Cardano: Proof of “First Principles”
This article is about why #Cardano has a very high chance to succeed and bring mass adoption to the blockchain world. Full disclosure, if you are focused merely on economics and/or price related aspects,… then this document may not be relevant to you.
I recently read an article that nicely described the origins of SQL, how challenging it was to produce the solution, a model of how first principles can help resolve major problems. For starters, SQL is the standard database programming language supported by basically any database in the world. Nowadays, SQL is not only used by any database in the world but is also heavily used in many other modern information architectures: big data, analytical systems, data streaming,…Just to give you some perspective, data is everywhere, so are databases and so is SQL. Everyone benefits from SQL in one way or another: when you swipe your credit card, call customer service, purchase a product online, at the store, etc. Data is ubiquitous and so is SQL.
Originally developed by a few IBM scientists in the 1960s after 8 years of hard deep research, they had to decompose a major problem every scientist, mathematician, or engineer was facing back in those days, every time they needed to access content stored in large tapes, part of those gigantic, large-room-sized computers we have seen pictures of. The creators acknowledged that for the technology to succeed, they had to take a different approach, and apply the same novel methods used in other fields. First principles and scientific approaches allowed them to come out with a beautiful and well thought-out design.
Because the scientists took the difficult path, a suboptimal product was not created, therefore SQL was not phased out just a few years later, as many other technologies in history. If they had taken shortcuts, we would have ended up with proprietary technologies, no standards, lack of integrations, no ease access to information ,….which would certainly have put us back a few decades. Instead, they set out to scale out the solution to any information system, in other words an architecture unimaginable in those days… Of course, as technology evolved so has SQL (50+ years already) but… SQL is still SQL.
In loosely designed complex systems, errors and flaws happen over time. In many cases fixes make matters worse. SQL has survived many major technological revolutions. Yet it could adapt without changing its core. Today, major companies, public & private institutions and global academia work closely together to govern standards and ensure SQL’s longevity.
Simply put, extrapolate all that I discussed above and apply it to Cardano project. You can get an idea of the magnitude of this project. What a larger team of the brightest minds in different domains can accomplish. First principles and the best talent blended with a clear target of what a decentralized system should be.
Since its conception in 2015, researchers have been exploring and crafting that blockchain “nirvana” status so the technology can go mainstream in terms of mass adoption. This exercise has created a resilient high-performance system . Its component parts (some currently underway) are fully interoperable and interchangeable. After the whole system is fulfilled, Cardano will reach a level of maturity to position itself as arguably one of the most advanced blockchains, if not the most. At the time of speaking, Cardano has become the most decentralized network, in terms of number of nodes.
Personally, I see Cardano as a system that resembles a Swiss Army knife, carefully designed and crafted, where each component plays an important role at addressing one problem, while all are living in complete harmony. Different behaviors in the system, in the network are configurable, not through rigid clunky structures, but rather through smart “widgets”. Developers and operators (will) greatly appreciate these elements.
Given these many parts multiple governing bodies would need to oversee the evolution and longevity of Cardano ecosystem (as happened in SQL). This surely deserves another article in the future.
Many milestones have already been fulfilled and others are in different stages of development. It is hard to list all of them so I picked the ones I feel are the most representative and meaningful to the ecosystem:
- Proof of Stake, you can learn more on Cardano website
- Several mutations of Ouroboros protocol, the flagship protocol in Cardano, as well as many other underlying protocols
- Extended UTxO (EUTxO) model to efficiently and flexibly represent transactions in the network, among other things
- Multi-asset/native token support (for Non-Fungible Tokens, stable coins): with the same set of features as those can find in native Cardano ADA currency without the need to write custom code as in other networks (i.e. ERC20 in Ethereum).
- Development stack: comprehensive set of API’s, Plutus, Marlowe, K framework (this via partnership with Runtime Verification), oracles, interoperability (NIPoPoWs, many things here), off-chain, on-chain support, etc.
- Separation of settlement and computation layers so this way multiple settlement protocols could operate on top of Cardano’s computational layer.
- Data management and compression techniques (very needed in blockchains, more innovations to come in this area).
- Zero knowledge protocols (in some way also related to the above): SNARCS in Cardano via SONIC (details still vague but quite promising, https://eprint.iacr.org/2019/099.pdf).
Next, I will focus on a few aspects I feel are worth highlighting.
One of the main obstacles for a technology to succeed is its ability to manage growth without sacrificing performance and user experience. The higher the volume of transactions, the more likely it is that technical challenges arise. Another key element to measure scaling success is the ability for a system to add new features. The more the platform is used, the more likely it is for new requirements to arise: regulatory compliance rules from different jurisdictions, niche industry requirements, interoperability with other blockchain settlement protocols,…
Scalability is always one of the most complex problems to solve in any distributed system, in most cases an aftermath that lead to failure. Cardano has been thoughtfully built from the ground up with this feature at its core so large volumes of information can flow through the network.
Hydra (next evolution of Ouroboros protocol) is due by the end of 2021 and when realized, per some preliminary tests mentioned by Charles Hoskinson, Cardano will be able to process higher number of transactions per second than the combined sum of what MasterCard, AmericanExpress and Visa manage. We can only expect a ton of use cases benefiting from this feature from stable coins, banking solutions using Cardano settlement layers, financial applications, games and many others.
A hard fork constitutes a significant change to the network by a major upgrade or change (there are other reasons too) causing blocks and transactions from previous network version to become invalid, therefore rejected by the latest network protocol. This is one of the most upsetting and stressing events in blockchain technologies as unplanned events tend to emerge: new hard forks required to address errors, money is lost,… so people’s confidence in that protocol get deteriorated. One key reason for this to happen is that designs do not tend to contemplate these events, an afterthought.
We recently heard about an accidental hard fork in Ethereum when some developers were trying to fix a software bug, which accidentally triggered a hard fork so validating nodes unexpectedly went out of sync invalidating transactions which led to bigger problems… Transparency is another recurring issue in this type of events as many errors tend to be swept under the rug.
Cardano has gone through multiple hard forks until date, the most recently in December 2020 in preparation for the upcoming asset locking. This turned out to be a big test given more than 1200 nodes (stake operators), tens of thousands wallets, delegators got involved in one way or another. In hindsight, this event ran so smoothly that many did not even notice the major changes that took place. A testimony of why Cardano architecture was so beautifully designed, evolving upgrade protocols are applied without causing any disruption nor impacting the health of the network. A good example of what first principles can produce when applied (kudos to Duncan and the team).
Any major industry and large institution set to adopt these protocols will always demand SLA’s (service level agreements) as those players cannot afford big disruptions to their processes, users and/or customers, as any error would cause a big damage to their image. This is a metric many people are not paying attention to, but quite an important element for business adoption. As large players enter the space (not only from the investment standpoint), this is no longer a nice to have, but rather a must. Really hard to solve. Cardano earned AAA+
If there is something that I am really excited about, it is the attention-to-detail approach taken by designers as different component parts and network behaviors can be managed and fine-tuned through sets of parameters (no hardcoded elements, developers know what I am talking about).
Key factors (both economical and technical) are driving network status in one particular way today. As these drivers evolve so will the network configuration through the combination of some parameters (hard forks are for other things). This configurability feature will largely pay dividends in the future as the network grows. A good representation of parameters available today: transaction fee, pool size, decentralization, pool configuration, pledge weight, network performance, Plutus smart contract libraries (at the time of writing this article Goguen is not officially released but code is available in Github)…
Another feature, recently introduced, that speaks for itself about how elegant the protocol was crafted is the creation and issuing of new tokens. When you compare to other projects in the space, this feels like a breeze and gives you an idea of the network effect these features will unleash once the capability is fully released. Where in others, many lines of complex code (via smart contracts) are required to manage token lifecycle, in Cardano things are configured from the command line. Like night and day.
I hope you enjoyed this article, and at least you understand from a non economical dimension why this project has the potential to become a key component for this decentralized future many of us are dreaming of, without the constrains and limitations of today’s world, the old world.
Please share with others to educate people about Cardano.
Adavanz is based in USA, operates ADAVZ stake pool in cloud infrastructure across multiple regions, expanding to new countries. 24*7 uptime. I am passionate about decentralized technologies to improve people’s lives. More than 15 years of experience in IT architecture, cloud & development around the world.
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