markets are going to work to how national ID works to how academia is going to work – is up for change. And as an entrepreneur and an innovator, that’s where you want to be. You don’t go where the ball is right now. You go to where the ball is going to be.  

If the whole world is globalizing and changing, you want to be where all the systems are going to change first, because if you get it right, more wealth will be created here over the next three decades than in Europe, the United States and China combined. That’s just how it is. It’s why the US got on top in the 20th century. It just simply had a better system than the competitors. And everything resets when you have technological change. We now live in a global economy. People from Africa are going to be on equal footing with people in Europe and America if we do things the right way. And then it’s a meritocratic race, and I’m going to bet on the people who are tougher, more resilient and more entrepreneurial 10 out of 10 times. They’re going to win – it’s just that simple. 

So IOG has a pan-African view as a company. We started in a pretty difficult country to do business in, Ethiopia, and you know what? Everywhere we looked, we saw well-educated, well-intentioned people who really did want change. And they worked with us. Sometimes the system worked against us; sometimes it worked with us. But everybody remembered why they were there. And it was the privilege of my career to announce a deal of five million people that could grow to 20 million, that could grow to a national ID system of 110 million in just a few years, and that could grow into a voting system, a payment settlement system. It can grow to anything. It’s kind of like the stem cell: once you’re in, you’re in, and you can keep navigating and growing. And then how do we take that to Kenya, to Nigeria? That’s 400 million people – more than the population of the entire United States – within grasp in five to 10 years.

What’s most extraordinary is that this will transform the lives of people. Now, boring work has to be done, dry presentations given about credential this and verification that. And they’re very necessary. But at the core of all of that are people. And a lot of people right now live a life where no matter how hard they work, they can’t prove that they worked hard. No matter how good they are, they can’t prove they’re good. So what does that translate to? It translates to lack of  foreign direct investment. It translates to a hard time getting a job. It translates to high interest rates, sometimes 40% per month. But when these systems come in, they can prove basic things. And people get the job. The interest rates fall. It translates to a mass uplifting of the people of the nation. And when that happens, everybody’s going to want it. And if everybody wants it, everybody’s going to get it. 

The smart cow effect

You see, that’s the key. It’s the ‘smart cow’ effect. I’m a rancher in addition to a technologist, and one of the things you learn when you rear animals – in my case bison – is that if one of your animals is particularly smart, they influence the whole herd. They go and figure out how to open up the fence. Once one cow can get out, every other one can, and you just wake up and they’re all gone. Similarly, one country changes the way identity or voting works, and that’s all it takes: every other country will change very quickly, including my own. 

In America we’re kind of the original rebels. In fact, Europeans were really terrified of us in the 18th century, 19th century. We had this whole revolution thing. We got pretty good at killing kings. But somewhere along the way, we went from revolutionaries to a situation where it takes two years to get a permit to build a fence for my farm. Something went wrong, you know? And there are a lot of people in the United States that like change too. In the state of Wyoming, we passed 26 pro-cryptocurrency laws. A massive number of companies have come to Wyoming. We have Dao standards decentralized autonomous organization standards, asset clarification standards. The economy’s growing by leaps and bounds. A $4 billion company, Kraken, moved in. All this amazing progress. 

Meanwhile, in Washington, the treasury department does everything in its power to try to kill our industry. They say it is threatening. A $2 trillion industry just pops up in its backyard and the US government is trying to kill it. So how do I change that? Well, I can go beg Goldman Sachs to do it, but they’re not going to. No. However, I can try to change things here in Africa. And that smart cow effect might work just as well in influencing the United States as it does elsewhere. You see? So you create the change that you want. 

Never be cynical, never be hopeless. If you want to change the world, go and change it. Years ago I was poor. I went to Japan, started Cardano. And no one took me seriously. I said, ‘We’re just going to build this blockchain and then go to Africa and talk to heads of state and change the world.’ And they’re like, ‘Yeah, OK. What qualifies you?’ ‘Oh, I’m just a math dropout guy. But don’t worry, it’ll all work. It’s totally legitimate.’ 

Eight years later we’ve got an army of millions of people and billions of dollars. And we’re meeting three heads of state on this tour. We just got it done one step after another. And I’m not special. I’m just kind of an asshole who’s resilient as hell. And that’s OK because there’s a lot of assholes who are resilient as hell in this audience too. All you gotta do is be passionate. That’s it. That’s the point. And this is probably one of the most passionate, resilient continents in the world. There are no people tougher than Africans. It’s true. Nobody is tougher. So if you’re going to bet on the future of changing the systems of the world, this is where to be, with Africans – as long as you give them the technology. 

Blockchain is as much your technology now as it is mine. We’ve written 120 papers and none of them is patented. They’re all open source. You get to use it as much as I do. You know how much do you pay for it? Nothing. They’re royalty-free. We’ve written over a million lines of code for Cardano. It’s all open source. It’s your code as much as it is my code. When somebody gets a decentralized digital identity (DID) it belongs to the person. When you get a Microsoft credential or a Google ID or an Apple ID or a Facebook ID, it belongs to Mark Zuckerberg, Larry Page, Apple. When you get a DID it belongs to you. And you can take it anywhere. The minute we start closing more deals across the continent, the credentials of all those kids in Ethiopia will be interoperable with the credentials in Zanzibar, Burundi, South Africa. So when you travel, you take ‘you’ with you, and you can’t be shut out of ‘you’. Simple concept, right? You did the work – you should own it. 

And it’s the same for business registration and all kinds of things. And that’s what’s so cool about Prism Pioneers and Catalyst. If this sounds like a good idea, and you’re an entrepreneur, then build a business on top of that infrastructure. And there is $1.4 billion available to go and build businesses on top of that. Pretty simple, right? And if your business works and it’s built on open DNA, then people can’t be locked out. That means everybody can build together. We create one global community where everybody’s equal. That’s the dream, and it’s why we’re here.

What excites me is what you do with what we’ve built. Because the things that we have provided, or that are coming out this year and next year, really can be used to run countries and businesses. And that’s not a joke. They could process millions to billions of transactions. It does all the things you’d ever want. And I’m excited about the prospect of living in a world that’s just a bit less cynical, a bit more fair, a bit more honest and a bit more open for everybody. So thank you for coming. I appreciate it. 

Hoskinson then had a Q&A session with two South Africans, Simon Dingle and Joshin Raghubar. Dingle is a fintech entrepreneur and author of In Math We Trust and Beyond Bitcoin. He tweeted recently that when people realize what Cardano is, it’s going to ‘melt faces’. Raghubar is the founder of iKineo Ventures and chairs Africa’s largest nonprofit tech incubator, the Bandwidth Barn. Hoskinson also took questions from the audience. The topics covered ranged from computer games to synthetic biology.

On games:

Some players of games like EverQuest, World of Warcraft, Skyrim, and Diablo 2 have devoted more than 10,000 hours of their life to them. That’s like what you do to become a mathematician or a doctor. You have lifelong skills. And the minute the server goes down, all of that progress just disappears. 

In the new generation of games that are coming you have the ability to save that state and make it portable. So what you do in game A can be taken to game B and C and D. There’s some ‘permeance’ there. 

And then, with the NFT revolution, it eventually becomes a market item that you can sell and trade.

On the need to create jobs in Africa:

In demographic terms, Africa is the youngest continent. In Ethiopia 70% of the population’s at or under the age of 30. If you give them internet and a great education, then suddenly you’ll have an incredibly entrepreneurial group because they don’t tolerate the status quo. You say, well, how will we create jobs for all these people? Well, they’ll create them for themselves. 

Technology and the metaverse:

I believe that things like synthetic biology, the internet of things, and artificial general intelligence – if they’re pushed through – will create tens or hundreds of millions of jobs. Ten years ago no one had a concept of the metaverse, and then Ready Player One comes out and we’re like ‘Oh yeah, we get it’. Probably 100 million people will have jobs inside the metaverse by 2030 or 2035. There’s no geographic bias to that. Most of them will probably be in Africa, Southeast Asia, and South America.

Biotech, evolution, and the blockchain:

I have a biotech company that does anti-aging regenerative medicine. It’s still in silent mode. Right now I’m negotiating with Colossal. It has just announced a project to bring the wooly mammoth back by 2027, and my ranch is the perfect place to do it. They have artificial wombs and the whole genome of the wooly mammoth, and they’re going to clone one.

What’s interesting about the intersections of synthetic biology and biotech and blockchain is there’s a lot of open questions. Who owns the mammoth genome? And then what happens when your mammoth has babies? Who owns that DNA?

It’s the same question in NFTs. You issue an NFT and someone buys it and sells it to someone else. There’s the artist who created the NFT. Should that be perpetual or at some point should that decay? The very same set of questions could be reapplied to synthetic biology for designer organisms, de-extinction efforts, and so forth. 

There’s a huge problem with poaching in Africa and other places. There’s mass extinction, especially in Madagascar. Ethiopia has lost 80% of its biodiversity in 100 years. It’s crazy.

How does a nation state create a strategy for de-extinction or for preservation of animals? Well, the same technology that could be used to bring the mammoth back could be used to bring those lost species back. How you create an economic system that prioritizes that is also a blockchain question. It’s an incentives question. So I think what our industry can do for the emergence of the biotech stuff is helping sort out some of the difficult questions about ownership of things, the transfer of things, the prioritization of things, as well as alternative funding models. 

Health data, privacy, and the vaccine:

As consumers we’re shedding all of this data and we don’t own any of it. It’s used in making decisions about our lives and we’re excluded from the process. That’s OK when most of society is still on paper and not digitized, but it’s dystopian when everything gets digitized.

The concept of self-sovereign identity is really the skeleton key because the data is not just data: it’s data plus metadata plus identity. So the identity really establishes the use policy of how it is shared, how it is revoked, and who controls it. Usually identity is the provenance of states and data is the provenance of private industry. It’s very siloed. And you can’t build one of these systems without the other. DIDs are pulling all these pieces together in a very clever way. And it puts the individual, the owner, at the center instead of the government or the enterprise. And then, people actually have to include you in the conversations about how your data is used.

Israel got first access to Pfizer because it had something to offer that other nations couldn’t. Countries like Germany were offering huge prices, but Israel said, ‘Well, Pfizer, if you had access to the medical records of every citizen of our country, wouldn’t that be interesting to you? Millions and millions of people. That’s like the world’s largest clinical trial.’ Because all the medical records of the country had been centralized it was easy for them to do that.

The hard question of governance:

I think as an industry we have a pretty good sense of what we need to do for scalability. It’s just a question of trade-offs and philosophy. I think, out of necessity, interoperability will come either as a network effect or through a collection of industry-wide efforts like Hyperledger and W3C stuff. 

The decentralized government is really hard because humans have never built a government that works. No one’s happy with their government everywhere I go.   

It’s a great transition: turning Cardano from this amazing academic – now amazing commercial – project to a self-governing, self-evolving organism that is led by its users.

This is a devil of a problem. Some people believe you can do it on- chain; others say you can’t. It would disappoint me if we hadn’t made progress by 2030. Now progress doesn’t mean you solved it. Blockchains are moving from homogeneous systems to heterogeneous systems. Design mirrors biology; design mirrors life. You need cell differentiation, you need eyes cells and ear cells. Analogously, a blockchain is useless if you don’t have heterogeneity because you need to interface it with medical records and voting systems and telecommunication applications, and every transaction and user is different.

Oasis Pro partnership is where DeFi meets RealFi for Cardano

New deal promises democratization of financial services and access to capital across developing countries

16 October 2021 Dominic Swords 6 mins read

Oasis Pro partnership is where DeFi meets RealFi for Cardano

At first glance, the deal between Cardano and Oasis Pro Markets announced at the Cardano Summit may sound like a specialist application of blockchain technology to the rarefied world of finance – of interest to bankers, perhaps, but not to the person on the street. But it could turn out to be a game changer for millions of people throughout the world.

Many countries struggle to fund large infrastructure projects such as bridges, dams, and rail networks, while their best and brightest citizens go and live elsewhere, their only contribution to their home country now the monthly cheques they send back home.

If you know anyone who sends money to their family in another country, then you have encountered the world of remittances. Although made up of small sums, it amounts to a huge well of money. Whole nations are kept afloat in this way, with remittances accounting for well over 30% of GDP in some cases.

Since 2020, as countries such as the UK have cut back their aid budgets, global remittances have actually exceeded the value of foreign direct investment (excluding China) and government aid from richer countries combined. It is a situation that Nick Cafaro, IOHK product manager, describes as ‘pretty astonishing’.

‘This means, for the first time in the 21st century, foreign workers abroad are sending money back home in amounts greater than all the investment coming from countries and corporations into those lower and middle-income countries – as well as the total amount of official aid.’

Yet that huge sum of money, much needed as it is, can only do so much good back home. ‘The government is unable to pool all that capital and put it towards big infrastructure projects that might benefit wider sections of the population,’ Cafaro said. ‘And the money coming in is not distributed evenly and so can actually increase inequality within countries.’

A third downside to this situation, Cafaro added, was that for remittances to continue people had to keep moving abroad to work, abandoning their family and wider community, ‘something that none of us really want to happen’.

A better way

Imagine a way of harnessing these funds so that they make the biggest impact where they are needed. A way that could actually raise the standard of living in the target country, and potentially stem the ‘brain drain’ of talented people from poorer to richer countries. Imagine that your solution also provides a return on investment for the person working overseas.

Blockchain can make this possible.

Countries typically fund infrastructure projects by issuing debt – sovereign bonds, as they are known. Sovereign debt is one of the bigger, more intimidating beasts in the capital markets zoo, and it is not one that most retail investors would be comfortable approaching. When a bond is issued by a sovereign nation, banks often form syndicates to buy up the entire issue. They want it for themselves because sovereign debt provides a fixed income at a low risk. Also it’s a regulation-heavy area of investment, so you need a huge amount of expertise to take part. It’s nice work if you can get it.

In the increasingly decentralized financial future, this massive class of debt and the huge pot of remittance money will be brought together. The relationship between Cardano and Oasis Pro Markets is a big step in that direction.

Cardano had wanted to form such an alliance for some time, and chose Oasis Pro because of its blockchain-first platform and regulatory expertise, said Cafaro, announcing the deal at the Cardano Summit last month.

‘The networks that are run by these syndicates of banks... are not capable of handling that type of deal flow, so you need to figure out how to connect those tens of thousands of individuals to the issuer through a single platform. The good news is that the Cardano blockchain is a great tool to solve this type of problem.

As Nick Cafaro, Product Manager at IOHK said:

We just had to find a partner to bring this “real fi” product to the Cardano blockchain. It had to be a company with expertise in capital markets and blockchain, and with all the right regulatory permissions in place.

Enter Oasis Pro Markets, Pat Lavecchia, the financial company’s chief executive, said: ‘We’re very much looking forward to a long-term partnership with Cardano and IOHK, providing democratization of financial services to a variety of countries utilizing our best-in-class technology – our matching engine or exchange, depending on the country and regulatory environment.’

He added that as well as providing greater access to the sovereign bond market for small investors – ‘the citizenry and diaspora of these countries’ – the initiative would provide ‘efficiencies and cost savings’ to the issuing governments.

Lavecchia described the Oasis Pro approach as ‘digital cash for digital securities’, which in effect meant using stablecoins and also potentially CBDCs, depending on different countries’ regulations.

‘Sovereign debt is a security that in the blockchain area could actually be fractionalized, and that fractionalization is tied very much to its democratization. It helps risk management for the issuer [and] increases the investor base, which in turn should improve liquidity as well, seamlessly. The digital exchange trading systems and order-matching engines that we’ve developed are the transition point from the legacy solutions . . . to the blockchain, and the benefits are enormous.’

According to Lavecchia, the issuer benefits in several ways. Because of anti-money laundering provisions, the issuer can ‘know at any time what institutions or individuals own their sovereign debt’. Governments no longer have to track down investors’ addresses and mail out their interest payments. ‘All that asset servicing is a tremendous time waste and unnecessary. The blockchain solves that issue. We estimate that the savings are anywhere between 25 and 50 basis points [0.25-.5%] of the issue amount.’

The issuing country can also benefit from smart contract innovations. ‘The smart contracts are embedded in the security itself and contain the terms of the security – for instance the principal and interest payments, the default provisions, if any, or any other actions or protections that are incorporated, not only for the investor but also for the issuer, the sovereign nation. It eliminates poor documentation and also reduces settlement times, which are currently between two and 10 days. Utilizing the blockchain and digital cash, that settlement time is reduced to almost zero.’

Once a country is set up with the Cardano/Oasis Pro system, it can expand its financial dealings to other asset classes such as equities, asset-backed securities, and other kinds of project finance, said Lavecchia. ‘This technology is available today and we have it with IOG ready to launch across the spectrum. In five to ten years this is going to be ubiquitous, so the sovereign nations that work with us today are going to be significantly ahead of the curve.’

Cardano Summit 2021 summary: Governance is the next big thing

Charles Hoskinson says that to continue to grow the blockchain industry needs to finish what it has started

8 October 2021 Dominic Swords 16 mins read

Cardano Summit 2021 summary: Governance is the next big thing

How do you close out an event like the Cardano 2021 Summit? With dozens of speakers, the announcement of a host of new deals, and the whole thing taking place live in six locations worldwide and watched online at more than 40 community hubs and in tens of thousands of homes, it’s certainly a tall order.

Ideally you’d want to reiterate the main points of the event, unpack the insights that emerged from getting all those brains together – and then give a clue to what might be coming next. 

The task fell to an appropriately high-powered panel, brought together on the stage at Laramie in Wyoming, the leg of the event attended by Charles Hoskinson, chief executive of IOG. As well as Hoskinson, the panel consisted of Romain Pellerin, IOG technology chief; Jerry Fragiskatos, commercial chief; Joel Telpner, head of legal; Frederik Gregaard, boss of the Cardano Foundation; and a non-IOG local hero, Caitlin Long, the founder and chief of Avanti Bank and Trust. The moderator was Rob Adams, IOG vice-president of corporate strategy. 

Panel moderator - Rob Adams, IOG vice-president of corporate strategy

Adams set the scene by saying that the panel was really about taking the blockchain industry from niche to mainstream. His skillful interjections guided the speakers through the themes of the event: utility, governance, adoption, and impact. Would one of these prove most salient in the future trajectory of blockchain, led by Cardano? Were there any clues as to where it would all go next?

One clue came from the reactions of the local audience in the US. Any point made by the speakers about preventing the infringement of individual liberty got a cheer. Stop corporations stealing our data: cheer. Educate legislators to be more blockchain friendly: cheer. Stop governments from misleading the people and make elections fair and transparent: big cheer.

You need a technology that can cross borders, and legacy systems are very slow to create those bridges – Romain Pellerin

Kicking off on the subject of adoption, Pellerin pointed out that blockchain technology had come about in response to a need. In the future, therefore, adoption and utility would remain intimately linked. ‘Blockchain is not here, you know, randomly. I think it's the technology of its own time,’ he said.

‘In a world that globalized itself, you need a technology that can cross borders, and legacy systems are very slow to create those bridges.’ He later suggested that blockchain was ‘the system’ to program interoperability, not just between chains but wherever it was needed.

If Pellerin seemed to suggest that adoption and utility would take care of themselves, Fragiskatos introduced a note of caution. Given that the coming wave of new adopters would include large enterprises and governments, extra care was warranted, he said. ‘My preference is that it continues to be grassroots – that is, powered by the individuals first – and that small businesses are built on top of them. And then enterprise and governments come last, in my personal point of view,’ he said, bringing the first big applause of the session. 

My preference is that blockchain adoption continues to be grassroots and be powered by individuals first – Jerry Fragiskatos

After all, he added, when an economy is healthy, it is consumer based and largely run by ‘small businesses first, and then enterprise and governments last. And I'd like to keep it that way.’ 

As well as the first clapping and cheering, Jerry’s comments brought the evening’s first appearance of the specter of big business, and even bigger government. Picking up on that theme, Long spoke of the ‘stunning’ backwardness of most banking technology. ‘[Larger] enterprises really do make things complicated,’ she said.

‘They don't operate by the Kiss principle: “Keep it simple, stupid.” And I think many blockchain developers do because we're operating on common, open, open-backend platforms. And the whole idea of that is so that anyone can join the networks.’

It's the classic Gandhi phrase: First they ignore you, then they laugh at you, then you win – Caitlin Long

Long was soon to raise a cheer from the local audience by alluding to the success the Wyoming community has had in shaping blockchain-related laws. Unfortunately, but not surprisingly, the breakthrough had been largely ignored by the (centralized) powers that be. ‘It's the classic Gandhi phrase: First they ignore you, then they laugh at you, then you win. I'm not quoting that correctly, but that's the idea!’

She then called on the Cardano community to hold The Wall Street Journal to account for not referring to Wyoming in its online article that day about stablecoins. ‘So by the way, I’d appreciate it if you all blow this up on social media – because they love to ignore us.’

This call to action, albeit only online, raised a big cheer. 

It looked like Gregaard, in his flat cap, might capitalize on the rabble-rousing theme. But his hour as an agent of societal change had not yet come. Instead, he made a cogent point about the difference between the first wave of adopters, such as gamers, who were ‘born digital’, and larger, older industries, most of which would remain ‘non-blockchain-enabled’ and were therefore doomed. ‘The blockchain-enabled win every single time,’ he said. 

The next wave of adoption would therefore come not from the very large (who can’t or won’t change) or the very small (who don’t need to), but from a middle ground, Gregaard said, citing the SAP and the Oracle financial systems. ‘It’s going to be parts of banking, [and companies] in the middle of the enterprise process. That’s the way I see it.’

Maybe . . . maybe not was the response from Hoskinson. No matter how well you plan, you don’t really know where the next wave will come from, he said. You can always be proved wrong by what people actually want – like people preferring cat videos to his own ‘Ask Me Anything’ sessions on YouTube. ‘Really, the key is just to be flexible and adaptive enough that whatever that future happens to look like, you'll be able to be competitive in it.’

Now it was his turn to pose a question. ‘What consumer experiences are now enabled that were not possible before?’ he asked. A great example of this was when smartphones revolutionized GPS. One day you’re having to print out a map from MapQuest; the next it’s all done for you live, right in your hand. The combination of the iPhone and Google Maps proved to be technology’s answer to the cat video which effortlessly draws everyone’s attention.

Hoskinson’s first contribution to the debate was therefore to warn against making a fetish of ‘perfect, top-down planning’. Rob then mischievously pointed out that the big wins celebrated at the summit had been with big enterprises and governments. Was this a contradiction?

No, said Fragiskatos. The point is that you’re always dealing with people, individuals.  ‘Enterprise and government serve consumers, ultimately. So I don't think it's contradictory at all. I'm just saying that the power should lie with the individuals. Enterprises have their role in that; it just has to be in the right context. And it should be from the bottom up. [This] is the ethos of our industry [and] is what makes for a healthy society . . . Our industry has a part to play to keep democracy healthy.’

Hmm, this was a great point and it really made me think, and perhaps the audience as well. Because that’s not just governance; it’s governance squared. The internal governance of blockchain makes its influence felt in the broader governance of society – government, in fact. 

Pellerin jumped on board. ‘The bottom and the top – I don’t really understand that. It's always about people,’ he said. The audience roused to his next point, about user inconvenience. This resulted from a ‘friction’ between technological ‘silos’, Pellerin said. ‘Try to move your content from Facebook to Instagram or WhatsApp – it's a pain and often it's not even possible. You have to do that manually. Right?’ 

Although networks were ultimately just people, we had become cut off from each other, ‘lost in silos’, Pellerin said, whereas what was needed was a ‘frictionless experience across businesses’.

Telpner expanded the theme to regulation generally, building on Long’s comments about banking in her home state. ‘The important thing about what Wyoming is doing is they're not saying no regulations – they're saying the right kind of regulation,’ he said.

The important thing about what Wyoming is doing is they're not saying no regulations; they're saying the right kind of regulation – Joel Telpner

With disruptive technology, ‘regulators are playing catch-up, and sometimes it's easier for them to simply say No than to understand how we take existing regulatory regimes and modify them, and do what we need to do to facilitate the new technology.’ 

Fundamentally, Telpner said, everyone agreed on the important things: ‘ideas of protecting consumers, of preventing fraud’. If most regulators in developed countries hadn’t figured out yet that blockchain was a better way to do those things, their counterparts elsewhere could see the opportunity. Smaller countries had a relatively free hand because of the lack of cumbersome legacy systems. Some of the innovations enabled by blockchain in smaller countries would be worth importing to leading nations. 

One example of this was financial inclusion; another was the question of identity. Pellerin pointed out that ID was always going to be the logical ‘entry’ into the blockchain system, with ‘selective disclosure’ coming later if you’re lucky. But Long again won the audience’s heart by making a key distinction: ‘Governments control the evidence of identity. [But] what is identity? It's the essence of your being – it's governed by natural law. It has nothing to do with any ID or a piece of paper or any other instantiation of who you are. It is who you are. And so that's important.’

When the applause died down, she added: ‘Because right now there are 15 million people who have come into the United States that do not have those papers that can provide evidence of who they are – and that's the unbanked.’

Businesses tended to do a better job than governments on this, she said, but the problem with handing over your ID to a bank is that it can share that information with other institutions, and ‘data in motion is usually less secure than data at rest’ – especially when it’s not encrypted. 

Hoskinson interjected at this point. Perhaps the governance talk was getting a bit political. ‘Just real quickly, sorry. So IO is not building any vaccine passports – just pointing that out.’ It may have received the biggest cheer of the evening, but the comment led on to a series of very serious points about the notion of identity.

‘The reality is that identity is not a singular thing. You have a person, but that person can have many different identities. They have online identities, work identity, family identity, religious identity, the identity when you go see the in-laws.’

Being able to take back control of all those different identities was the ‘magic’ of DIDs, or decentralized identifiers, Hoskinson said. ‘Reputation is what matters about identity . . . and it's always connected to a context. Do I want to hire them? Do they want them to take care of my kids after school?’

At present, whoever controls society controls people’s identity. ‘But we no longer need central authorities and institutions to be the connecting tissue to move reputation around.’

Legacy big tech groups ‘all in their own way are creating identity systems, and they're embedding them into consumer products. And they put clever little names on it, like a Google ID or Google authenticator or Apple Pay.’

Hoskinson painted the picture of a battle for identities, a battle that would be fought within a fixed time window. ‘And whoever wins that will have a profound impact on your ability to use your life . . . Controlling our own identity and having it be self-sovereign is [one of the] major challenges in the 21st century. It’s foundational and . . . [one that] this industry has to win to survive.’

Telpner added that while blockchain could provide the tools to take back personal data, it was up to the people themselves to tell the banks: ‘This is ours. This is not yours.’ It had cheer written all over it, but the audience stayed silent. Perhaps they were thinking. 

Fragiskatos knew how to engage the audience in the ID discussion. ‘I think there's business, and there's personal. This one [ID] is very personal. I am sick and tired of my accounts being compromised. Last time I checked every single one of my accounts was compromised. And then you've got companies making money from my data. It makes you feel powerless because – Oh, it's just the way it is. Right? That's the feeling we've become accustomed to. I think [blockchain] is just the better system, period. And it will ultimately be adopted everywhere.’

The crowd loved it. Gregaard then tied the question back in with blockchain’s bigger ambitions, as a corrective to state overreach. ‘I really think we're going to lose that war,’ he said with intense conviction. With his reference to war, it was clear he was addressing not just Jerry’s frustration with data compromise but also Hoskinson’s comments about a war for control of identities. 

If we cannot show meaningful participation ... and get people to really show their opinion, we're just not going to win that [battle against state overreach] – Frederik Gregaard

‘If we cannot change governments, if we cannot show meaningful participation with a non-fungible voting system and get people to really show their opinion, we're just not going to win that. The only way we can win that is to prove that we can create a trusted identity on a blockchain, which holds more trust than what the enterprises and the banks are collecting . . . And if we're not able to do that, then we lost before we even started the fight.’

The next question came from Hoskinson himself: ‘What’s the next big thing?’ It seemed to be directed at Gregaard, sitting to his left.

Gregaard said it was interoperability of existing systems, not just the chains, to make it easier to get crypto into fiat currency, among other things.

For Telpner the next big thing was clear: governance. Certainly it was the theme that kept rearing its head in almost every discussion. Fragiskatos said it wasn’t necessary to know the next big thing, but his bet was that it would be the disruption of social media. 

To finish up the conversation, Hoskinson took to the stage alone, and took us back to first principles. There was an ‘honesty gap’ in the blockchain industry, he said, which had ‘written a lot of checks’ that it had yet to cash. The focus needed to be on finishing the things that had been started. 

‘It's one of our biggest failings. We tell people, Use this application, do this thing, and then it blows up and tens of millions and hundreds of millions, then billions of dollars get lost. Yet somehow it doesn't seem to get better – it just seems to get worse.’

Surely that was a governance issue? Perhaps, but if so it was one that would require more adoption to fix.

Addressing the worsening moral hazard around promises, Hoskinson said, would require higher standards, better certification, auditing, and rigorous coding practices. To that end he was collaborating with experts in formal program verification. ‘The kind of guys you call when you want to build a train, an airplane, or a car and make sure the thing works and you live to tell the story.

Somehow, some way, we must build a government for Cardano together, one that works – Charles Hoskinson

‘How do we take these amazing innovations, born of academia and forged in industry, and bring them together and apply them to our industry in a way that scales down to an agile development team – not PhDs living in a lab with million-dollar budgets, but entrepreneurs, two, three people working together?’

The answer was one that seemed to bring together all four themes of utility, governance, impact, and adoption. ‘It turns out there's this beautiful isomorphism between certification and an open app store right now,’ Hoskinson said, with a twinkle in his eye.

An app store like this would be a world away from the ‘curation model pushed upon the consumers’ thus far, where you can only hope that if an app is in the store then someone has done the checking, and where sometimes it is decided ‘that people shouldn't be in the app store because maybe they compete with Papa Apple, or Google, or Microsoft’. 

Hmmm, was this a governance issue? No, wait: maybe it’s adoption. Utility? OK, it’s all of them. 

‘What if you create a store where it's always open, anybody can come, anybody can build? You just submit a transaction to the blockchain – it's there. But because you have the ability to certify, the way it gets visualized and presented, how it appears to the consumer, is different. The more work you do to prove the things you have are high quality, not a scam, secure, the better it appears. The less work you do, the worse it appears. Pretty simple concept, right? 

‘You preserve openness, but you leave the burden on the [app developers] to prove to the people who are going to be downloading this, using this, trusting it with their identity, their money, their privacy – you leave it to them to prove to you that they've done their homework and they've done it right. What Cardano is doing with so many great partners in the utility track is delivering that to you.’

That may have been part of the utility track, but as so often the other tracks of adoption, impact, and in particular governance seemed to peep through. And it was to this point that Hoskinson had the (almost) final word. ‘Oh, governance. This is the hardest one of all of them. Boy! Why? Because do we have a government that works!?’ 

There followed the biggest non-cheer of the night. A deafeningly silent anti-cheer. 

‘Exactly,’ Hoskinson continued. ‘The one thing I know from the 52 countries I’ve been to in the last few years, you know what? The number one complaint is: My government doesn't work. The Swiss say it, the Russians say it, the Chinese say it, the Japanese say it, the Americans, we say it. No one's happy with their government. So yet somehow, some way, we must build a government for Cardano together – that works. Good luck! And you know what? We're going to get it done.’

Catch up on all the announcements from the Cardano Summit 2021 website and IOHK’s Twitter.

Reporting by Dominic Swords.