Cardano Protocol Parameters

hi this is charles hoskinson broadcasting live from warm sunny colorado today is march 10th 2021 just a quick video to discuss protocol parameters i've noticed there's some chatter on twitter and some people discussing things the k value a naught different inflation schemes these types of things and when and how does that get captured by a democratic process as many of you aware we're in a rapid decentralization of the system and one of our biggest milestones is going to happen this month with d equals zero and then the next major milestone will be the delivery of peer-to-peer and then the next major milestone will be the delivery of genesis and then the final milestone is the delivery of a democratic process that enables system level parameters like k a naught and other such things to be changed through a series of votes in addition to that also ratification of a cip for a soft or hard fork using the hfc mechanism so as many of you aware we're firing on all cylinders and every person in the company is incredibly busy we're number one for commits for a reason because we're actually delivering a whole family of software for example the devnets the catalyst project with the rust code base all the ledger improvements that we have to make to integrate properly extended utxo and plutus and then of course building a proper voting model so the thought about the democratic process was that there's an initial set of parameters which are a start point it's almost an initial value for a differential equation and then the idea is that the system will reach some notion of a steady state or stability there and there would be a large amount of data that's generated about three to six months of data that we anticipated and those data will tell us a lot about the different properties of the system how egalitarian is it common problems we've seen for example exchanges creating pools or people having many pools under the same brand and so forth and the idea is that that objective reality of facts would be then matched to protocol parameters and the cip process about changing those protocol parameters or changing the designs of certain things for example when we talk about the side chains integrating an ethereum side chain and yellow side chain and catalyst to be interconnected with cardano it is very likely the control protocol for that are going to be an overlap of the stake pull operators who right now run the main network well if that's the case because they're doing additional things and taking additional load they need to be compensated for that so it'll likely result in a modification of the inflation parameter to reflect that compensation for those three additional networks that are there so we're in the process of designing a cip specifically for that and my hope is that that's actually the first cip that the community will directly vote on and approve through a bicameral model so the idea would be that the catalyst sidechain would be the first voting point should it pass there then it would go to the main network and be voted on by state poll operators via delegated votes so we're deep in the weeds of designing a system with a bicameral model and trying to get all these pieces in place and it's a long discussion and really it's a question about the totality of participation of ada holders as well as meaningful participation of ada holders so to me it's not good enough just to have a vote you also have to have a discussion of people actually informed what they're voting on and the right power dynamics and checks and balances and a proper deliberative process for that so the idea was that catalyst would serve as the starting point to build those social dynamics through a grant model and we've seen it grow from 50 participants to 16 000 participants in less than nine months and we believe that if this trend continues that those sixteen thousand participants will grow to perhaps fifty to a hundred thousand participants before the end of the year and constitute greater than fifty percent of the total holders of ada now if that's the case and those dynamics look productive and effective and there's lots of cool things happening like in expert class forms and delegation forms and you have the ability to admit different constituencies and checks and balances between those constituencies such as a bicameral model then i believe we're in a really good place to make good decisions about cip ratification and you really need a good starting point for cip ratification and this is a great example of that changes to the inflation parameter but by no means is that the end-all be-all there's also going to be persistent discussions about minimum transaction fees the minimum pledge amount the k factor and other such things and it's important that those have the ability to vote on and that's definitely something that was in the cardinal 2020 scope and it's what we work on every day there's more than 30 people in our organization that's all they do all day long they think about these types of things but it's important to understand that that work stream works in parallel with the plutus work stream with the performance improvements with a lot of other things the peer-to-peer networking and so forth and we're trying to feel parallelism as much as humanly possible so there's over a hundred engineers working full-time in various parts of the system more than a dozen organizations who are trying to make sure that that gets out in addition to the meta work that's happening for example the design and development of the cardinal 2025 roadmap for community voting the governance structure upon which that's going to be proposed and the development of a partnership set for all these things we'll have a lot more to say about voltaire the progress and how this deliberative process is going and how the funds are cumulatively building up to decentralized update system ratification of cips and change of system level parameters and dorr is in charge of that on our side and works with the cardinal foundation and works for the mergo and the general community and of course we do listen to people here and there but it's important to understand that this is a tremendously complex process and task and there's an enormous amount of work that has to be done on education the development of leaders as well as just technological improvements to get the system to completely work and to end so a little bit of patience does matter and i understand sometimes the frustration but you have to start somewhere and the goal is to get k to a thousand to make sure the original intent that came out of the formal specifications and the oxford paper is honored and make sure that there is a copious amount of data available to the general public about these things so that we can use that as a basis for discussions of improvements on our assad we have begun discussing and broadening the conversation above and beyond just our internal resources for example we brought in a firm called the prism group that have harvard economists and other people inside of it and this is one of the topic areas that we've been discussing in addition to that there's a long arc research occurring at oxford through elias's group where we're actually examining some of the things we thought were true and trying to look for improvements here and there and there have been many contributions for the community as whole through the cip process such as the curb benefit pledge for example which is a great piece of work and there's a lot of other cool ideas that come none of these really matter if you have low participation or sub-optimal participation so you need a representative sample of the holders of ada and that representative sample has to be informed or at the very least have access to people who are to delegate their voice to second it is important that this process be done in a systematic way where different constituencies have a chance to have input and feedback or else the system will not be legitimate and consent will not be of a certain scale that people consider that the changes to the system are worthwhile it's important to understand that what we're putting into place is kind of pre-decided it was okay genesis everybody agrees or aborts genesis is a good idea if we're going to change we change after that's been rolled out peer-to-peer networking it's a requirement for decentralization okay that's coming smart contracts okay that's coming a decentralized update system if you don't the update system that we've designed the very first update that can be proposed is an amendment of that update system that's the point it's a self-amending system in that respect and so the point of the system is the game nomic where the players can change the rules of the game there's a mechanism to do so there and that's done through community curation and a community process and it can go in any particular direction it's as much an experiment as anything else but it will take some time to get there and it's important to understand there's over 35 billion dollars of value now probably around a million people and it's a very large ecosystem and lots of moving pieces to it so regardless of whatever we do as a community it's important that we as a community understand that profound value at risk and that we must take this very seriously systematically and deliberately and also understand that different people have different incentives and different people will either win or lose based upon changes to the system so we take protocol parameter updates more seriously than pretty much anything else and as i said there's a 30 plus person team across all the teams that do this stuff and think about this stuff and there's tons of things to do and we keep adding more contractors and providers and we keep doing more research we keep generating more data and of course we keep writing more and more code so that we can eventually get to that point things are on schedule in terms of delivery and as i mentioned there's going to be a lot to say at the cardinal 360 episode at the end of the month and those episodes are going to continue increasing in depth and diversity as well as get much more involved on topics like governance much more involved on catalyst much more involved on the smart contract development side of things over almost 600 tokens have been issued on cardano since we did the mary hard fork and there's over 1300 people who are developers who have expressed interest in learning about cardano building something on cardano and there's over a hundred deals that we have in our pipeline just in my company that are serviceable many of which are cardinal focused or there's a strong desire for that so i think the issue we're having there is is more of an issue of communication versus reality there's a perception in certain circles being pushed by the ethereum crowd and others that were a ghost chain and there's no interest in cardano it's quite the opposite there's an overwhelming demand and interest in cardano and it's just more of an issue that we need to make sure we have proper shareables so in addition to the card on o360 update at the end of the month we're going to try to create a cardone 360 mini which contains one or two minute summaries of each content area and also make sure that we have infographics that are easy to share for surrogates so that that information can get out there it can be quite useful in the social media domain reddit telegram and other media which are not amenable to long form and then we'll have the primary show for the long form medium as well so a lot of things happening a lot of things occurring and the other thing i'm going to make sure that we have available either at the end of this month or the early part of next month is a single funnel for contacting or collaborating so if you want to be a stake pool operator if you want to be a developer if you're seeking investment for equity from our vc group or other vc groups if you want to grant from catalyst whatever your domain happens to be and there's dozens of potentials i want to have a one-stop shop website you go to you fill out all the paperwork in the form you click submit and then have an sla where we try to have a 48 hour 72 hour response time for that and get you where you need to go route you where you need to go whether it be amergo or the foundation or teach you how to use catalyst or get you a package of information to read to get to the next step whatever that might be it's very important that we get that unified approach and also localize the unified approach across cultures languages and skill domains what ends up happening is a lot of people tend to email me and that's great and i forward it as much as i can but you're just introducing a huge amount of latency if you come directly to me i on average get more than 500 emails a day related to stuff about cardano and other topics it takes me hours to go through my email and some days i don't and i fall behind so you are contending with those other 500 emails if you're emailing me on a and so just be aware of that so it's much more important that we have a better way of processing that huge influx of stuff at least from contacting my company or me iog obviously the foundation has its own routing as does emergo as do the independent businesses in the cardano ecosystem the 2000 stake pool operators and so forth and that's great to see but i'm just trying to make it easy for me okay so anyway to recap and to summarize governance is definitely moving along it's of course having issues here and there and there's an enormous amount of work to do voting centers to refine and build there was the uri hiccup and that got fixed but gives you a sense of how delicate these things can be there's big improvements to the voting protocols that have to be done and that's just in the catalyst sense and then on the on-chain update system we'll make sure that obsidian comes on and provides an update on what they're doing there and as i said i'm very keen to see if we can expand from two key paths a value key in a staking key to three key paths a valid key sticking key and voting key and if we do an on-chain update system with stake pool operators then they would vote through a delegative process so you would use stake you would choose to give them your stake your vote your vote and stake or just your vote but no stake something like that and have a bicameral model so it approves on catalyst then it gets approved there so you can see that there's a proper checks and balances and representation the problem is that these voting systems are from a political science perspective very nuanced and you have to run them through different notions of adversarial behavior which is why we brought in firms like sociocracy and john buck and we've been looking at more traditional political science theory and we're trying to get a good sense of the right types of attack factors and how to segregate things so that much more critical things such as changes to the inflation mechanics or monetary policy are much more difficult to do versus things like minimum transaction fee or something like that which can be changed much more easily and have less notion of the integrity of the system as a whole that is an art in a certain respect and no matter what we do as the initial condition it's going to be imperfect because that's just how it is the point is that the initial condition is subject to a dynamic system so it changes over time and you can change the rules of the game after start playing the game and that's the point so we are definitely trying to converge to a singular line of thought the challenges were mentally exhausted because we're also doing aura boris omega and there's now spooling up a full-time hydra team and we have a humongous effort on smart contracts we're wrangling thousands of people there and all these other things and and so there's only so much mental bandwidth and we're trying to get as much done as quickly as possible this is such an enormous project in its totality and at times there are delays but the good news is that there aren't any for this and we are moving according to plan it's just as painful as we thought it was going to be and within the six to nine months we should see massive releases improvements and it really will all come alive i anticipate we should finish the cardona 2020 roadmap this year there might be some rough edges here and there and some optimizations and improvements but i don't see anything that's happening that would be an indication that the work we're doing is going to bleed into 2022 and we are decentralizing very rapidly in fact i would argue at the moment we are one of the most if not the most decentralized cryptocurrencies and it's important to understand that there's an implied social contract about the work that's being delivered should that be violated there will be a hard fork and a divergence in a cardinal classic or something like that so custodian or not we're not in a position to alter that it's it's determined at this point and it's more of a matter of just delivering the pre-existing set of work that needs to get done and that's what we're working on so a little bit of patience and a little bit of understanding on certain things and also a little bit of understanding that it does take time for those social dynamics to set that level of participation the set and for the information flows to get to a point where they're productive not destructive and that different people have different interests and before a system can be sustainable and stable it has as an ecosystem to balance and have kind of an ecological resilience to a winner-takes-all scenario where one group or an oligarchical group comes in and has a profound influence and control over the system and these systems are significantly more complex than a proof of work system because they're more useful and they aspire to do more and we do what we can to reduce complexity and embrace simplicity but where complexity occurs you're you have a combinatorial explosion of attack surfaces and things you have to think carefully about which is why we've always been the slow steady methodical project and despite the fact that we're doing revolutionary things that have never been done before in the history of our industry it actually is working out exactly as we thought it would warts and all so thanks for listening i hope this is helpful and can't wait to see you guys at the end of the month for cardinal 360.