Tobias Ilskov 🛡️ Profile picture
May 23 14 tweets 5 min read Twitter logo Read on Twitter
Of #Cardano's three main scaling strategies,

Hydra will most likely be the first we see really improve Cardano's user experience since it's been in active development for a while now

So, where are we at, and what's coming next?

Here's the TLDR, and some unexpected Alpha 👀🧵 Image
Whatever the IOG's Hydra team has been doing, they've certainly been very busy

Consistently within the daily top 1-3 in Cardano-related Github commits.

And GitHub is where we can see what they're working on NOW and what's in their ROADMAP

WHAT'S HAPPENING RIGHT NOW

The team recently announced the first iteration of Hydra is mainnet compatible, but its use cases are still limited.

So, right now they're exploring use cases so they can tailor their approach to fit those needs
&
working on communication security Image
EXCITING ITEMS ON THE ROADMAP

Here's what's in the pipeline for the next several months.

1) Enabling Users to Enter and Leave a Head Without Closing it for Everyone

This will be done through incremental commits and de-commits Image
Example: If you and your friends were trading in a hydra head, you would be able to withdraw or "de-commit" your funds

without forcing your pals to also withdraw theirs and then have to open another head so they can continue.

Similarly, new people could join without disruption Image
2) Increasing the Number of People/Assets Who Can Use a Single Head

Unlike Bitcoin's Lightning channels, which only connect two people, Hydra head can host large groups of people and essentially any native Cardano asset.

However, there are limitations, because the current Image
Hydra iteration requires all assets in the head to be redistributed to their owners in a single transaction,

and while a single Cardano transaction can do A LOT, it isn't unlimited.

This limits a Hydra head's user and asset capacity to about 20 users at a time.
To address this, the Hydra team plans on devising a secure way to close a Hydra head using multiple transactions

that way, the # of UTXOs and users in a Hydra head will be able to be much higher.

This should allow more than 20 users and far more assets to be in the head at once
3) Multiple Hydra Heads per Hydra Node

In the current iteration, each Hydra node (the hardware Hydra runs on) can only host one head

This creates hardware inefficiency that limits potential transaction throughput

So enabling multiple heads is another high short-term priority. Image
4) Resilience

As of right now, it's unclear how live Hydra heads would respond during protocol-wide changes like a Chain Upgrade Event or parameter changes

Appraising those situations and resolving hiccups is another really important step in the Hydra head development Image
BEYOND HYDRA HEADS

These are the upgrades on the GitHub roadmap I thought were most significant, but this roadmap isn't the end.

After finishing the Head Protocol, there are two other main protocols in the Hydra family the team will turn to.
1) The Tail Protocol

This software will make it easier for people to use Hydra on low-capacity devices, like a cell phone
&
make Hydra heads capable of hosting assets whose owners aren't always online during the life of the head

These will be great for accessibility
2) The Cross-Head and Tail Communication Protocol

This will allow hydra heads to communicate with each other and with hydra tails without going through Cardano's L1

After this protocol launches, users will be able to send assets through a network of Heads, like on Lightning.
That's it!

Big thanks to @ch1bo_ for keeping the GitHub organized enough for a non-programmer like me to understand it,

and to @_KtorZ_ for this thread about Hydra a couple years ago.

Cheers everyone! 🥂

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More from @TobiasIlskov

May 24
When discussing Cardano parameters, most of us are familiar with k and minpool fee by now

but have you heard of

"a0" ?

This parameter governs how an SPO's locked pledge (their personal commitment) affects the reward rate they and their delegators earn.

Let's dig in! 🧵 Image
a0 is a variable in Cardano's staking reward equation

which can be any number between 0 - ♾️

and defines the degree to which an SPO's pledged stake affects the amount of rewards their pool earns with each produced block. Image
For example, if a0 were high, you might see:

A saturated pool with 50k ADA pledged by the SPO earn 2.5% ROI
&
Another saturated pool with 1M ADA pledged by the SPO earn 3.5% ROI

Both produce roughly the same # of blocks, but the protocol pays the pool with high pledge more Image
Read 13 tweets
May 17
Oroborous Vs BFT Style Consensus

Cardano is famous for it's security and robustness, but is its consensus mechanism more secure and reliable than competitors?

And if so, how?

Here are some reasons I'm bullish on Cardano's longest chain consensus mechanism 🧵👇 Image
First, we'll look at how Oroborous and most BFT protocols work

Then we'll look at how they hold up against likely attacks and network failures

Last, we'll summarize some exciting improvements coming to Oroborous over the next couple years.

This'll be fun!
HOW DOES OROBOROUS WORK?

As a PoS mechanism, Oroborous gives validators consensus power proportional to the stake (ADA) they and their delegators have.

Therefore, each ADA delegated to a stake pool operator is like a vote for who you trust most to run the network honestly Image
Read 25 tweets
May 16
I got some really good counter-arguments in the replies to this thread about the benefits making ADA inflationary.

I'm not quite as worried about the supply cap anymore

Here's some of the best arguments from advocates of #Cardano's supply cap

🧵👇
1) Tampering With Monetary Policy Sets a Dangerous Precedent

@cardanoan argued that if we introduce inflation to help incentivize staking, it would theoretically open the door to all the inflationary embezzlement we see and hate in TradFi. The supply cap needs to be untouchable
For example, if we allow inflation for staking incentives, what's to stop the government from issuing more ADA to fill the treasury?

We know all too well what happens when governments think they can print as much money as they want...
Read 11 tweets
May 15
Unpopular Opinion:

The more I think about it, the more I feel #Cardano's ADA supply cap is a long term liability.

We rightfully consider inflation one of the worst bogeymen of TradFi,

but in a PoS system I don't think inflation is necessary bad at all

My thoughts 🧵👇 Image
First we should ask, what aspects of Cardano does its monetary policy influence?

- The long term price of ADA (store of value)
- Staking Incentives (network security)
- Transaction fees (user experience)

Let's compare how these fair with capped and inflationary models...
With an ADA Supply Cap

STORE OF VALUE
- With a supply cap, the value of 1 ADA will definitely appreciate more as the network gains adoption than it would with inflation
Read 16 tweets
May 11
#Cardano has a lot of advantages as it moves into the next bull cycle

but it also has some serious short and long term issues that we need to understand and resolve

So, what are some of Cardano's competitive vulnerabilities?

Here are 8 🧵👇 Image
Vulnerability 1: Relatively high transaction fees

While Cardano's fees are a lot lower than #Ethereum and #Bitcoin, they are still significantly higher than other 3rd gen blockchain's like Solana, Algorand, Tezos etc...

From what I understand, the high fees are a result of Cardano's still limited throughput

When blockspace is low, transaction fees need to be high enough that attempts to DDOS the network are too costly to maintain

When throughput increases (more blockspace), fees can be lower
Read 26 tweets
May 10
Few industries are more competitive than the L1 Smart Contract Space.

Does Cardano have a moat?

Here's my analysis of CARDANO'S SUSTAINABLE COMPETITIVE ADVANTAGES:

I see 6 🧵👇🏼 Image
MOAT 1: Features of EUTXO (Hard, but not impossible to replicate)

With the exception of Ergo, all other SC chains use the account model, so effectively speaking the following advantages of EUTXO are unique to Cardano.

1) Knowing exactly what a transaction fee will be
2) Very low chance of transactions failing
3) No fee if a transaction fails
4) Easier parallel computation (scalability feature)
5) Possibility of REVOLUTIONARY defi innovations like Distributed Dapps (AXO, Genious Yield) which would be impossible on account-based chains.
Read 28 tweets

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