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How we’re scaling Cardano in 2022

With core smart contract capability now deployed, the next phase for Cardano focuses on performance optimization and scaling. And it starts right here…

14 January 2022 Tim Harrison 5 mins read

The Cardano project has always been committed to addressing the classic blockchain trilemma; scalability, security, and (importantly) decentralization. As the organization tasked with creating the core platform, we have always pursued a defined, clearly staged roadmap to deliver on Cardano’s capability and fulfill its long-term potential.

Utilising formal development methods and Haskell code – with deep roots into a peer-reviewed academic approach – we have delivered a robust, secure platform fit for the future. Built for correctness. We named this phase Byron.

An incredible community has grown up around our endeavors and, through a network of some 3,000 stake pool operators, we now have one of the most decentralized proof-of-stake networks in the world. This era of decentralization and stake pools we named Shelley, after poet and political radical, Percy Bysshe Shelley.

Goguen (which included the Alonzo HFC event) brought with it core smart contract capability, paving the way for DeFi and DApps. With initial Plutus capability now deployed, we continue to evolve the expressiveness of the Plutus language and the overall proposition, in collaboration with a growing community of developers.

Now, as we enter the Basho stage, we’re investing further energy into optimization and scaling. Building on these foundations, and steadily increasing capacity and throughput to deal with the growth in the DApp ecosystem and onboard first hundreds of thousands, then millions of new users. From DeFi degens to citizens of developing nations.

During the course of this year, starting right now, we’ll be pursuing this next phase of our mission. Parameter adjustments, improvements, enhancements and other innovations will all play their part in steadily increasing Cardano’s capacity & throughput during 2022. While maintaining the considered, safe approach that has served us to date. Yes, we anticipate periods of high demand, network congestion at times. We’re on an exciting journey and usage will be high. While we may at times feel impatient, this is the way. Here’s how we will optimize and scale as we grow.

On-chain solutions

Block size increase

The bigger the block, the more transactions it can carry. Block size was recently increased by 8KB to 72KB (a 12.5% increase); further increases will be applied over time based on ongoing system monitoring and overall network health.

Pipelining

Improves block propagation times by coalescing validation and propagation. The goal is for blocks to be propagated to at least 95% of peers within five seconds by reducing the ‘dead time’ between blocks (the block propagation overhead). This provides the headroom to make more aggressive scaling changes, such as increasing block size/increasing Plutus parameter limits.

Input Endorsers

Input endorsers improve block propagation times and throughput by allowing transactions to be separated into pre-constructed blocks. This improves the consistency of block propagation times and allows higher transaction rates.

Memory /CPU parameters for Plutus

Memory usage is more efficient across the chain. Specifically, there are memory improvements in Unspent Transaction Output (UTXO) handling, stake distribution, live stake distribution and pools, and hash representation.

Plutus script enhancements

Even more effective usage of the powerful EUTXO model through smart contract optimization, including:

  • Reference inputs (CIP-0031) – Plutus scripts can inspect transaction inputs without needing to spend them. This means that it is not necessary to create UTXOs simply to inspect the information held by an input.
  • Plutus Datums (CIP-0032) – Datums can be attached directly to outputs instead of datum hashes. This simplifies how datums are used, as a user can see the actual datum rather than having to supply the datum that matches the given hash.
  • Script sharing (CIP-0033) – Plutus script references can be associated with transaction outputs, meaning that they can be recorded on-chain for subsequent reuse. It will not be necessary to supply a copy of the script with each transaction, hugely reducing friction for developers. Reusing scripts in multiple transactions significantly reduces transaction sizes, improving throughput and reducing script execution costs.

Node enhancements

Improvements will help even distribution of stake and reward computations across the epochs, thus providing greater headroom for block size increases. Also, memory usage is now more efficient. Memory compaction reduces RSS footprint, and memory sharing means we need less data instantiated. Node version 1.33.0, from January 2022, reduces peak load at critical points, including the epoch boundary.

On-disk storage

By storing portions of the protocol state on disk, nodes will need to hold less in memory, meaning that RAM-constrained systems will be able to run nodes provided they have sufficient storage, and memory will no longer be a bottleneck on scalability. This will enable significant growth in the blockchain state.

Off-chain solutions

Sidechains

A sidechain is a separate blockchain connected to a main blockchain (the 'main' chain, also known as parent chain), through a two-way mechanism (the 'bridge') that enables tokens and other digital assets from one chain to be used in another and results returned to the original chain. Assets can be moved between chains as needed. One single parent chain can have multiple interoperable sidechains connected to it, which may operate in completely different ways. EVM sidechains coming to Cardano include dcSpark’s Milkomeda and IOG’s Mamba.

Hydra

Introduces isomorphic state channels to maximize throughput, minimize latency, incur low to no costs, and greatly reduce storage requirements. Hydra provides a more efficient means to process transactions off-chain while using the main-chain ledger as the secure settlement layer.

Off-chain computing

Offloading some of the computation, for example with Asynchronous Contract Execution (ACE) can drive greater core network efficiency. Transactions occur outside of the blockchain itself, yet can offer fast, cheap transactions via a trust model.

Mithril

To achieve greater scalability, you need to address the complexity of critical operations that depend logarithmically on the number of participants. Mithril will improve chain synchronization while maintaining trust. The result? Multi-signature aggregation that is fast and efficient without compromising security features.

Infographic credit: Mikki Pham/Fernando Sanchez

Optimizing Cardano

The path to network optimization lies in gradual step-by-step adjustments

10 November 2021 Tim Harrison 10 mins read

Optimizing Cardano

As a proof-of-stake blockchain, Cardano is built to be highly secure and resilient to network failures. Driven by the Ouroboros consensus algorithm, built-in Haskell that uses formal methods, and peer-reviewed academic research, Cardano is designed to provide a rock-solid environment to process millions of transactions globally, in a decentralized and highly scalable manner.

In our previous blog post, we discussed network performance – how the system works as a whole when processing, verifying, and signing transactions. Getting this right at the very earliest design stage is crucial if you want a system that is built for the long term. Yet, network capacity is a valuable resource, so for the most efficient performance metrics, it is essential that computation, memory, storage, and network resources are consumed effectively.

Cardano is built to be flexible. It is designed to maximize throughput while allowing for responsiveness to increasing demand. As the network grows, we are tuning protocol parameters to adjust to pricing fluctuations, extend scalability and throughput properties. So let’s take a closer look at how we will be optimizing network performance over time.

Defining congestion

Efficient systems – from networks to roads – are built to minimize congestion, while enabling effective management when it does happen. In blockchain terms, congestion implies that the network is oversaturated and experiences difficulties when processing large volumes of transactions and signing associated blocks. On average, Cardano blocks are approximately 25% utilized across a given epoch, which shows that generally, the network is not congested and there’s significant spare capacity to process an even larger number of transactions.

Cardano is designed to be fair and highly resilient even under heavy saturation. Let’s remind ourselves about the current parameter settings and look at future optimizations that are planned. Current performance metrics depend on the following measures:

  • Throughput — the volume of transferred data. The current block size is set to 64 KB. A single Plutus script transaction is currently limited to 16 KB, and simple transactions can commonly take up to around 300 bytes. These measures have been balanced to ensure good network utilization while minimizing transaction latencies. If increased significantly and at once, users will face increased delay in block adoption time. That is because throughput and timeliness are in tension with each other – maximizing throughput implies better network performance, but this can come at the cost of increased delay when the system is heavily saturated.
  • Timeliness — i.e. the block adoption time. The total ‘budget’ for block adoption is set to 5 seconds for a block to propagate across the network (95% of the stake) with a budget of approximately 50 milliseconds available for Plutus scripts. This is designed to allow the block to include both scripts and simple transactions without monopolization.

Recently, users recorded an increased waiting time for transaction processing which has been caused by large NFT (non-fungible token) drops. The reason for this oversaturation lies in the fact that a high quantity of NFTs was released at once which caused the following:

  • a large number of simultaneous NFT transactions
  • several users trying to purchase the same NFT and thus attempting to process transactions at the same time
  • simultaneous refund transactions to users who were unable to purchase the NFT

This scenario created network scarcity for the NFT sale and therefore a huge demand on the service – 43,000% of the supply. It is also worth noting that the ‘congestion’ period lasted for less than one hour.

This is a growing market and NFT creators are already starting to iterate their processes to minimize the impact of such drops on the user experience. It's still early and we are all learning fast. It should be noted that the process of minting NFTs is perfectly parallelizable, meaning there is no limit to this process. Once minted, NFTs storing the programmable swap code and assets required to transact are ready to interact with the market.

But in the short to mid-term at least, this is a matter of building more efficient traffic systems rather than widening the roads. Some developers are already producing such systems specifically for NFT drops, which should reduce costs as well as short-term network loads.

Decentralized exchanges (DEXs)

Many early DApps being built on Cardano are DEXs or Decentralized Exchanges. And in some applications users tend to experience contention while placing their orders. Because the DApp design prerequisites that the whole state is kept within one UTXO (rather than spread across multiple UTXOs), there occurs a dependency of a future transaction on an output from a previous transaction. This has been widely referred to as the concurrency ‘issue’. However, trundling out that automobile analogy again, it is no more of an ‘issue’ than driving on the left is an ‘issue’ in the UK or Japan. It does require a learning curve but ultimately it is just a different way of doing things. And if a developer doesn’t do it, yes, they will encounter problems! Nor is it inherently more complex – just requires a different approach.

Cardano’s EUTXO model is different from the account-based model. DApps built on Cardano should move away from the single-threaded state machine style and go down a level of abstraction to the EUTXO directly, constructing a solution that involves concurrent edges in the EUTXO graph. It is important to use different sets of UTXOs thereby enforcing parallelism which will improve the throughput of the system while keeping the performance of individual operations the same. Sure, this does require a shift in mindset to any developer used to Ethereum’s approach. Yet, the UTXO-based model is more secure than the account-based model because keeping all the state in a single account is more vulnerable to attacks. If using parallelism techniques correctly, users will enjoy improved results in terms of throughput and scalability whereas off-chain solutions are better applicable to UTXO ledgers. For more details read the concurrency blog post and how to build a scalable Plutus DApp. We’ll publish further content on this in due course to provide additional guidance on making the most of the model.

The optimization roadmap

Our focus at launch was always to provide core capability and correctness, before optimizing. This has always been our stated goal. We’re continuing to monitor performance and benchmark adjustments. As the network grows and Cardano functions at a higher capacity, we will be adjusting the parameterization to keep up with network demand. These are gradual upgrades that will be implemented step-by-step over the next few months to ensure that changes meet the network requirements and do not compromise on different properties.

We have carried out extensive analysis and started to implement node metrics that accurately measure the data diffusion time. Data diffusion is the process of distributing transactions and blocks across nodes that verify the blockchain. It is essential to provide nodes with the needed information so that the consensus algorithm can make its decisions.

We’ll likely be implementing an average waiting time from transaction submission to transaction adoption. Along with that, we are investigating and analyzing scenarios that will boost network performance iteratively over the short and longer term, including:

  • Block size increase — increased block size means more transactions in a block. The benefit is that there will be less waiting time for transactions to be adopted by a block during the periods of network saturation. However, there is a trade-off. Larger blocks take longer to propagate across the network. This also means that nodes will need more time to verify transactions. Although the block size increase is an option to increase network performance, such changes should be executed with caution. To ensure that the increase does not compromise block adoption time, we will gradually change parameters and assess the results during high saturation periods. This is not a one-step update, but rather an iterative approach that will provide us with clear results and help ensure the most efficient adjustments.
  • Mempool size — currently, the size of the mempool is set to 128 KB, which is twice the size of the current block. The mempool works as the network buffer and may cause short delay when including transactions into a block. However, mempool size increase won’t improve network throughput – transaction queues will stay the same. The mempool allows for a fair adoption of new transactions that enter it randomly based on the producing node that is chosen by the lottery algorithm.
  • Script compression — given that the current transaction size is set to 16 KB, we’re continuing to work on compression, which allows the protocol to ‘zip’ the code in a transparent manner. This means more script transactions in one block due to their decreased size – developers will be able to submit more sophisticated code compressing it to 16 KB or less, and there will be more space left for other transactions.

Architecting for EUTXO

As described in our previous concurrency blog post, Cardano’s EUTXO model eliminates entire classes of problems when designing DeFi applications. In addition to EUTXO’s native ability to process transactions in parallel, the model’s deterministic nature ensures that developers and users can avoid wasted ‘gas’.

That said, the EUTXO model isn’t the same as the account-based model. Lifting and shifting application architecture intended for account-based systems to a EUTXO-based system will result in a suboptimal application design. Applications designed specifically for Cardano’s EUTXO model will provide the best user experience.

We’ll publish a deeper technical dive on how developers can optimize order submission and processing, for example, to the EUTXO model shortly.

Iteration & Improvement

So there is plenty of work going on behind the scenes as we continue to evolve and iterate. These are still early days, and we will continuously assess network performance and adjust parameters accordingly as we go. In the short term, we’ll be able to ease NFT drop congestion by more evenly spreading the stake distribution and reward distribution computation. This will in turn enable us to increase the block size, eliminate pauses and congestion at epoch boundaries, and remove computational spikes (which can cause slower block propagation). Gradual block size increase will also let us assess the best case scenarios for network performance and these results will be soon visible on the network.

We also plan to move the ledger state to disk storage to ease the on-chain load, alongside script compression and on-chain sharing features implementation. When finalized, they will greatly complement network adjustments.

In the mid-term, Hydra will bring additional capability. Longer-term, our Chief Scientist and team continue to research other methods and mechanisms around pricing frameworks and enhancing the Ouroboros protocol to increase transaction throughput. More on this in future blog posts!

Two months in

We are just two months since the start of the smart contracts era on Cardano. Whatever the weight of expectation and anticipation around the ‘launch’, this was never going to be a one-hit upgrade. Just as it was always going to take time for the ecosystem to build momentum, there was always going to be a period of bedding in and then adjusting, as demands on the network grow. We’re on a journey and understanding community feedback remains key. Talking to many of the exciting new projects #BuildingOnCardano, we’re building a better understanding of their plans and objectives – along with any issues they are facing – so we can support and serve as needed. We’re also closely following the community debate.

It’s early days and we’re all still learning. Yet, by design, Cardano is set up to flex and grow alongside its nascent – yet already vibrant – ecosystem. Let’s all keep building!

If you are a developer and want guidance, support, or just fancy dropping by for a chat to one of our open sessions – make sure you join our growing technical community on Discord.

My thanks to John Woods, Vitor Silva, Kevin Hammond, Duncan Coutts, Romain Pellerin, Michael Peyton Jones, Jean-Frederic Etienne & Olga Hryniuk for their support and feedback in preparing this blog post.

Cardano to integrate Chainlink oracles for real-time market data

Our new collaboration will add additional support for developers building smart contracts for Cardano DeFi applications

25 September 2021 Tim Harrison 4 mins read

Cardano to integrate Chainlink oracles for real-time market data

At the heart of the potential of DeFi and RealFi is the use of blockchain-based peer-to-peer technology to build reliable and transparent financial products using oracles and smart contracts. During today’s Cardano Summit, we announced an exciting new strategic collaboration with Chainlink Labs that will help developers build smart contracts for Cardano DeFi applications.

Access to real-world databases will be supplied through Chainlink’s decentralized ‘oracle’ networks which provide tamper-proof, high-quality external data to blockchains, enabling ‘smart contracts’ to execute around datasets such as election results, sports stats, and cryptocurrency rates. Another example that might be quite useful is in the provision of weather data. Chainlink Labs works with several FinTech startups that are trying to enable parametric insurance in sub-Saharan Africa. Secure, verifiable and robust weather data is a key input required for such parametric insurance contracts.

Chainlink provides oracle services to power hybrid smart contracts on any blockchain. Chainlink oracle networks enable smart contracts to reliably connect to any external API, leveraging secure off-chain computations for feature-rich applications. Chainlink currently secures tens of billions of dollars across DeFi, insurance, gaming, and other major industries, offering global enterprises and leading data providers a universal gateway to all blockchains.

As the preferred oracle solution for Cardano, developers using the blockchain will be able to feed Chainlink’s institutional-grade data into their smart contracts – blockchain-based digital agreements that execute automatically once certain predefined conditions are met.

After market price feeds, support for other Chainlink decentralized services will follow: sports data for prediction markets, weather data for parametric insurance products, and verifiable randomness for gaming and digital collectables such as non-fungible tokens (NFTs).

This collaboration between IOHK and Chainlink Labs will give access to a wealth of secure data, helping DeFi achieve its promise of building a less costly and more inclusive global economic system. Initially, information feeds for real-time market prices will be linked to Cardano. Over time, additional data feeds on sports and weather will follow, for use with insurance, gaming, and NFTs.

IOHK Founder Charles Hoskinson said: “Oracles are essential to making real-world data accessible on Cardano and they support advanced smart contracts, such as DeFi applications.

“IOHK is committed to providing developers with the most secure and robust tooling for building useful solutions on Cardano, making it an easy choice to integrate Chainlink’s market-leading oracle solution.”

He added: “Not only will integrating Chainlink price feeds reduce the go-to-market time for Cardano developers, but it will establish a secure foundation for Cardano’s DeFi ecosystem, helping make Cardano more trusted by users around the world.”

Sergey Nazarov, co-founder of Chainlink, said: “We’re excited to leverage our extensive experience and expertise by establishing native support for Chainlink on the Cardano blockchain and supporting its next stage of growth into markets like DeFi and beyond.

“Similar to programming interfaces in web app development, developers building DeFi applications on Cardano will be able to plug-and-play Chainlink price feeds into their smart contracts to quickly gain access to high-quality, real-time price data on a wide range of assets while still maintaining robust security and uptime. Ultimately, this will empower developers on Cardano to build next-generation applications quicker and more securely.”

Niki Ariyasinghe, head of blockchain partnerships at Chainlink Labs, said: “We have a tremendous amount of respect for the Cardano ecosystem. Obviously for the technical team behind Cardano – IOG and so on – but also for the collaborative nature of the community as well."

Ariyasinghe added: "Cross-chain interoperability is another longer-term goal. This is really a framework for enabling bridges between different chains and enabling a multi-chain world. So this is something that we hope to collaborate on with the Cardano ecosystem as well.”

Today will feel like a destination. Yet a new, exciting journey begins...

The Alonzo upgrade is an epochal moment in the birth of a new ecosystem

12 September 2021 Tim Harrison 10 mins read

Today will feel like a destination. Yet a new, exciting journey begins...

Later today, we'll deploy Plutus smart contract capabilities onto the Cardano mainnet via a hard fork combinator (HFC) protocol upgrade event.

The Alonzo upgrade will bring highly anticipated capabilities to Cardano through the integration of Plutus scripts onto the blockchain. These will allow the implementation of smart contracts on Cardano, enabling a host of new use cases for decentralized applications (DApps) for the very first time.

It’s only just the beginning. But this is still a moment for celebration. As a community, we have been on an incredible journey together. Rightly, we should allow ourselves to acknowledge the tremendous efforts made by so many to get here. This will also be a time for reflection on the challenges we've collectively overcome.

While we might allow ourselves some brief downtime, this is no moment to rest up. And there is certainly no room for hubris. This is where the mission truly begins as we – the whole community – start delivering on the vision we have all been working towards for so long. Building a decentralized system that extends economic identity and opportunity to everyone, everywhere.

The road to here

While many years of research and development have prepared the ground, it was the Byron reboot in March 2020 that truly laid the foundations for the network we have today, by providing a robust and scalable code base on which to build. In July the same year, the Shelley upgrade shifted Cardano from a federated model towards a decentralized one.

Since the end of March 2021, when we adjusted the network decentralization parameter to D=0, every block has been produced by a decentralized network from a community of 2,868 stake pools.

It’s a remarkable staking ecosystem that continues to grow rapidly. According to statistics from Cardano data aggregation tool Pooltool, the number of ada staking wallets today stands at 825,755. This represents an increase of 35%+ since June. At the time of writing, the total ada delegated to stake pools is valued at $ 59.86 billion, accounting for 71.4% percent of total ada supply ($ 83.9b).

March’s Mary upgrade created a multi-asset network and introduced native tokens. As well as providing an alternative to the ERC20-type model, Mary released a Cambrian Explosion of creativity. With low minting and transaction fees and, uniquely, no need for smart contracts for Cardano NFTs, we have seen the blooming of an incredible NFT ecosystem. According to data from pool.pm (powered by Smaug pool), Cardano has seen 780,436 tokens minted to date and 19,419 policies. All without the need for smart contracts.

Enter Alonzo

The Alonzo upgrade (named after the pioneering American mathematician Alonzo Church), will build on this success. Deployed using the same HFC technology used in previous upgrades, this will mark the beginning of a fresh period of rapid growth. By allowing Plutus scripts to be written and executed on-chain, we’ll have the backbone for a new decentralized application platform, enabling numerous DApp and decentralized finance (DeFi) use cases – from simple swap type apps to decentralized exchanges (DEXs), and more complex computational programs such as Oracles and crypto-backed algorithmic stablecoins.

So, we have one of the most decentralized, sustainable, robust, and advanced blockchain platforms in the world, run by a skilled community of stake pool operators (SPOs). We enjoy an informed and passionate community of delegators. We have a thriving NFT ecosystem, attracted by the ease and low-cost of minting. Oh, and a roadmap for future governance through Voltaire and ultimate scalability through Basho and Hydra scaling. The future is bright and stretches far; we’ll continue to travel the long road together.

The birth of a new developer ecosystem

All the core building blocks are in place. Platform. Vision. Mission. Community. It is still very early days for smart contracts and DeFi, yet we have made great progress already.

Thousands of developers have been taking part in the Plutus Pioneers course, learning the fundamentals of Cardano’s native development framework. Scores of projects have already started developing in Plutus and are at various stages of expertise and readiness. Hundreds of projects have been actively working on the various Cardano testnets and privately-hosted solutions. Some 150 projects are developing their ideas via Cardano’s Project Catalyst innovation program, the world’s largest decentralized innovation fund. In the latest round, 800 – yes, 800 – projects applied for $4m-worth of funding. With a treasury now worth well north of $1bn at today’s values, and 33k+ members, the future for building on Cardano couldn’t be brighter.

For a snapshot of just how many projects and organizations comprise the ecosystem, visit our Essential Cardano repo. Or check out the various excellent ecosystem maps (these are representative, though none are comprehensive) out there like those from the Cardians (see Figure 1). These don’t represent what projects will be visible right away. But they offer a beautiful vista.

Figure 1. Ecosystem map by @Cardians_

We look forward to seeing these projects evolve as they head towards deployment. Some are close to the launch pad, others further off. Following the release of our first full public testnet earlier this month, and now the mainnet, we expect to see many start to ramp up their development activity.

We are still early

Let us be clear. There will be bumps in the road. Early user experiences might not be perfect. Some early DApps will have issues. We'll see some great development teams and some poor ones. This is a permissionless, decentralized blockchain, so this is inevitable. And a few DApps may prove insecure. Cardano’s secure layer 1 platform offers robustness and high assurance – and Plutus is designed to minimize the potential for exploits. But poor coding practice can always introduce risks for DApp users. Inevitably too, we can expect bad actors looking to take advantage via hacks, exploits, and the likes.

As a community, we need to be vigilant as our ecosystem matures. In fact, we believe that to mature across the industry as a whole, certification needs to be taken more seriously. At the summit, we’ll announce plans on how – along with a number of strategic partners – we’ll be supporting the creation of new standards and solutions.

Do Your Own Research

As ever, we encourage everyone to do your own research (DYOR). Look to your fellow community members for ‘crowdsourced due diligence’ and provide your own contributions. Look for projects with a positive history of open and transparent communication, properly maintained social channels/websites, and technical track records. Be sensible out there, especially in these early days. Alongside confidence in DApp security and project intent, DApp discovery will also be key to the healthy growth of the Cardano ecosystem. So expect to hear more on that at the summit, too.

The summit will also be a time for celebration, although there will be those who will seek to sour this. While our community is always open to being challenged in good faith, we have grown too used to Twitter’s and Reddit’s fear, uncertainty, and doubt (FUD) – from the biased and the willfully ignorant. Every project receives its share of this toxicity, and a greater degree is inevitable around major releases.

This is a disappointing element of our immature industry. We need to do better if we want to accelerate wider adoption. The FUD has been particularly virulent this past week. For me, it's a daily part of the job. Fortunately, most of my colleagues focus on building and don't concern themselves too much with CryptoTwitter™.

We shall see plenty more FUD and nonsense over the weeks ahead. Things will likely get uglier before they get better. Whatever. This will only strengthen our resolve to prove the naysayers wrong. We also have a vibrant and passionate community that never fails to support the project and respond with facts and courtesy. That continues to make everyone working on Cardano exceptionally proud. Thank you.

We are still early

Let’s remain steadfast through the storm. And focus instead on a bright horizon. We expect to see the first simple smart contract scripts deployed on Cardano within hours of the HFC event. It will take a while longer for more sophisticated DApps to start rolling out via the public testnet. With hundreds of projects building behind the scenes, we expect to see projects deploy through September and October, and accelerate through Q4. Especially with launchpads, tools and frameworks, including the Plutus Application Backend (PAB), and community-created APIs becoming available.

There are high expectations resting on this upgrade. Some unreasonably so. Cardano watchers may be expecting a sophisticated ecosystem of consumer-ready DApps available immediately after the upgrade. Expectations need to be managed here. We should remember that another well-known blockchain project which launched in July 2015 had to wait over two years before its first DApp (something to do with cats?) gained real user traction.

Steady iteration and improvements

Over the coming months, we’ll continue our cadence of fortnightly releases of new code, regular maintenance upgrades, and major HFC events each quarter. We shall continue to tune and optimize the platform, adjust performance, and refine pricing parameters as we track and monitor usage patterns. Only real usage will reveal how we need to adjust our flexible and scalable platform over the months of growth ahead. We shall also be looking to the growing developer community and the Cardano Improvement Proposal (CIP) process to bring further capability based on key requirements and needs.

The Alonzo HFC event will deploy Plutus 1.0, the core platform which itself will continue to evolve and bring more functionality over the coming months. Plutus is our native language, but of course, it is only the beginning here too. New bridges, sidechains, and other layer 2 solutions will bring in fresh options and an ever wider developer base. Future upgrades stemming from the work being done on Hydra will add further capability. Research papers like stablecoins, Babel coins, and stable fees will also in time start moving toward the prototype phase, bringing further innovation to the longer-term roadmap.

So, while we remain focused on continuing to research and develop longer-term utility for the platform, the ecosystem will evolve fast over the coming months. It's going to be quite a ride, with a huge amount of activity within the community.

Exciting times ahead

The Alonzo upgrade is a transformational network upgrade that will catalyze a blossoming ecosystem of developers, creators, and innovators. Later this month, we’ll have the Cardano summit. This week, we finalized the sessions. With over 100 sessions and more than 40 hours of content spread over multiple tracks across two full days, this will be the most significant event in Cardano’s history. It will be a celebration across virtual worlds and real-life meetups, a showcase of where we are today, and a forum to talk about where we’re heading. A reflection of a budding ecosystem that, while young, has always shown great maturity of purpose. And a platform for exciting new announcements.

So as we pass the epoch boundary today, let's take that moment. We can allow ourselves a celebratory whisky or two (even if it's just a cheeky splash in our morning coffee for our friends in Asia and the Southern hemisphere).

Let’s be proud of what we have achieved. But this is where the real work begins.

Let’s go.

Decentralization: to D=0 Day and beyond

Stake pool operators today take over block production and their role is set only to grow

31 March 2021 Tim Harrison 7 mins read

Decentralization: to D=0 Day and beyond

Today at 21:44:51 GMT, block production on Cardano will be fully decentralized. That is a watershed. From a federated network of seven core nodes run by IOHK, Emurgo, and the Cardano Foundation, we’ll emerge into a decentralized landscape where the stake pool operator (SPOs) community will produce 100% of blocks.

Cardano is a proof-of-stake blockchain platform, founded on peer-reviewed research and delivered through evidence-based software development processes, by a team of world-leading researchers and engineers. From this technocratic core, Cardano exists to steadily redistribute power to the edges – to a community of individuals. And to empower them as an enabling force for change and progress.

Our SPO community has been instrumental in bringing Cardano to this point. When d, the decentralization parameter, reaches zero, SPOs will become responsible for creating all blocks on Cardano.

Why decentralization?

In everyday terms, decentralization is the delegation of power from a central authority to a wider group of bodies. But that definition only scrapes the surface in the context of cryptocurrencies and blockchain.

Cardano's technical journey to full decentralization continues through phased developments that include degrees of block-production from SPOs, peer-to-peer (P2P) network discovery, and ‘gossip’ with peers exchanging information among themselves. It involves the deployment of advanced community-led governance and decision-making frameworks, culminating in fully decentralized software and protocol updates. Ultimately, it will result in the creation of a platform wholly and democratically operated and controlled through a global community of SPOs, developers and ada holders.

Decentralization is a core value and driver for Cardano, and we are far from alone in this. The mainstream financial world has recognised that blockchain and the decentralized finance (DeFi) technology it enables has the potential to spawn a new financial system as revolutionary as the internet itself. And that is just part of a trend towards decentralization. Open protocols between renters and providers of data storage that anyone can use have the potential to disrupt the dominant centralized cloud server providers such as Amazon and Microsoft, and there are similar trends affecting video and communication networks and gaming. Cryptocurrencies first brought people into the blockchain world and now the buzz around non-fungible tokens (NFTs) is encouraging them to interact with blockchain in a new, fun way. These trends are introducing blockchain to the mass market.

Power to the edges

Centralization has shifted the balance of power, from the people to corporations such as Facebook and Google, creating a virtual information monopoly. Because of their unchallenged market positions, centralized authorities enjoy data hegemony over their consumers.

Decentralization is the antidote to this concentration of power and the risks that it brings. Decentralization empowers the individual to make choices and decisions, it returns ownership of personal information to where it belongs, it pushes power to the edges and enables every participant in the network (or ada holder) to have a stake.

There are three pillars to Cardano's decentralization: block production, networking, and governance. These are intrinsically linked to one another, and work synergistically to create a unified outcome: full decentralization, which lies at their confluence.

Pillar one: block production

Every blockchain relies on the addition of new blocks to grow and thrive. With the Byron era deployment, core nodes – managed by IOHK, Emurgo, and the Cardano Foundation – were wholly responsible for creating blocks and maintaining the network. The advent of Shelley and the Incentivized Testnet in 2019 served as testing ground for decentralized block production. The results demonstrated the viability of such an initiative. In other words, the Incentivized Testnet experiment proved that Cardano could be reliably sustained by a network of community-run stake pools. As of epoch 170 on June 3, 2020, there were 1,299 registered stake pools, 413 of which were creating blocks.

Today, we now have about 2,300 pools, with a healthy proportion creating blocks and rewarding delegates. Some are controlled by exchanges, others by single-pool community operators. All bring value to the network. The former through their ability to bring new ada holders into the ecosystem, the latter through their contribution to continuing decentralization and encouraging grassroots engagement. We are committed to encouraging decentralization, and adjustments this year to parameters such as k (maximum pool size) and pledge along with our community delegation strategy – and more on that later this week – will continue to propel this agenda forward.

Pillar two: networking

The second pillar of Cardano's decentralization is the implementation of peer-to-peer (P2P) networking, which has also been tested with Shelley. The aim here is to link together geographically distributed pools to provide a secure and robust blockchain platform.

On mainnet, this feature will use a set of mini-protocols and a classification of cold, warm, and hot peers so a given node can make the best decision when selecting connections. From a networking perspective, we are in a hybrid phase where manual processes are required from SPOs to maintain network connections. When d=0, all the core nodes will be retired as SPOs take over block production. IOHK will continue to maintain relays but, increasingly, the SPO network will also take on this role. To dig deeper into this, check out this segment of March’s Cardano360 show, where Cardano chief architect Duncan Coutts laid out the P2P roadmap.

Pillar three: governance

The Goguen roll-out has already introduced transaction metadata and native tokens to Cardano. Arguably, this has been the most apparent manifestation of growth and progress for Cardano since the Shelley launch.

Yet, at the same time, we have also seen the rise of something even more powerful: an engaged community of builders, creators, and entrepreneurs within Project Catalyst. At the time of writing, the Catalyst community includes 17,000+ worldwide members. This pool of decentralized talent includes entrepreneurs, experts, and specialists across many areas, and provides a vast reservoir of ingenuity to ensure the best and brightest ideas get the funding they deserve.

A layer of solid governance supports the very core of what Cardano is trying to ultimately achieve: a blockchain where a community of stakeholders makes practical decisions about the chain’s protocol and evolution. Catalyst is the precursor to Voltaire, the development theme that will introduce the third and final level of decentralization through the integration of governance and on-chain decision-making/voting.

Voltaire will introduce:

  • Access to funding via a decentralized treasury (worth some $400m at the current ada price) within a governance framework where the community will have the power, through their ada stake, to influence Cardano's future direction
  • Decentralized decision-making on enhancements, network improvements, and parameter updates
  • Fully decentralized software updates: the process enabling decentralized, open participation for fair voting on decisions about system and protocol advancements

Conclusion: the fall of centralization

Decentralized block production – done. P2P networking – rolling out from April. Governance? Project Catalyst is on a roll and there is much more to come.

From a federated chain with centralized block production, to a chain with blocks wholly minted by the community. We are well on our way. When we have completed building all three pillars, we shall have created something truly unique. A network that is robust and resilient, yet flexible and adaptable to future growth. A platform that serves its users today, while empowering them to build fresh value and functionality for tomorrow. All within a democratic framework where the community makes the calls. True decentralization, standing atop those three pillars.