Who Runs The Cardano Network?

When the BTC whitepaper was launched in 2008, the network went live in 2009 and started out as an experiment.

The concept was very well thought-out as the security claims were not mathematically proven to be correct until 2015. The PoW concept was invented in 1997 initially by Adam Back who is now the CEO of Blockstream for a system that aimed to prevent DoS attacks and e-mail spam. However, it wasn’t until it got combined with Bitcoin’s network that it became a success.

In a similar way, Cardano is taking the Proof of Stake concept to solve its shortcomings. Cardano aims to prove each security claim to be mathematically correct before it implements it. the network consists of two layers, a settlement layer where the monetary transactions run and a computational layer which is used for smart contracts.

When we speak of security, both of these aspects should be taken into account. While the ecosystem was launched by IOHK, The Cardano Foundation, and Emurgo, the IOHK had a responsibility to develop the technology of the blockcahin. Since the launch in 2015, more than 40 academic papers related to cryptocurrency were published in the research program for the settlement layer’s consensus mechanism dubbed “Ouroboros.”

There are a few versions of it but in this guide, we will focus on the classic one.

The first version focused on making Cardano secure in a synchronous setting which is a situation where the nodes are online and ready to produce blocks when needed while the clocks are running in sync. The time period is here called an “epoch” and divided into 21,600-time slots with 20 seconds each, meaning an epoch lasts 5 days. Each slot represents a 20-second time window where the slot leader creates a block. Before the epoch begins, all slot leaders are elected randomly.

To do so, the classic model used a “Follow-the-Satoshi” tool which was invented by Charlie Lee, Litecoin’s creator. Every Lovelace that is staked represents a lottery ticket that wins the rights to create a block and this means that anyone can participate with any amount of stake given with the changes being proportional to the number of staked coins. this means that the more stakes, the higher the chances of being elected.

The lottery needs more than just lottery tickets- it needs a method to select the winner. In order to do so, Cardano’s genesis block which is a seed of random numbers was posted and determined the slot leaders during the first epoch. In Ouroboros, the randomness seed for the epoch is generated using a cryptographic scheme which is named Publicly Verifiable Secret Sharing.

Each time a block is generated, the nods are playing a game of flipping in order to generate a random number. Then, they use the PVSS to encrypt the outcomes and make them publicly verifiable. When the epoch ends, the numbers are combined and produce a final random number which all participants can use and elect slot leaders for the next epoch.

Ouroboros was the first PoS protocol that was mathematically proven to provide persistence and liveness in the synchronous setting under the assumption that there’s an honest majority that participates.

The nodes can go offline and the clocks on the internet are not always synced which means that the real-world use of the protocol isn’t synchronous setting. The slot leader selection is also fully transparent and the leaders are known ahead of time. However, this wasn’t a good idea for the security of the platform which is why the second version Ouroboros Praos focused on making the blockchain more secure.