Lars Brünjes, the Director of Education at InputOutputHK, an organization that supports the ongoing development of Cardano (ADA), a blockchain-enabled solution for building and deploying decentralized applications (dApps), says that establishing solid parameter values and maintaining flexibility will be “key to the growth and ongoing decentralization of Cardano.”
Brünjes, who holds a Ph.D. in Pure Mathematics and likes working with Haskell (a functional programming language used to create software on Cardano, among many other use cases), notes that most of Cardano’s (ADA) parameters are technical and are key when it comes to ensuring the safety and optimal performance of the distributed ledger technology (DLT) network.
However, he claims the technical side of Cardano doesn’t directly have a “significant influence on user experience.”
He goes on to mention that the Cardano project has three “distinct” goals:
- “We want to be truly decentralized, so that no one party can threaten the integrity of the chain,”
- “We want the stake pool operators to be incentivized to keep supporting our chain,”
- “We do not want these incentives to significantly change at any singular point in time in a way that might negatively affect the stability of the operators’ income.”
While these may be good goals, it’s worth noting that there are thousands of cryptocurrency projects launched since the release of the Bitcoin whitepaper and Bitcoin (BTC) protocol in 2008-2009.
With the exception of Bitcoin (BTC) and Ethereum (ETH), even though they’re also centralized in some aspects, there aren’t too many legitimate cryptocurrency or DLT-powered networks that are “truly” decentralized. In most cases, it has not been practical to maintain adequate or desirable levels of decentralization due to various technical issues and design limitations.
For instance, IOTA, a major distributed network platform, was hacked recently. The security breach led to millions of dollars in losses, which forced its developers to turn off the network’s main node. Although IOTA project developers had claimed the project was decentralized, it’s really not because it shows that any controlling party is able to independently shut down the platform.
While this may not be the case when Cardano’s mainnet goes live, it still remains to be seen whether the DLT platform’s developers will be able to reach their goals.
Brünjes writes:
“With decentralization comes democracy. Our community must have a say in how the chain is governed. For this reason, we will run with these numbers initially and issue a Cardano improvement proposal, where the community can vote on optimal chain parameters. In the end, the governance of Cardano will be in the hands of the Cardano community, who we feel confident are the best people to advise us.”
Many crypto and blockchain projects like Decred (DCR) aim to function in a similar manner, where the “community” decides what actions to take to maintain or further develop a network. However, it appears to be far from practical or ideal because when the network experiences problems, its creators have to step in to “fix” things.
This means the network isn’t truly decentralized.
Brünjes further notes:
“It … took Bitcoin around eight years to reach its peak of maximum adoption and price. We therefore feel that it makes sense to expect Cardano transaction volume and exchange rate to increase sufficiently over the next eight years to more than make up for the decrease of monetary expansion during that time.”
He concludes:
“Choosing good values for all Cardano Shelley parameters is a hard and complicated endeavor, because a lot of concerns have to be balanced – security, efficiency and stability of the system on the one hand versus economic viability for stake pool operators and delegators and long-term sustainability of the ecosystem on the other hand.”
It’s still debatable whether Bitcoin is really decentralized, because of miner centralization in China. The country has been home to most of the world’s major BTC mining centers.
Blockchain networks have also experienced scalability issues due to technical design limitations of current DLT systems. There have also been serious security issues that have led to numerous hacks.