Thread by @Soorajksaju2

#Cardano saw an incredible amount of development in the 1st month of 2023

But when it comes to its influence over shaping the future of the #Cardano ecosystem

One development stood above all others

It's not #DJED or the launch of another dApp

Curious? Here's a thread 🧵👇

#Cardano is not designed to be a single "God protocol"

That embraces one set of trade-offs and denies flexibility

But #Cardano is designed to be a financial operating system

That is flexible enough to accommodate the arbitrary complexity of a broad range of usecases

This is why the design of #Cardano is based on the concept of "Separation of concerns"

A concept that #Cardano borrowed from the design of TCP/IP

The Internet's core communication system that enables every Internet-connected device to communicate with each other

In computer science,

"Separation of Concerns" is a design principle for separating a computer program into distinct sections

Each section addresses a separate "concern"

Which is a set of information that affects the code of a computer program

In #Cardano's design, this separation is between "Value" and "Computation"

#Cardano has a value ledger, which is called

▪️The #Cardano Settlement Layer (CSL)

And then, there is

▪️The #Cardano Computation Layer (CCL)

Where eventually, most of the computation will be executed

Cardano Settlement Layer (CSL) is designed to be

▪️Safe,
▪️Reliable
▪️Self-healing,
▪️Deterministic
▪️Decentralized
▪️and Upgradable

#Cardano SL has features such as

▪️ Cardano native asset standard

▪️ Extended UTXO accounting model

▪️ Plutus & Plutus Domain Specific Language (DSLs)

These features give #Cardano SL the ability to accommodate most of the DeFi, NFT, and custom user applications

But

There may be circumstances where Cardano's design choices are incompatible with some use cases

These specific use cases may require a trade-off between

Determinism, speed, upgradability, and other properties

So the idea of #Cardano CL is to be flexible and accomodative

#Cardano CL is designed to have different computational layers

with a different ledger, network, transaction, and consensus logic

These layers will have different trade-offs in terms of decentralization, reliability, safety, upgradability, and throughput

The idea is to provide different options using the #Cardano CL

To accommodate different business needs & use cases

also to be interoperable with other blockchains

Enabling a thriving & versatile economy

on top of the safe, deterministic, reliable & decentralized #Cardano SL

#Cardano CL is designed to work as a sidechain for the Cardano mainchain or #Cardano SL

That's why the launch of "Sidechain Toolkit" by @InputOutputHK

For developing custom sidechains on #Cardano

is the most significant development in the #Cardano ecosystem so far this year

So what is this #Cardano sidechain toolkit?

The Sidechain Toolkit is a set of components and recommendations

that allows blockchain developers to deploy customizable solutions as sidechains of #Cardano

The toolkit’s building blocks are designed to empower developers

This toolkit enables DApp developers to create custom sidechains

that offer advantages in

▪️Testability
▪️Scalability
▪️compatibility
▪️and interoperability

The toolkit is composed of three main components:

▪️Chain follower
▪️Main-chain Plutus scripts
▪️ and a Sidechain specific module

So, what are the functions of these components?

▪️Main-chain Plutus scripts

These scripts are deployed on the Cardano SL

They initiate the creation of a sidechain that will feature Plutus scripts for

▪️Registering block producer candidates

▪️Minting policies of the sidechain’s token

▪️& Facilitating token transfers

▪️Chain follower

The chain follower has the ability to monitor events on the main-chain that impact the sidechain

And transmit this information to the sidechain

The V1 of the toolkit uses a Cardano DB Sync instance for this purpose

▪️ Sidechain-specific module

This component is a component of the sidechain node validator

It is responsible for filtering & transforming data received from the chain follower

It presents them for processing based on governing rules of the sidechain technical specs

A sidechain is initialized by an SPO/"chain creator"

Who publishes the sidechain Plutus contract implementations

Which includes committee registration scripts

That allows SPOs to register or de-register as a candidate in the committee

The sidechain is validated by an SPO committee

Where each SPO is a candidate running a sidechain validator node

The sidechain is initiated when a quorum of validators is reached

In each epoch, a committee is randomly selected and handed over to the next.

The toolkit features a technical specification document with an overview and guides to Cardano sidechains.

Its features include:

▪️Transfer of data & assets between CSL & CCL

▪️Support for multiple consensus protocols, ledger rules, & languages

▪️Secure sidechain launches

▪️ Opportunity for the SPOs & Delegators

Depending on how rewards are set up on the sidechain

These custom sidechains provide new opportunities for the SPOs & delegators

As they can increase rewards by operating sidechain nodes

& getting sidechain-specific tokens as rewards

Eventually, as the ecosystem matures

and certain sidechain-specific tokens become valuable enough to be accepted by the whole ecosystem

Features like the "Babel fees could further increase the role of these tokens in the broader #cardano ecosystem

Cardano already sees an incredible amount of development activity when it comes to sidechains.

Here are some of the developments regarding sidechains :

▪️@WorldMobileTeam is launching a custom #Cardano sidechain using #Cosmos SDK

https://twitter.com/1082320694548066305/status/1618675139239096324

▪️@InputOutputHK is developing a new data protection-based sidechain, "Midnight"

That safeguards sensitive commercial and personal data

And provide unique and innovative usecases

iohk.io/en/blog/posts/…

@InputOutputHK ▪️MIlkomeda EVM Sidechain on Cardano is already up and running for almost ten months now

https://twitter.com/1450094001365917711/status/1508478019035357189

@InputOutputHK ▪️Shareslake sidechain brought the first stablecoin to the Cardano ecosystem

https://twitter.com/thepizzaknight_/status/1616141219259613198

Soon developers will be able to deploy a variety of sidechain solutions on #Cardano

using a variety of blockchain developmental frameworks like

▪️Scorex: github.com/hyperledger-la…

▪️Hyperledger Fabric : hyperledger.org/use/fabric

▪️#Cosmos SDK: v1.cosmos.network/sdk

On a side note:

it's very much possible that some of the most anticipated dApps on #Cardano may launch not as dApps on the #Cardano mainchain

but as a #Cardano sidechain

2023 could be the year for #cardano sidechains

TL;DR

▪️#Cardano's unique design provides a settlement layer that is secure & decentralized

▪️A computational layer through custom sidechains that accommodate different use cases

▪️The #Cardano sidechain toolkit will initiate the proliferation of the #Cardano sidechains /CCL

That's a wrap!

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This thread is inspired by @IOHK_Charles 's whiteboard video👇
youtube.com/live/cvROzVEAx…