Cardano stake pool operator delegation – a new round
We are again inviting community stake pool operators to apply for ada delegation
1 September 2021 3 mins read
The Cardano network continues to grow exponentially, thanks to the efforts of the stake pool operators (SPOs) who secure and maintain it.
During 2021, we have been delegating a proportion of our corporate ada holdings to help bootstrap our SPOs. In the first two rounds of delegation, IOG’s strategy has focused on supporting geographically distributed pools, mission-driven operators, pools creating content or driving social awareness. We also supported geographically distributed lower-middle-sized small pools to help balance the network. In previous rounds, we have tried to identify pools where our delegation can support strong performers, while making a positive impact for the whole community.
To date, around 200 pools have received IOG delegation of c. 3M ada each. It's a healthy number of pools but just a fraction of a vibrant SPO ecosystem now numbering in the thousands. Inevitably, we haven't been able to support as many pools as we’d have liked and plainly, a number of valued community contributors have been missed.
So this time, we’re doing things a little differently. In this third round, as we enter a new era of smart contracts, we wanted to acknowledge and applaud the community contributors that are widely recognized yet so often without much fanfare. As well as applying for themselves, we’re asking the SPO community to nominate the best of their own. As well as requesting delegation to their own pools, SPOs will also be invited to nominate up to two additional pools they feel should be recognized and supported for their positive contribution to the community.
We’re looking for outstanding contributions made to the ecosystem that fall into at least one of these categories:
- Build: SPOs contributing to ecosystem growth by providing tools, dev advice, resources, etc.
- Create: SPOSs producing high-quality written content and creative artwork such as infographics that adds value to the wider community.
- Educate: SPOs building alliances, groups or educating delegators on important topics, role modelling technical excellence, or contributing to the Plutus Pioneer body of knowledge.
In addition, SPOs should operate only a single pool and have a current stake of 12M or less.
Once we have received all the delegation requests and community nominations, we shall evaluate all the candidates against these criteria, publish the pools selected and make delegations in October after the Cardano summit.
And another thing. It’s not often we get a chance to survey the whole community. So this time, we’re also asking SPOs to contribute to our study on sustainability. Along with the questions for the delegation survey, this time we’re also polling SPOs at the end of the survey on their pool’s setup and green credentials. We’ll share the results of this survey with the community.
I’m an SPO. How do I take part?
Each month, we publish an ‘SPO Digest’ newsletter bringing together key news for the stake pool operator community. The next SPO Digest, which we will be sending out shortly, will include the survey where you can apply for delegation. SPOs seeking delegation should fill this in and also add up to two additional SPOs they’d like to see recognized. To receive the delegation survey, please ensure you are signed up to the digest list via https://mailchi.mp/iohk/spodigest by midnight UTC on Sunday 4th September.
Making education in Africa more accessible, affordable, and equitable
Announcing a new strategic partnership between IOHK and the European Business University of Luxembourg (EBU)
24 August 2021 4 mins read
We are pleased to announce a new and exciting partnership between IOHK and the European Business University of Luxembourg (EBU) to make education accessible for everyone in developing countries.
EBU is a renowned educational provider and non profit organization dedicated to higher education and certificate programs. They are partnered with over 36 key global organizations and currently educate over 2000 students in 25 countries on the African continent. Together, we intend to roll out our training programs on a wider scale. We firmly believe that EBU can play a pivotal role in furthering the prospects of the people of Africa with this expansion of their scholarship program that will provide great benefits to prospective students.
The objective of this partnership is to expand the teaching and content material with the provision of courses in Plutus and Haskell to a broader audience, thereby empowering people in developing countries to learn new skills and become self-sufficient.
Working closely with Alexis Hague and Dr. James Mulli, directors at the European Business University of Luxembourg (EBU), this new partnership will be sponsored by IOHK’s director of education, Lars Brünjes, in conjunction with our IOHK education team. The collaboration will give a wealth of new African students access to educational material for free, whilst also supporting our mission in the region.
Widening the reach of education in Africa
These programs have been developed to meet the increasing demand for Haskell programmers and enable students to work on DeFi solutions, application programming, tokenization projects, and smart contract development.
IOHK will support the Plutus-Haskell offering that EBU plans to deliver to students with teaching and content material for the provision of these courses. EBU will promote the IOHK goal of bringing smart-contract developer expertise to students and relevant stakeholders in Africa and other continents. This is a very positive benefit to those people who are interested in getting up to speed and ready for the Alonzo release that will deliver smart contract functionality.
How will the scholarship program work?
EBU will include Haskell in their curriculum and offer courses in Plutus and Haskell to students who are enrolled in the EBU Certificate program at no tuition cost to the student, but with a €10 commitment fee. In addition, students who join the EBU Ambassador program will be incentivized to grow the courses using an “Earn as you Learn” stipend for bringing new students on board. Both of these rewards offer direct benefits to the students who enroll on our courses and will help us to grow and expand this program organically.
IOHK and EBU will work together to support the implementation of each other’s missions for education and creating opportunities for people in developing countries. This will be achieved using tools such as an education for all approach, the provision of learning hubs with internet for participants, and the practical implementation of blockchain solutions.
How can I sign up?
If you are interested in signing up for these training programs ahead of the start of EBU’s new term on September 27th, please visit the EBU scholarship website to register and enroll. Participants will then receive a coupon code to use for enrollment. We are pleased to confirm that the price of these courses will be waived and only includes a nominal administration fee. If you have any questions, please contact EBU admissions or EBU administration.
We plan to release these training programs and content publicly in GitHub in the near future, so that other institutions can follow this approach and roll out their own Haskell and Plutus training courses. Stay tuned for more details on availability of this content coming soon.
Cardano Stack Exchange: a growing and vibrant community developer resource
Learn about this dedicated community hub that supports Cardano developers
19 August 2021 4 mins read
The Cardano ecosystem is committed to supporting and growing our developer community. A vibrant, informed community is essential to the development of a decentralized, functional ecosystem with a diverse user base. In line with our open-source approach, as we evolve Cardano together, everyone can benefit from its decentralized financial solutions while delivering best-in-class blockchain technology.
To reach our common goals, it is essential that everyone participates in the development process and can always get the information, guidance, and assistance they need.
To support this mission, we are encouraging development talent and experts from across the globe to gather in one place – Cardano Stack Exchange. This developer hub is the ideal place to share experiences, ask and answer questions about all the streams of Cardano development and operations, and share resources. This site – being driven by members of the Cardano community – is one of the resources to help you learn how to develop decentralized applications (DApps) and write smart contracts.
What is Stack Exchange?
Cardano Stack Exchange originated from Stack Overflow, the free community website for developers created by Jeff Atwood and Joel Spolsky in 2008. The name was chosen by a voting process in April 2008 by readers of Coding Horror, Atwood's popular programming blog. From this beginning, the movement has grown to host many specialized Stack Exchanges.
One of the newest is dedicated to Cardano developers. Currently in beta, it is a community-moderated question-and-answer site where all Cardano developers, including Plutus pioneers, can get expert answers to a variety of questions, ranging from installation queries to configuration and implementation details.
This community-driven, decentralized philosophy of Stack Overflow fits particularly well with the open-source, decentralized philosophy of Cardano.
How it works
If you are stuck on an issue in Cardano, or curious about an element of its technology, the Stack Exchange is a great resource. It serves more as a place for specific questions about real problems than a discussion site like the Cardano Forum. This format means that you can easily find the questions you are looking for without getting lost in long-winded discussion threads. Once you come on board, you will have the opportunity to search all previous questions and suggested resolutions.
Examples of questions currently being answered on the site include:
What happens to staked ada after transferring ada to another wallet?
What is the maximum number of addresses in a Cardano Wallet?
How to create a serialized transaction without a local full node?
Your question might have already been answered; in this case, you can see how many times it has worked for someone. On the other hand, if you have a new question, someone else will probably encounter the same issue, and your question and answer will be helpful for them.
Cardano developers and support staff regularly check the site and will provide answers where they can. You can check for new questions too, and maybe provide an answer for someone else. The community elects the moderators and upvotes questions and answers to show appreciation.
The more you use the site, the more valuable it becomes. Users gain reputation points by asking questions, upvoting questions and answers, and providing answers to fellow developers. Reputation points increase your overall score and earn you more site privileges. Many people find that explaining something to another developer is one of the best ways to deepen their own understanding. The best way to learn, as they say, is through teaching.
How to get involved
We’re very keen to establish and grow our Stack Exchange presence. The site is currently in beta and can only grow with community usage and support. This is where you come in. We’d like to encourage you to ask a question – or a bunch of them if you like!
The site is completely free to use. Just provide an email address, set your password, and you’re good to go!
When someone from the community answers your question, you can return the favor by helping your fellow developers with possible resolutions and suggestions to their questions. When you receive an answer that works for you, remember to accept and upvote it. Considering the search terms that others might use will help you write a good question.
With the site currently still in beta phase, it needs wider adoption and activity to progress to full production. We encourage you to log on, get involved, and help make the site a valuable resource for everyone in the community.
The Stack Exchange initiative is truly a Cardano community effort. So particular thanks to all the contributors working to drive this project forward.
I would like to acknowledge Neil Burgess for his contribution to this article.
Djed: implementing algorithmic stablecoins for proven price stability
Djed is the first coin to use formal verification to eliminate price volatility
18 August 2021 7 mins read
Cryptocurrency volatility is one of the obstacles to its wider adoption. Blockchain technologies provide benefits such as transparency, data immutability, and proven security of financial operations. Yet, it is harder than fiat currencies to predict how the market will behave, or forecast the value of a digital currency. This hinders using cryptocurrencies as accounting and exchange units in daily operations.
A stablecoin is a cryptocurrency pegged to a basket of fiat currencies or a single currency (eg, USD or EUR); commodities like gold or silver; stocks; or other cryptocurrencies. Stablecoins include mechanisms that maintain a low price deviation from their target price and so are useful to store or exchange value, as their built-in mechanisms remove the volatility.
Some stablecoins lack transparency and liquidity of their reserves, which compromises their price stability. To address these challenges, IOG has teamed up with Emurgo, another of the three founding partners of Cardano, and the Ergo blockchain, which uses UTXO-based accounting like Cardano, to work on a stablecoin contract called Djed. Djed is based on algorithmic design. This means it uses smart contracts to ensure price stabilization, and that the coin will be useful for decentralized finance (DeFi) operations.
How stablecoins work
Different mechanisms contribute to the stability of the coin’s value and help eliminate price variations. These mechanisms are underpinned by the economic principles of supply and demand.
A common mechanism is backing the stablecoin by a reserve of the currency used as the peg. If demand is higher than the supply of sell or buy orders, this supply should be increased to avoid fluctuations in the price. Typically, stablecoin reserves are not stored in cash. Instead, they are kept in interest-bearing financial instruments such as bonds. The returns on these provide revenue for the operator.
As long as the stablecoin is fully backed by reserves in the currency to which it is pegged – and the operator can react quickly to variations in demand – price stability is maintained.
Stablecoin reserves are commonly associated with investments. The lack of liquidity of these investments may prevent the operator from reacting quickly to demand. This compromises stability in the short term.
A drawback of fiat-backed stablecoins is that they require trust in the entities keeping the reserves. Lack of the reserves’ transparency or of the ‘full-backing’ claim, combined with inefficient stabilization measures, have already caused Tether stablecoin (USDT) to fall below $0.96, as shown in Figure 1.
Figure 1. Price of the Tether stablecoin (USDT) in the past three years
Issues of transparency do not arise when the backing asset is a cryptocurrency on a public blockchain. Furthermore, the use of smart contracts ensures efficient and reliable execution of stabilization measures due to its automated and secure mechanisms.
Enhanced stabilization mechanisms of Djed algorithmic stablecoin
Djed is a crypto-backed algorithmic stablecoin contract that acts as an autonomous bank. It operates by keeping a reserve of base coins, and minting and burning stablecoins and reserve coins. The contract maintains the peg of stablecoins to a target price by buying and selling stablecoins, using the reserve, and charging fees, which accumulate in the reserve, as shown in Figure 2. The ultimate beneficiaries of this revenue stream are holders of reserve coins, who boost the reserve with funds while assuming the risk of price fluctuation.
Figure 2. How Djed works
The Djed stablecoin is designed as an asset pegged to a fiat currency (USD), along with a governing algorithm. This approach provides a stable means of exchange. But Djed is not limited to being pegged to the dollar. It can work with other currencies, as long as there are oracles providing the contract with the corresponding pricing index.
The first formally verified stablecoin protocol
Djed is the first formally verified stablecoin protocol. The use of formal methods in the programming process has greatly contributed to the design and stability properties of Djed. Using formal techniques, the properties are proven by mathematical theorems:
- Peg upper and lower bound maintenance: the price will not go above or beyond the set price. In the normal reserve ratio range, purchases and sales are not restricted, and users have no incentive to trade stablecoins outside the peg range in a secondary market.
- Peg robustness during market crashes: up to a set limit that depends on the reserve ratio, the peg is maintained even when the price of the base coin falls sharply.
- No insolvency: no bank is involved, so there is no bank contract to go bankrupt.
- No bank runs: all users are treated fairly and paid accordingly, so there is provably no incentive for users to race to redeem their stablecoins.
- Monotonically increasing equity per reserve coin: under some conditions, the reserve surplus per reserve coin is guaranteed to increase as users interact with the contract. Under these conditions, reserve coin holders are guaranteed to profit.
- No reserve draining: under some conditions, it is impossible for a malicious user to execute a sequence of actions that would steal reserves from the bank.
- Bounded dilution: there is a limit to how many reserve coin holders and their profit can be diluted due to the issuance of more reserve coins.
There are two versions of Djed:
- Minimal Djed: this version is designed to be as simple, intuitive, and straightforward as possible, without compromising stability.
- Extended Djed: this more complex version provides some additional stability benefits. The main differences are the use of a continuous pricing model and dynamic fees to further incentivize the maintenance of the reserve ratio at an optimal level.
IOG, Ergo, and Emurgo teams have been working on the implementation of the Djed algorithmic stablecoin contract earlier in 2021 to test different models.
The first implementation of a Djed stablecoin contract was SigmaUSD on Ergo. This was the first algorithmic stablecoin deployed on a UTXO-based ledger in Q1 2021. It had a fee of 1% for buying or selling operations, and an oracle that updated the exchange rate every hour. This initial version was subject to a reserve draining attack by an anonymous user who owned a large number of ERGs (Ergo’s native coin). The attack was ultimately unsuccessful, and it is estimated that the attacker lost $100,000.
To further discourage such attacks, this initial deployment of Minimal Djed was replaced by a version where the fee was set to 2%, the oracle updated every 12 minutes, and every oracle update was allowed to change the price by at most 0.49%, unless the price difference was greater than 50%. This provided stronger resilience against reserve draining attacks.
Djed has also been implemented by the IOG team in Solidity. One version uses the native currency of the Ethereum blockchain as a base coin, and another uses any ERC20-compliant token as a base coin. So far, these implementations have been deployed to testnets for Binance Smart Chain’s testnet, Avalanche’s Fuji, Polygon’s Mumbai, Ethereum’s Kovan, Ethereum’s Rinkeby, and RSK’s testnet.
Djed: Cardano implementation
The Alonzo update to Cardano will enable smart contracts using Plutus. Plutus is powered by Haskell, which guarantees a safe, full-stack programming environment.
Draft implementation of an earlier version of Minimal Djed is available in the Plutus language. In this implementation, stablecoins and reserve coins are native assets uniquely identified by the hash of the monetary policy that controls their minting and burning according to the Djed protocol. This implementation also assumes that oracle data such as the exchange rate is provided as signed data directly to the transactions, instead of being posted on-chain.
There is also an ongoing OpenStar implementation. OpenStar is a framework for private permissioned blockchains developed in Scala. The implementation of Djed using OpenStar follows the idea of off-chain smart contract execution to have a stablecoin on Cardano that does not depend on smart contracts executed on-chain.
To find out more about Djed stablecoin, see the recently published research paper or check out the presentation by Bruno Woltzenlogel Paleo, IOG technical director, at Ergo summit 2021.
We’d like to thank and acknowledge Bruno Woltzenlogel Paleo for his input to this article and support throughout the process of its creation.
Why they’re calling Cardano ‘the green blockchain’
Staking process avoids the massive energy use and hardware pollution caused by Bitcoin and Ethereum mining
17 August 2021 5 mins read
Ever since Satoshi Nakamoto published the Bitcoin whitepaper in 2008, Bitcoin has had its fair share of controversy. The cryptocurrency has often been in the limelight for the wrong reasons. The biggest criticism is how much the mining activities of Bitcoin – and other cryptos such as Ethereum based on proof-of-useless-work – protocols are damaging the environment. Turns out, well, a lot.
The University of Cambridge reckons that mining consumes 100 terawatt-hours (TWh) of electricity a year – that’s one trillion watts every hour. To put this figure into perspective, that's 0.55% of the electricity produced in the world each year, enough to run a country such as Malaysia or Sweden. Digiconomist shows the same energy problem plagues Ethereum. And the figures continue to rise.
In recent months, the environmental impact of proof-of-work mining has come to the forefront. Mining algorithms require massive amounts of energy. This issue was, up to recently, compounded by the fact that 70% of mining was concentrated in China, where electricity production relies on fossil fuels, particularly burning coal. A recent crackdown by the Chinese authorities has prompted an exodus of crypto miners, which will probably just move the problem to another country. And the issue affects other places anyway. Concerns about energy consumption led to the shutting down of a mining hub in Mongolia in March, for example.
Profiting from cryptocurrency mining is not restricted by geography or motivation. British police swooped on a building this year expecting to find a cannabis farm, for example. Instead, they found 100 computer boards mining Bitcoin with an illegal connection to the electricity grid. It was later reported that 'three nerds' had stolen power worth £16,000 a month to make £8,000 in crypto.
The greener crypto road
While fundamental to its function, the proof-of-work algorithms of Bitcoin and Ethereum are their Achilles heel. Powerful, state-of-the-art mining rigs produce better yields, but the faster the rigs are, the more electricity they require. This poses the question of long-term sustainability. A recent post on the Ethereum Foundation blog claimed that ‘Ethereum’s power-hungry days are numbered’ and that its long-awaited move to proof of stake would use 99.95% less energy, although exactly when this shift will take place remains unclear. (‘Early 2022’ has recently been suggested.)
But what makes proof of stake, as used by Cardano, a more environmentally friendly blockchain?
Proof of work is resource-intensive because miners need to solve ever-more-complex mathematical problems to create blocks. They are in an energy-intensive global race to solve meaningless, randomly generated puzzles. This massive amount of computational power could be used to map the stars, search for alien life, or speed up the search for Covid vaccines; but it is just wasted effort. This wasted digital effort leads to real world consequences as well.
The need for powerful hardware leads to a secondary problem: e-waste. Miners always need to keep up with rivals, which means buying more powerful mining rigs. The 'old' equipment – often suitable only for mining – quickly becomes obsolete. It is discarded, and according to the Digiconomist, Bitcoin's e-waste is shockingly high. Only 20% of the world's electronic waste is recycled, so the plastics and poisonous materials such as heavy metals in the rigs can end up in landfill. (According to predictions by the United Nations, the world will produce up to 120 million tonnes of e-waste a year by 2050.)
So why are commentators in newspapers and on investing blogs such as the Motley Fool calling Cardano the ‘green blockchain’? When it comes to sustainability and environment-friendly cryptocurrencies, Cardano has two clear advantages: far less energy consumption, and staking.
In proof of stake, network participants run nodes, and the chain selects a node to add the next block, based on the node's stake and other parameters. So the main difference between these two algorithms (and therefore, in their energy requirements) is that in proof of stake, block producers do not need to spend excessive amounts of time and computer power to solve random puzzles. IOHK chief Charles Hoskinson has estimated that Cardano’s energy use is just 0.01% of Bitcoin’s.
Proof-of-work cryptos need computer power to produce blocks in a pointless, energy-intensive arms race. A Cardano node, in contrast, can be run on a very low-powered processor, such as a Raspberry Pi. More than 40 million of these have been produced, many for schools in developing countries because they cost just $40-$70. This simplicity also reduces plastic and e-waste.
The extreme weather events and forest fires of recent months, along with the UN’s landmark (and chilling) study into global warming and climate change, has thrown this into even-sharper relief. Deforestation, ice-shelf depletion, and global warming are all in the public eye. Heat waves in many parts of the world are damaging the environment, and forest fires are devastating many areas. Consequently, anything that contributes to the sustainability problem comes under scrutiny. This includes the growing cryptocurrency industry.
On December 12 2015, 196 countries signed up to the Paris Agreement, a legally binding treaty to limit global warming to 2C. A 'net-zero emissions' race is now underway, aiming to cut carbon dioxide emissions sharply by 2050. The next stage in this process is COP26, the United Nations conference in Glasgow in November.
When it comes to addressing environmental problems, there are no easy answers. Cardano is a decentralized platform that can replace the inefficiencies of older and legacy systems. With its sustainability credentials, Cardano, and other proof-of-stake protocols, are seen as part of the solution, rather than contributing to the problem caused by Bitcoin and Ethereum.
26 September 2021
25 September 2021
25 September 2021