The Shelley Upgrade, And Its Importance To Cardano.
The launching of the Shelley mainnet by Cardano in July meant that holders of ada can now enjoy staking rewards. The launch also translated to the hard fork that churned out incredible innovations on the Cardano’s blockchain code.
Cardano Staking: What It Is About?
With the coming of the Shelley launch, staking became live. Currently, staking comes in two kinds. A type which allows advanced users to run and manage their own staking pools. This would need great uptime, as well as innovative management.
The second allows ada holders to delegate their holdings to the staking pools. They do not need to put in the intense effort before they can earn rewards from this.
Cardano foundation is of the opinion that the average delegator will have 4.63% accruing to them annually as interest. The interest may be altered based on the level of participation.
According to the management team of Cardano, IOHK, there are more than four hundred staking pools at the moment, and they expect that it will scale through to reach a thousand, making it the most decentralised network. It was achievable during the testnet era, and they believe that it would be achievable again. During the testnet period, it saw around 12.99 billion ADA- $1.7 billion- been staked
Prior to staking launch, it was realized that not every user may have the skills, time or when the interest to stay online throughout and ensure that their nodes are available every second of the day before they can get involved in the protocol. This made them allow holders the option to delegate their ada to stake pools.
Immediately their holdings are delegated, the users give their participation right to the operator of the stake pool. The users are then given a delegation certification which is made to show that they have delegated their ada to the stake pool.
Though holders may have delegated their participation rights to the operator of the stake pool, the holders still hold the full rights over their ada holdings and the earnings.
The parent company of Cardano, IOHK, is known for its naming standards. It loves to carve out its nomenclature from history and intrigue. Many have always wondered what made them give Cardano its name.
The Shelley was also named after the popular English Romantic poet that lived during the eighteenth century, Percy Bysshe Shelley. He was the one that created ‘Ozymandias’, a popular poem.
When you look at the sonnet written by Shelley at first, you’ll feel that it has no link to the distributed ledger technology. The poet was not in existence when blockchain technology was created or even when Satoshi Nakamoto churned out Bitcoin. Why then did Cardano name their project, Shelley?
To get this answer, we have to look further into the sonnet, ‘Ozymandias’. It romanticizes the end of an authority and the coming of something better. In this case, it could be the ending of centralization and the coming of the beautiful world of decentralization.
What Consensus Does Cardano Use?
With the launching of Shelley, Cardano’s consensus mechanism is the Proof of Stakes. This mechanism led to higher scalability, decentralization, security while offering energy efficiency.
Instead of using miners like in PoW, PoS use delegators/validators. In the case of Cardano, it will be based on how much ada are staked in a stake pool.
The variation of PoS used by Cardano is called, ‘Ouroboros’. In its nature, Cardano decided to name it after a historical figure. In this case it was christened after the self eating snake of the historical times. When it was launched at first, it was called, ‘Ouroboros’ before it was changed in 2018 to, ‘Ouroboros Praos’. With the coming of Shelley, its name was changed to ‘Ouroboros Genesis’.
A paper was released on the Ouroboros Genesis in 2019, and it was meant to speak at length on what makes it stand out from similar structures in the market. It is not news that many blockchain protocols use some sort of Proof of Stake consensus mechanism, but many of them fail in addressing the issue of dynamic availability.
Let me break it down. In the typical PoS consensus, it is common to see a pool operator or a node breaking down, being offline temporarily or not reachable at all. The parent blockchain could even be out of tune with them. This offers a great issue because it is expected that every party in the PoS must be in sync and reach a consensus before any transaction can be validated.
What this means is that once a node is not reachable, the consensus can’t be made. If the other participants decide to join again, or a new set of participants want to join the chain, the others may have doubts about how secure and true the blockchain is.
If the aforementioned occurs, retail investors may lose their funds. It could even worsen into a system failure of heightened magnitude for those institutional participants that manage advanced financial platforms using the Proof of Stake blockchain. This is a problem that’s common with many Proof of Stake consensus protocols.
The coming of Ouroboros Genesis heralds an innovative solution, as it allows the parties involved to ‘bootstrap’ from genesis.
What this means is that those participants that are offline and new participants can join the blockchain safely. Once they join, they can bootstrap or re-sync a copy of the Cardano blockchain from its beginning, which is the Genesis block. It combines the perk of PoW, which is the ability of participants to join the genesis block, with the advantages of PoS.
The coming of Shelley and the implementation of the Ouroboros Genesis brought in the most innovative PoS blockchain protocol in existence. This is awesome news for those firms that are looking for innovative software, as they can start implementing their solutions on PoS blockchains.