Thursday, September 8, 2022

How Cardano can be upgraded

At the time of writing, 95% of nodes are ready for Vasil upgrade. You can check the current status on Cexplorer: https://cexplorer.io/versions

Hard forks allow major changes to the protocol rules. In a decentralized network, the majority of people running nodes must agree to the change. Therefore, synchronization is necessary. The team creates a new version of the client that includes the changed protocol rules. People running nodes must install the new version if they agree to the changes. If they do not agree to the changes, they can continue to run the old version of the client.

Let's talk a bit about the protocol upgrade process. Most blockchains must be forked to enable updates. This can be quite a disruptive process that can result in forked currencies or ghost chains. Users are often faced with many questions regarding the following: What the update means for their asset holdings? Do exchanges and wallets support the update? Will the hard fork lead to network downtime?

Usually, a hard fork requires a sequence of the following steps. The pre-fork blockchain protocol stops operating temporarily. New changes and rules to the protocol are implemented. The post-fork blockchain restarts with the new rule changes. After the upgrade, two different blockchains can exist. One with the old rules and one with the new rules.

Cardano’s hard fork combinator is designed to streamline the network’s updates without requiring network stoppages or restarts. It does this by combining pre-fork and post-fork blocks for a transition period. The combinator allows for maintaining one continuous blockchain. Cardano’s hard fork combinator combines blocks rather than diverges the old blockchain with the new blockchain. This can be achieved without sacrificing the continuity of user experience or causing network interruption of any kind. There is no blockchain split after the hard fork combinator event. No new ADA coins, no new tokens, etc.

The IOG team took a completely innovative approach to hard forks and did not allow the creation of forked blockchains with new coins. In doing so, decentralization has not been sacrificed. Node operators are free to choose their client version.

For a hard-fork event to occur, 75% of the block producers must signal support for the new rules. Signaling is enabled by installing a new version of the client. It is possible to publicly track how many nodes have installed the new version and what percentage of blocks are created by the new client version.

In addition to the support of pool operators, other conditions can be defined to trigger a hard fork event. For example, the support of large exchanges.

Initiating a hard fork event can be considered a vote for change. The team cannot arbitrarily change the protocol rules without the consent of the pool operators and all stakeholders. Note the difference between Cardano and Bitcoin.

The team can change the protocol rules at any time. These changes may concern critical parts such as monetary policy. There is some social contract between the team and users that the team will not change important rules without debate and approval from the community.

For PoW networks, voting is done via hash rate. Only miners decide on the change. BTC holders cannot participate in the voting unless they operate an ASIC miner. The dominant miners in the network have a major influence. So a relatively small group of people.

In the Cardano ecosystem, all ADA holders make the decisions. ADA holders delegate coins to a pool of their choice. If a pool behaves differently than delegators expect, they can delegate coins to another pool at any time. This is quite crucial because the reason to delegate coins elsewhere may also involve voting to change the protocol rules. If delegators disagree with the new rules they will delegate ADA to pools that refuse to install the new client version. The stake of all delegators has decision-making power.

While only miners vote in the PoW networks, all ADA holders can vote in the Cardano network. Pool operators can only vote on the change through their own coins. The total stake of the pool, i.e. the number of blocks the pool produces, depends on the stake of all delegators. The distribution of decision-making power is more fairly distributed in Cardano than in PoW networks.


No comments:

Post a Comment