When we talk about the decentralization of a blockchain, we talk about the distribution of power to avoid concentration. Oligopoly is not desirable, and even less so is monopoly.
The first metric on power distribution is blockchain production, whether we refer to PoW (Proof of Work) or PoS (Proof of Stake) consensus, where the number and independence of actors involved in the creation of the chain is key.
I mentioned variety, because quantity is not a sufficient condition, although it is necessary, since there could be a large number of miners or validators, but many of them belong to the same economic power group, and this would be detrimental to decentralization.
Another measure of decentralization is the ownership of cryptocurrencies from the blockchain, since concentration in a few hands is undesirable, the well-known “whales” in the crypto industry. This is aggravated if it is the PoS consensus, the one used in Cardano, since the participation of the same could mean a Sybil attack, since an attacker with a sum greater than 50% of the tokens of that network, can contaminate the distributed system, creating a large number of identities that appear to be independent and use them to obtain disproportionate influence, alter routes or modify stored content redundantly.
In turn, nodes may be highly concentrated geographically, either by the physical location of servers or by cloud networking services (such as Amazon Web Services, Digital Ocean or Google Cloud Platform) and so latency will be higher for customers connected far from those countries, resulting in slower transactions. In addition there is the possibility of service disruption from these providers stopping the blockchain.
Interoperability between blockchains also has an impact on decentralization, but from the more general approach, and as a synergy over the entire crypto ecosystem. I discussed this topic in this article.
Governance is also a strong marker of decentralization. In this article I explained DAOs. As an example of the importance in governance, recently published on Reddit a post talking about governance issues in Ethereum, as a “selfish” group of miners have created the EGL token that seeks to artificially control the gas cap, against the network design. They have already added more than 20% of the hash power. In the regular governance process, miners are incentivized to act in the best interest of the protocol and maintain this governance. However, with the process of switching to PoS that excludes miners, they are now acting in their own self-interest. Such a proposal would never pass the EIP (Ethereum Improvement Proposal) governance process, but now because of greedy miners, this attempted power grab is taking place. With EGL now looking to bribe miners to tokenize and sell this control to the market, ignoring due process.
But the focus I want to analyze in this article is the development of technology as a factor of decentralization, where we can divide it between who produces the technology and how much of it they produce. The amount of production is directly related to the changes and innovations developed.
The Development of Cardano
In 2015, Charles Hoskinson and Jeremy Wood created IOHK, (Input Output Hong Kong) the developer of Cardano. IOHK is one of the world’s leading blockchain infrastructure research and engineering companies.
The operating arm of IOHK is IOG (Input Output Global), a company that has its Head Office in Colorado, United States, with a remote team of over 300 people in over 50 countries. The cultural variety of people from around the world, offering different skills, cultural perspectives and at different stages of life, builds the foundation for decentralized development.
In addition, in building Cardano, EMURGO develops, supports and incubates commercial opportunities, and helps integrate companies into the blockchain system. It is essentially the for-profit arm of Cardano, but also actively participates in R&D on Cardano.
IOHK has areas of work, and they are: Cryptography, Software Engineering, Distributed Systems, Human-Computer Interaction, Networking, Formal Verification, Programming Languages, Trusted Hardware, Economics, Securities/Foreign Commodities/Company Policy and Regulation, and Tax Law.
On their website we can see an incredible team, currently consisting of 302 professional members, varying from engineers, academic researchers, web designers, accountants, lawyers, financial analysts, economists, nucleated in 22 areas, the executive, research, development, formal methods, quality assurance, service reliability, technical support, professional services, business development, product management, business analysis, project management, general operations, education, communications, content, design, web development, product marketing, finance, human resources and talent resources. impressive!
If you’ve been a member of the Cardano community for a while, you probably know some of the people in the company from their public exposure, Prof Aggelos Kiayias – Chief Scientist, Romain Pellerin – Chief Technology Officer, John O’Connor – African Operations Director, Aparna Jue – Cardano Product Director, Prof Simon Thompson – Senior Research Fellow, Lars Brünjes – Education Director, Tim Harrison – Marketing & Communications Director, Olga Hryniuk – Technical Writer, Fernando Sanchez – Technical Writer, David Orr – Videographer, Manuel Chakravarty – Technical Architect, and Samuel Leathers – Service Reliability Manager.
IOHK’s research is led by Professor Aggelos Kiayias, chief scientist, coordinating the participation of several universities, so there is also decentralization by independence, outside the hierarchical structure of IOHK. Currently, the research team is working on the Blockchain Technology Laboratory Network (BTL Network), a network of interaction with the following academic institutions from 4 continents: The University of Edinburgh, Tokyo Institute of Technology, National and Kapodistrian University of Athens, and University of Wyoming, and with collaborations also from Lancaster University, University of Oxford, University of Cambridge, University of Connecticut, University of Kent, among other institutions.
The research topics are: consensus, game theory and economics, sustainability and governance, expressibility and programmability, performance and scalability, networking, privacy and identity, interoperability, regulatory tech. The countries in which the research operations are carried out are Canada, China, Germany, Greece, Netherlands, Japan, UK, Ukraine, USA, Slovakia and Switzerland.
Los resultados de la investigación son publicados en International Association for Cryptologic Research, Association for Computing Machinery, y IEEE.
Source: An overview of IOHK research
Of course, all IOHK developments are open source, and are published on Github, and at the time of writing this analysis, we can see that there are 399 repositories for the different areas of the projects, such as cardano-node, ouroboros-network, plutus, and daedalus, among others.
Cardano has been maintaining an overwhelming pace of development for months, with the first place in daily average number of commits for blockchains.
IOHK has not only developed the blockchain as a distributed platform, but also:
Daedalus: full node wallet, this means that, unlike lightweight wallets (e.g. Yoroi, Adalite, etc.), Daedalus downloads a full copy of the Cardano blockchain, and independently distributes each transaction in its history, thus providing maximum security and completely reliable operation, without centrally hosted third-party servers.
Atala PRISM: a decentralized identity solution that allows individuals to own their personal data and interact with organizations seamlessly, privately and securely.
Mantis: the only client written natively for Ethereum Classic, built from the ground up to deliver levels of assurance, security and ease of use. Full node wallet.
Plutus: secure, full-featured programming language based on Haskell, the leading functional programming language. Both on-chain and off-chain code is written in Haskell, and Plutus smart contracts are Haskell programs.
To date, IOHK has 114 scientific papers published on its website. All of them research, and many are already applied to the Cardano blockchain.
Recently IOHK has published Djed: A Formally Verified Crypto-Backed Pegged Algorithmic Stablecoin, the protocol for a stablecoin, for which IOG has partnered with Emurgo, another of Cardano’s three founding partners, and the Ergo blockchain, which uses UTXO-based accounting like Cardano.
One more clear example, where the plurality of players evidences Cardano’s decentralization in development.
The Final Link to Decentralization
Everyone can freely decide to install the Cardano client or create a pool. No one needs permission. The source code is available on GitHub. So it is possible to build your own version.
But not everyone can change something in the source code, because if that were possible, then everyone could implement code that could destabilize the network. To avoid this, you have to define an acceptance process that ensures that the proposed code does what you expect and that it will work.
Thanks to Voltaire, the era of governance, which will implement community participation in the development of the blockchain, Cardano will become a truly decentralized network and will not be under the control of the IOHK. Still and under these rules, current IOHK team members will be able to participate in the research and development of Cardano.
The Voltaire era will implement the process of development proposals to evolve the blockchain. Such developments will be paid from the Cardano Treasury, which is regularly supplied with part of the epoch rewards.
Anyone will be able to propose an innovation or improvement on the blockchain protocol, called Cardano Improvement Proposal (CIP), and then the ADA-holding community will be able to vote voluntarily, deciding on its implementation and funding.