Hi, this is Charles Hoskinson broadcasting live from warm, sunny Colorado. Today is April 12, 2023. I'm making a video titled "Okonomiyaki." As many of you know, I used to live in Osaka, Japan, and while I was there, we had this food called okonomiyaki, which kind of translates to "a little bit of everything grilled" and "like what you like." They put everything in the kitchen sink on a grill, and you eat it. It's a good roll-up term for discussing a few things at the same time.
First off, Lace launched this week. It's kind of a graceful rollout to mainnet. An enormous amount of work went into optimizing the backend. We were kind of stuck in development hell for a long time, cleaning up things like wallet restoration and account management. I don't want to get into it because it's pretty voluminous, but the short version is that we were able to get it to an acceptable collection of thresholds and benchmarks. We remediated everything in the security audit, which was quite extensive, and there were numerous issues. For example, the SIP 30 DApp connector had strong differences of opinion about how to actually implement it. We followed the spec, but it didn't work as well as we hoped, so it took quite a bit of time to get everything where it needed to go.
As with all product launches, it always takes more time, effort, and money than you think. The good news is Lace is out now. What's going to happen is that you're going to see rapid improvement iterations of Lace. We're going to get to a three to six-week release cycle where every three to six weeks, an update will come. This could include things like Brave support, Safari support, improvements to the account model, additional keyword recovery options, and new capabilities and features like the DApp store, multi-delegation, and multi-sig. You'll get a little bit of everything in your okonomiyaki every three to six weeks. The advantage of a Chrome extension is that it's very easy to push a cloud update to the software, so it just auto-updates and works seamlessly.
There is a parallel team that has been working with the Lace project for quite some time, focusing on optimizing Cardano infrastructure in general, such as the deprecation of DB sync and node-to-node protocols. They're also working extensively on what is required for a multi-chain environment, so how to get it to work with Bitcoin, Ethereum, Solana, and other blockchains. Both teams are working together and will meet in the middle at some point. With that three to six-week cadence, new features will come quickly, and it will be fast, beautiful, and concise. I'm really excited to watch that evolve and grow.
There's a lot of magic that you don't see under the hood. It's remarkable how much effort went into it, and I want to personally thank the address team, all the partners, and the Lace team for their hard work to get it over the hump. Floron was one of the lead engineers on the Lace team, and he put together an elite launch group to get these last-mile items done that were just lingering. I'm very proud of that.
Lace is very simple right now, but there's a hidden brilliance and elegance to its simplicity. With a fast release cadence, it will grow into a very feature-rich experience faster than you think. You'll keep coming back to it, and it will keep looking better and better.
A few more things: we are still on target for the SIP 1694 workshop in Edinburgh, Scotland, in July. There's a lot of effort going into community workshops, and the MBO looks really good in terms of the progress that's happening. Finally, some communications are coming out, and that will accelerate quickly.
Many of you have seen the enormous amount of work we're doing for node version 8.0. Right now, we're running on node version 1.3.5 or 1.3.7; I can't remember the exact version. We've moved over to the protocol version, so the next node update will not continue the bizarre nomenclature but will be a continuation of the protocol version as referenced on-chain. It will be node 8.0. We're going to get into a two-week release cadence with that node, probably to pre-production, and then there will be a cycle for when that's considered mainnet-ready. There's about an eight-month backlog of stuff that accumulated for various project reasons, and that's currently being put into node 8.0. A lot of tests need to be done to get it through, and it's currently in heavy benchmarking.
Normally, we are much better about integrating things, but we had a perfect storm of cherry-picking and various issues that caused the backlog to get ahead of us. We were doing work but not merging and integrating into master as much as we should have. We recycled and changed over the CI process and the VCS process to change December to 8.0. This is the node where we're going to start deploying vault pair features too, so in pre-production and on a parallel test, some of the early ledger rules associated with SIP 1694 will start being implemented and added. They will work their way up over time, and people through private test nets can begin to play around with those features and be in active conversation with the team. This will be a faster, more agile process for adding these capabilities to the system.
Hopefully, this will also provide some understanding as we go into July about what a tendering process would look like for community tooling for SIP 1694 and how significant that delta will be. There's a lot of progress there, as well as great progress with Mithril and Hydra. Part of the Lace initiative is to pull together a working group to talk specifically about what it will take to integrate Mithril into a wallet. Lace will likely be the first mover and bear the burden of the integration costs, but if we do it right, it should be relatively straightforward for other wallets in the Cardano ecosystem to adopt Mithril and massively improve security.
What's happening with Mithril is we're starting to get to the heartening and auditing part as opposed to the functionality part. Probably one more PI cycle will be required for that, but we'll dig deeper into the details. I wouldn't be surprised to see that library in an integration-ready state probably in the summertime, and then it's just a question of how quickly it can be integrated into a wallet. There are two different modes with Mithril: one is full node security for a light wallet, and the other mode is fast sync for a full node. This allows for parallel validation of epics, effectively giving you a chance to go multi-core. However many cores you have, you can sequentially validate each epic out of band, and the Mithril certificates give you a checkpoint to confirm that each of those epics looks good.
There have been discussions about congestion control on Cardano, most notably with Meld. A working group has come together to discuss this in general, but it's not anything really new. In 2021, we wrote a blog post on the IO blog about tiered pricing, which included an implicit conversation about congestion control. In general, congestion control with a cryptocurrency involves prioritizing transactions or scripts over others. You have a finite resource, which is the block size, and a potentially larger resource, which is the pending transaction pool. You have to decide who gets priority.
There are various off-chain and on-chain solutions for this. One off-chain solution is to modify the stake pool software to have tiered pricing as defined in the 2021 blog post. This wouldn't require a protocol change, but the downside is that not everyone will adopt it, leading to inconsistent application of transaction prioritization. Another option is to introduce additional resources for consideration. Currently, the resource for transaction priority is the fee structure. The naive way to control this is by increasing or lowering the fee. A more complicated way is to introduce a fee market. You could also explore alternative technologies, such as prioritizing based on transaction age or requiring additional computations like a VDF to rate limit during high load.
This topic is interesting and closely related to many plumbing topics with input endorsers, especially since the network will experience a significant amount of throughput. With the side chain and layer 2 model being proposed, there will be many checkpoints occurring from the side chains to the main chain, with a lot of inbound transactions. Even as we expand network capability, we still need highways to decide what's low priority versus high priority and what the desired settlement time is.
A closely related topic is finality gadgets within the system. We're currently working on a paper called Ouroboros Paris, which explores how to construct a finality gadget on Cardano. Currently, it's scoped for use in sidechain transactions because it provides fast finality, but you could also imagine using it for fast finality transactions on the main chain. These topics are interconnected: throttling through rolling averages, using proofs, coinage as a throttling mechanism, fee markets, tiered fees, off-chain routing, and custom software at the stake pool level. We're reaching a point where adoption is sufficient to warrant a conversation among various actors in the Cardano ecosystem, from people doing NFT drops to those using Cardano for payments.
The good news is that there’s no shortage of great ideas, research, and protocol design. There are short, mid, and long-term options to improve things where and when necessary. It used to be that we would say, "That's a problem we'll deal with when it becomes a problem." It's not a problem today, but it could become one soon as all the side chains turn on and NFT and DeFi volumes continue to grow. If you've been following the TVL of Cardano, you'll see that DeFi adoption has been growing considerably over the last six months, particularly in the last three months, where it's gone up by 50 or 60 percent. There’s been an enormous uptick in transactions and DeFi activity, and many new protocols, like Jed, have recently come online.
In anticipation of this, it's crucial to start putting together a working group to discuss the future of congestion in the system and the mitigations we should consider. I'm commissioning some research specifically to look at regulating functions like a VDF, as they are useful in various contexts. There's also a desire to implement a recursive SNARK structure on Cardano, which would make proving coinage trivial and significantly reduce the burden on stake pool operators.
In the future, we may also need to invest time into a distributed mempool, especially for the concept of input endorsers. There will be many events, some of which will eventually settle on the Cardano blockchain, while others will require semi-persistent storage using a pub-sub protocol. For example, the construction of Mithril certificates will involve stateful operators creating intermediate certificate advocates and exchanging them among each other using the protocol before assembling the final product. This batching also happens in Hydra, and it would be beneficial to have a distributed memory database that allows us to share RAM for these tasks as a semi-persistent workspace with some degree of redundancy. There are protocols that have been invented to achieve this; for example, Stanford's RamCloud protocol from around 2015.
As we move closer to high-throughput systems, we need to examine these aspects to expand the working space and create a semi-persistent layer within the system. A lot of this is happening at a blinding pace, roughly in parallel. Many clever things are happening with Plutus version 3 and the upcoming launch of Marlowe, which we've successfully tested on the mainnet. It's looking really cool and interesting. Other products like Atala Prism are reaching a high degree of maturity; in fact, Atala Prism has just reached version 2. There are many great Prism pioneers doing amazing work, and it's exciting to see how that’s been growing.
We're firing on all cylinders. There has never been this volume of work, progress, and diversity in our ecosystem. There are major innovations in sidechains, governance, consumer software, identity software, off-chain frameworks like Hydra, systems like Mithril, language design like Plutus DSLs, and all the community projects that are getting supercharged and moving quickly. Additionally, we're getting closer to unlocking the power of the community through SIP 1694. Once that's done, if the community chooses to go down that road, we'll have a treasury of 1.5 billion ADA under the community's control for them to decide how to use it.
The d-reps, the MBO, and other actors will obviously have strong opinions, but ultimately, the community gets to decide through that process. I believe we'll see exponential growth in the number and quality of projects and their delivery over the next 24 to 36 months once that event occurs. There's been an enormous amount of work in preparation for these things in anticipation of the load, and it's going to get really busy, really quickly.
The good news is that everything evolves. Simple things like moving from GHC 8.10 to GHC 9.2 were a huge lift, but they significantly improved workflows and developer efficiency. There's also a lot more attention to detail on feature pairing and documentation. Every feature is paired with a customer with clear acceptance criteria, ensuring everything is properly documented in meaningful ways.
There's also a lot of tendering right now for fixed-cost contracts to work on specific components, like the node-to-node protocol and the Cardano CLI. We're likely going to tender fixed-cost contracts for that in parallel with Genesis work. We've written out acceptance criteria and are essentially saying, "Go do that. In six to twelve months, come back with it, and we can pull it into the system." This approach applies to a collection of other optimizations as well. This level of parallelism allows for more development velocity.
Unfortunately, there was a lot of stuff that was deeply sequential. For example, the recent node 8.0 update was a deeply sequential task because we got bottlenecked in a certain area. Now that that's opening up, it will allow for much more parallelism in the development process. It will be nice to transfer the repos to the MBO and have a different release management system for people to submit pull requests and contributions to the core code.
That's why I call it okonomiyaki because it is a little bit of everything, and that's kind of where we're at. NFT NYC was this week, and I think we had great representation from the community there. NFTs continue to grow, and there are some interesting SIPs, including SIP 68 and another one I forgot. I also have a working group looking at SIP 38, the account abstraction idea. That's a really interesting concept.
Another thing I requested is to look into transaction pipelining, where multiple contracts can be pipelined together into one master transaction for proof commitment on-chain. We require this for checkpoints, so there's a lot of that going on.
The macro environment is still a little shaky. Crypto has been brutally battered by the U.S. federal government, and some of the most unfair commentary I've ever seen has emerged. For example, a recent report on DeFi alleged that crypto and DeFi are racially discriminatory. I guess wealth transfer from white people to non-white people is considered racist under this administration. However, I like the fact that more and more people are gaining control over their financial lives and achieving economic agency.
There has been a lot of unfair commentary recently, with some cases being straight-up lies and misrepresentations of reality. It used to be that we had differences of opinion but could agree on the same set of facts. Now, the reports coming out have no basis in reality; they're basically fantasy. This is difficult because there's an attempt to leverage these communications from the executive branch for policy. We continue to engage on our side, as do others in our ecosystem, but we're finding less honesty in the dialogue.
That said, courts seem to still be on the side of crypto, as they support the rule of law and fair disclosure. They are on the side of freedom in many cases, not all, but many. Additionally, there seems to be a growing blockchain caucus that is becoming increasingly disgruntled with the unaccountability of the bureaucratic layer of the United States. They are realizing that what's happening is creating an anti-competitive environment, which is offshoring business. It's not hurting crypto or slowing it down; it's just building a wall around the United States, forcing entrepreneurs and innovators to leave for other jurisdictions like Abu Dhabi, Switzerland, Singapore, and many others that have become friendly to crypto entrepreneurs.
Operation Choke Point 2.0 continues, and the level of scrutiny being inflicted upon banks to de-platform crypto companies persists. There's ample evidence of that, and again, there's a misrepresentation of reality. This administration seems to have a policy of dishonesty first and always. When asked about it, their official position is that they're not doing anything, yet document after document and example after example show that people who have had stable banking relations for over ten years have suddenly been unbanked without explanation, as if they are criminals, with no ability to remediate or negotiate.
This is not something an organization wants to do. You don't fire a customer with tens of millions or hundreds of millions of dollars in their bank account for no reason, especially when that customer has been good for a long period. That's something you do when you're forced to do it by a regulator. Hopefully, as congressional investigations continue, this will be uncovered, similar to the original Operation Choke Point under the Obama administration.
I apologize for being harsh about this, and I understand that people's politics may vary. This is not a political issue; it's an industry issue. It's uncomfortable when the default position of a government is to treat everybody as a criminal or with great suspicion when they have done nothing wrong and are legally operating. That's an abuse of authority and power, especially when all we're doing is creating jobs and preparing the United States for the next economy—the cyber economy, a global economy, an economy with infrastructure security that produces high-paying jobs for the American people. It's bizarre to label that economy as unnecessary while proponents claim it benefits everyday people, even though it means a transfer of wealth and power to the most powerful entities in the world—namely, giant banks and large financial institutions that are completely unaccountable and can do whatever they want whenever they want.
I'm sorry, but we remember a time when this wasn't the case. We're working our way through it, and I remain optimistic. In the short term, we take a few lumps and bumps, but in the long term, we win. At the end of the day, what’s happening is not sustainable. The U.S. dollar cannot continue to take the hits it's taking. We can't keep printing money. There are enormous amounts of banks with unfunded, unrealized capital losses, and commercial banking continues to dry up. The financial industry is getting sicker, and the solution is not to print more money or further consolidate the industry. Nor is the solution to launch a federal CBDC, which robs you of all your liberties.
Unfortunately, FedCoin continues to make progress. It's another one of those "dishonesty first and always" situations where they claim they're not working on it, but they are actually rolling it out block by block. They're creating a system where eventually your money will live on your phone, cash will be banned, and at any given time, if you anger the regime in charge—someone unelected whom you've never met
0 is illegal, so it's a tough situation. I really wish that the opposition party in the United States had done better in the prior election because they would have been in a position to stop this. Unfortunately, there doesn’t seem to be any electoral punishment at the moment for this malfeasant behavior. However, as people become more aware of their own money, perhaps they will start taking these issues more seriously at the ballot box, which is really the only way to stop it on the elected side.
On the bureaucratic side, the courts can only restrain them so much. Unfortunately, the bureaucracy doesn’t seem to be accountable to or listen to the courts in all cases. Therefore, new laws need to be passed to hold the bureaucracy further accountable to judicial oversight in order for us to work our way through this. On our part, we will continue to educate, engage, and talk with people. We will try to find common ground where it makes sense, and we will continue to ask people to be honest and tell us where they stand. We will advocate for sensible policy that allows for consumer protections while preserving what makes the industry special.
I know I signed up for transparency, auditability, immutability, decentralization, and equality, where everybody is equal in the system. They should have the same access to the system, the same opportunities inside the system, and the same abilities that I do as a protocol creator. That’s what we fight for. If we get protocols that don’t have those principles, I’m not going to work on them; I’ll go do something else with my life.
So far, Cardano has been able to be a shining beacon of principles, and this ecosystem has managed to keep its head above water. We continue to move forward, especially in the developing world, and I look forward to seeing many of those projects progress. However, it is starting to heat up, and everyone in the industry is beginning to feel it in their own ways. We need to take some time to really think through an industry-wide strategy.
Unfortunately, the polarization, tribalism, and fragmentation caused by our economic differences have made it very difficult to work with other members in the industry. Some we work very well with, like Al Grant and other ecosystems, while with others, it’s exceedingly difficult to even get an acknowledgment of legitimacy. For example, Bitcoin maximalism holds the opinion that it’s completely okay for the government to go after the altcoin industry—everything that’s not Bitcoin—because they believe we’re all evil and Bitcoin is the only legitimate thing. They don’t realize that the same tools and techniques used to delegitimize altcoins will also be used on Bitcoin. They have this mistaken belief that somehow they’re above the fray and immune to all of that.
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