What are the highlights of staking on the Cardano (ADA) network?
Cardano, also known as ADA, is about to enter the Shelley incentive testnet stage, mainly to test the operation effect of the staking mechanism. The PoS public chain, which can be called a "PhD project", was founded in 2015 and launched the main network in 2017. It will accelerate its pace from the recent incentive test network stage to catch up with the goals of each stage on the roadmap.
The incentive test network will attract many stakers to participate, including professional verification nodes and ordinary currency holders. This network with a total market value of about 1.2 billion US dollars exceeds the two major public chains of Tezos and Cosmos in volume. It will converge into the overall scale of PoS network staking and become an important part of "stakeable assets" after the Shelley mainnet goes live.
This week’s stakefish article will mainly introduce Cardano and its staking. After reading this article, you will understand:
Cardano's network progress
Features of its consensus algorithm Ouroboros
The uniqueness of its staking mechanism
Shelley Incentivized Testnet Participation and Rewards
Enter the period of accelerated development
The Cardano team, which has always been "slow and meticulous", is not satisfied with launching some "minimum viable products" ("minimum viable product")", which explains to a certain extent why this joint design and development by the University of Edinburgh, the University of Athens and the University of Connecticut The "PhD" public chain has gone through a long polishing process.
Aggelos Kiayia, Cardano's chief scientist, also pointed out that reliability is the biggest goal of network construction, and what should be considered is not the performance of the ideal environment, but the effect that can be achieved in the worst case.
(Image Source:
(Image Source:https://cardanoroadmap.com）
Looking back at the first phase of the Byron network, the community responded to more than 60,000 questions, submitted more than 23,000 codes, and made multiple revisions to the design process.
In June this year, the Shelley testnet was launched. In mid-November, the incentive testnet process started. On December 5, the incentive standard of the Shelley incentive testnet was released. It is expected that the staking test will officially start on December 9. After that, we can also expect to see an acceleration of network progress.
Cardano co-founder Charles Hoskinson also conducted an online AMA on the day when the incentive standard was released, proposing that Cardano will accelerate its development process in 2020, and talked about the commercialization and capitalization of the network.
If things go well, people are expected to see the second phase of the roadmap—the official launch of the Shelley mainnet—in early 2020.
It is expected that decentralized applications will be added to the Goguen network in the third phase;
Then in the fourth stage, the Basho network greatly improves scalability, realizes interoperability, and reaches 10,000-level TPS;
Finally, in the fifth stage of the Voltaire network, which is the final stage, on-chain governance is realized.
All of the above progress is expected to be completed within 2020. It took 4 years from the creation of the project to the completion of the first phase, and within the next year, Cardano aims to complete the set tasks of the 4 phases (the research and development time periods of each phase overlap).
Understanding Ouroboros Keywords
Cardano is best known for its original Ouroboros algorithm, a PoS (Proof of Work) consensus algorithm. This means that when producing blocks, the Cardano network also depends on the amount of network equity to determine the probability of producing blocks. Under this premise, Ouroboros has its own characteristics in the process of producing blocks.
The Cardano team wants to cover as many different real-world environments as possible, which also makes its design more and more complicated, which makes it harder for people to understand the whole picture of this network. Among the "vast" papers and materials, we can first select a few key words for a brief understanding.
The first is the concept of time: epoch and slot.
In the Ouroboros algorithm, the block generation time is divided according to epoch, and one epoch contains 21,600 slots. The network generates a slot every 20 seconds, and it takes 5 days to complete all 21,600 slots of an epoch.
In each epoch cycle, multiple stake pools (stake pools, we often call verification nodes) selected by the algorithm are responsible for generating slots, and stake pools are also called slot leaders.
The second is the concept of layers: the settlement layer and the calculation layer.
The Settlement Layer (SL) acts like an account or balance ledger and is mainly responsible for the transfer of token value, while the Computational Layer (CL) is used to process smart contracts.
The two "layers" here are different from the concept of "on-chain + off-chain" of Layer1 and Layer2. Cardano's computing layer and settlement layer actually form a "double-chain" structure.
Uniqueness of staking rules
The incentive test network is not the final form of the Shelley main network, but is constantly adjusting thresholds and parameters, introducing new factors, and testing the game theory goals of the incentive model.
Even so, some basic principles have been relatively clear, and the design of these principles can also see the uniqueness of Cardano.
1. Prevent excessive centralization of nodes.
After an epoch is over, the staking rewards will be uniformly distributed to the equity pools participating in the block production according to their respective contributions (mainly based on the proportion of equity), and then each equity pool will be distributed to node operators and token delegates according to the proportion of entrusted tokens. people.
In order to restrain the excessive concentration of network rights, the rewards issued to a single equity pool have a maximum limit, and equity pools exceeding a certain size will not receive higher rewards, which means that entrusting an excessively large equity pool will cause a single agent to A reduction in currency returns. Therefore, people play games in the process of participating in staking, and achieve mutual Nash equilibrium in the process.
2. There is no slashing.
In the incentive mechanism of many PoS networks, there are two types of incentives: rewards and slashing. But Cardano doesn't have slashing set up.
When answering the question "How to ensure PoS security without a penalty mechanism", Ruslan Dudin of the Emurgo R&D team replied that because of its network characteristics, Ouroboros does not need to use slashing to ensure security like other PoS networks. The system is already in the security model and mathematics. Proofs are designed to ensure a robust transaction ledger. He believes that slashing is an optional but not necessary mechanism for PoS networks.
3. It can be traded while staking.
In previous discussions and articles, we learned that during Cardano’s staking process, token holders only entrust the right to participate in the network protocol, not real tokens. People can still transfer funds from their wallets while staking, and the tokens are not locked. This is a distinguishing feature that distinguishes it from many PoS networks.
This means that the staking of the Cardano network does not need to consider the issue of token liquidity, and the "unbinding cycle" does not exist, which will also greatly promote the increase in staking participation.
Engagement and Reward Rates
Cardano took a second snapshot of the Shelley testnet on November 29. Before the snapshot, token holders who operate in designated wallets according to the guidelines will be able to participate in the incentive testnet.
During the test period, the main network tokens can still be traded, and the staking rewards of the test network tokens will be transferred to the subsequently upgraded Shelley main network account. For token holders, the relevant operations are not complicated, and it is easier to get test rewards.
Number of Cardano network transactions
(Source: https://seiza.com/)
The significant increase in transfers on the day of the snapshot on November 29 reflects the degree of participation in the Incentivized Testnet. A total of 5,103 transactions totaling 29,231,089,753 ADA tokens were traded on-chain, accounting for more than 90% of the initial token supply. There are currently 3,000 people in the Telegram group, and many participants have already started stress testing for stability and settlement times.
According to the recently released Shelley testnet incentive standard, each epoch will have about 3.8 million ADA as a reward, and the reward rate will be adjusted according to the staking participation rate. When the participation rate is 50%, the reward rate is about 7%-8% , the reward rate is about 15% when the participation rate is 30%.
The official reward calculator of the Shelley test network has just been officially released. Both the equity pool and the token holders can check the estimated income under different conditions such as staking ratio, reward ratio, and equity pool size.
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