The Cardano Vasil Upgrade

According to the Cardano project team, their much anticipated Vasil Upgrade hard fork will proceed on September 22, 2022. The upgrade will bring more scalability and also lower transaction costs on the Cardano blockchain. A smart contract platform, like its competitor Ethereum, Cardano represents a third generation blockchain design.

There have been previous delays to the upgrade due to flaws discovered while testing during the summer of 2022. The Cardano project developers have been criticized for moving too slow in meeting targets, but this was to make sure that the software is stable and secure. What many don’t realize is that this is part of the team’s strategy to deliver a product that is tested for quality, making it less prone to failure. Let us not forget that many cryptocurrency projects have ended in failure due to poor development, not to mention tokenomics.

Cardano’s founder Charles Hoskinson mentioned in a YouTube video (from Altcoin Daily):

“We built Cardano to be the financial operating system of the world …. we understood a roadmap to get there … we’ve maintained actually that level of security and quality that people have come to know …”
Charles Hoskinson

In essence, what Hoskinson is saying is that in order to have a working cryptocurrency token, it has to meet rigorous testing and quality assurance. Despite news of errors in the protocol, it was during testing that they occurred. Errors were discovered on the test network, so that means it can be corrected before deploying to production. Development takes plenty of time in order to guarantee an ecosystem that is reliable and safe to use. The team is now ready to deploy the upgrade to the main network, and this should improve the network significantly.

Cardano is at the Goguen phase (smart contracts) of the roadmap to the Basho phase (scaling). This is the release of the Cardano smart contract platform that uses Plutus, a functional programming language that uses Haskell. This also includes the release of Marlowe which is a high level programming language for financial applications that can also be used for building smart contracts. Plutus is more advanced for high-end developers, while Marlowe can be used by users with no previous background in software development.

What will be interesting is what happens in the Cardano ecosystem after the upgrade. For Cardano’s native token ADA, this could mean a big price boost provided there are no complications during and after the upgrade. Traders and investors are keeping an eye on the price of ADA, as the news has been received positively so far (ADA spot market price was at $0.49 as of writing). This has kept ADA among the top 10 in the cryptocurrency market so far (based on CMC 9/4/22).

Cardano sets itself apart from other tokens. It is not a ‘meme’ nor is it considered a purely speculative asset like many coins that have no utility (i.e. ‘shitcoins;). Instead it has its own unique philosophy that is in line with the fundamentals of cryptocurrency, but based on the foundations of sound engineering. It is building a community with its own ecosystem, much like Ethereum. If Cardano can deliver on the many features it hopes to provide users, we can expect it to remain one of the top (if not the top) cryptocurrency in the market.

Disclosure: This is not financial advice. This is for educational purposes only. Do your own research always to verify information.

The Alonzo Hard Fork – The Road To Cardano Smart Contracts

The launch of the Alonzo hard fork signals the next stage in the Cardano roadmap. This provides the path to the Goguen phase, which introduces smart contracts to the network. This will take place in multiple phases represented by colors. The current phase is called Alonzo Blue, to be followed by Alonzo White and Alonzo Purple. What is coming are the feature for developing applications. Alonzo is the upgrade that will allow developers to build DApps (Decentralized Applications) that run on a secure and mathematically verifiable network.

According to the Cardano testnet site:

“The ‘Alonzo’ hard fork will bring exciting and highly-anticipated new capabilities to Cardano through the integration of Plutus scripts onto the blockchain. These will allow for the implementation of smart contracts in Cardano, enabling the deployment of a wide range of new DeFi applications for the first time.”

Cardano (ADA) has been criticized for its slow development pace. This has anxious investors waiting for the release of products built on top of the Cardano blockchain. The Cardano team are doing this with purpose to be able to release a peer reviewed system that is stable, secure and quality tested. That can only be possible by following the roadmap set by the developers. It begins with the foundation to build a core network that was introduced in the Byron phase. Next came the decentralization of the core network, which was the purpose of the Shelley phase. Now comes the ability for developers to build on top of the Cardano blockchain, like how developers use the Ethereum blockchain for smart contracts and DApps.

The smart contracts used in Cardano are written using the Plutus programming language. It is based on the functional programming language Haskell, which is used for reliable and mission critical application development (e.g. aerospace and defense software). The aim here is to provide a more stable code for smart contracts, which are critical in nature. That means a more sound way to execute DApps on the network, that minimizes logic errors and capable of scalability.

The Alonzo Blue phase will bring the testnet live by the end of May 2021. It will be open to a select group of partners and developers to test the codebase. The Alonzo White phase comes around July 2021 and will bring in more participants for testing. Alonzo Purple will then open up the testnet to the public. This is in preparation for opening the system up to other users to test the performance of Cardano smart contracts. With these developments, the smart contract platforms will get more competitive in the cryptocurrency markets. Ethereum and Binance Smart Chain (BSC) are going to see a new platform to compete with.

Unlike most projects, Cardano has a reputation for being slow. Founder Charles Hoskinson wants to take the slow tortoise approach to development, rather than giving too many updates right away. The team’s objective is to release quality controlled and tested software that is reliable and secure. They want to make sure they avoid many bugs and flaws that could compromise the system. Perhaps we can now see the fruits of their labor.

Ethereum 2.0 Spadina Testnet Is Set To Launch

The Ethereum 2.0 or ETH 2.0 journey continues with the Spadina Testnet launch. This is part of the Ethereum 2.0 roadmap to improve scalability, security and programmability. Spadina will run in parallel alongside the Medalla Testnet. Developers can use both networks to test Ethereum 2.0 features. This paves the way to ETH 2.0 which is expected to launch later this year, but this is not always certain. Many factors (e.g. bugs, divergence in viewpoint, etc.) can arise that could lead to delays, as often happens with the development community.

The genesis for the Spadina testnet has been set to September 29, 2020 (“dress rehearsal” v0.12.2 Ethereum 2.0 multi-client testnet “Spadina v0.12”) with a genesis time of 1601380800 (12 PM UTC). Once the testnet is up, developers can begin testing deposits and beacon nodes on the network. The testnet uses only 1,024 validators which is far less than what would be required on the mainnet (16,384 validators).

The purpose for Spadina is further test the crucial features for ETH 2.0 Serenity Phase 0. This includes deploying smart contracts for making deposits and generating the genesis block on the network. Depending on how successful and confident developers are during the testing, it can very well continue into 2021 or lead to the release of ETH 2.0 much sooner. This requires more understanding and participation from the community to determine if the upgrade can be implemented on the Ethereum mainnet.

ETH 2.0 introduces the Beacon Chain with sharding and the Proof-of-Stake (PoS) consensus mechanism. These are upgrades that address scalability problems in the Ethereum protocol. The target is 100,000 transaction per second (TPS). The challenge is to scale without sacrificing too much security and decentralization. With PoS, mining will be replaced by staking, introducing a new incentive system to reward nodes that contribute to the security and efficiency of the Ethereum blockchain.

Ethereum Needs The LINK Marines

Ethereum is surging as DeFi is bringing in more liquidity into the decentralized platform. A vital part of this push includes Chainlink, a decentralized oracle network. Chainlink provides a solution for providing information to smart contracts, many of which run on the Ethereum platform. Blockchains are evolving to third and fourth generation networks that introduce new features that extend the capabilities of smart contracts. It is significant to the Ethereum blockchain when it comes to use case.

Decentralized Oracles

Chainlink provides an API for connecting smart contracts to real world data. This information can be processed form databases which feed the data to smart contracts in real time. What separates Chainlink from other oracles is its decentralized BFT (Byzantine Fault Tolerant) network architecture which is not under the control of any entity or organization. This prevents bias, data tampering, manipulation and single points of failure. Downtime can be costly when data is not received in time. This can affect business decisions like when to sell stocks or coins.

One of the main applications for Chainlink is connecting smart contracts to real time price feeds. By design, Chainlink was developed to bring off-chain data sources to on-chain smart contracts. The previous problem with smart contracts is they could not get data on their own. Chainlink provides a type of middleware to connect external data to the smart contract to execute on any blockchain.

LINK Token

To ensure that nodes on the Chainlink network are feeding accurate data to smart contracts, a token is used called LINK. It is an incentive to the oracles who provide data and help secure the network. Bad actors are removed from the system while those who are honest receive the incentives. There are consequences for dishonest nodes who try to tamper with the data. It is a type of reputation system so bad actors will be discouraged from malicious intents on the blockchain. This includes nodes that neglect providing data, falsifying data and attacking other nodes among other things. This provides an open market that is merit-based to provide reliable and trustworthy data.

Blockchain Agnostic

Although built using the Ethereum ERC20 token standard, Chainlink is actually blockchain agnostic. This means that Chainlink was meant to work with other blockchains like Icon and even Hyperledger. Although it is an ERC20 token on the Ethereum main network, it is not exclusive to it. Chainlink’s LINK token can survive on other blockchains through distribution. Blockchains that need real time data can use Chainlink through an API.

Benefits To Ethereum

Prior to Chainlink, oracles could not directly feed data to smart contracts in real time. The data from oracles can be coded by developers, but they could not do it automatically until the Chainlink API came along. A smart contract can get external data feeds from various data sources via Chainlink’s nodes that handle data requests. They also return the results back to the smart contract to fulfill the request.

The importance of Chainlink is the way it provides real world data. For practical application use cases, oracles like Chainlink can provide data as they occur and not from a previous time. Smart contracts that are able to get data in real time to process transactions are more accurate and reliable. This can improve systems that rely on constantly changing data like on monetary exchanges. This means a trader will get the actual value of their trade as it is happening in the market.

The potential is huge for Ethereum. It provides an actual service that has a use case to benefit users. It is also decentralized so there should be no point of failure or downtime. These oracles perform non-stop even if one node is down since there will be others to take its place. This can help extend smart contract capabilities on Ethereum to become truly reliable for business and finance.

The Ethereum ERC-20 Token Specification

The Ethereum Request For Comment ERC are defined technical protocols from an EIP (Ethereum Improvement Proposal) request to the Ethereum development community. Once the EIP has been approved, it becomes an ERC, and can be implemented on the blockchain. The ERC-20 token was a specification that allowed projects to use the Ethereum blockchain as a source for funding. It became very significant when ICOs (Initial Coin Offering) became popular between 2015 and 2017. That was until financial and trading compliance issues affected the continuation of ICOs due to lack of regulatory clarity. Certain projects will be under scrutiny to participating in ICO if they have not passed the statutes of limitation for the issuance of an unregistered “security”. This falls under the SEC (Securities and Exchange Commission) for most jurisdictions and have since discouraged new projects from issuing an ICO.

Since many projects are already using this as a standard on the Ethereum blockchain, the number of ERC-20 token contracts has grown. By mid-2017, there were around 5,500 ERC-20 smart contracts on the Ethereum network. It grew past 40,000 in 2018 and are further increasing. ERC-20 is not just a technical specification for creating tokens, but it also provides a guideline for how to interact with other wallets, smart contracts and digital marketplaces within the Ethereum ecosystem.

The ERC-20 became a standard on the Ethereum platform not only for funding, but for the issuance of tokens. Several cryptocurrency projects started out as ICO with tokens (e.g. EOS, Tron, OmiseGo). These projects used the Ethereum blockchain to fund their own coins as issued tokens which can later be exchanged for the native cryptocurrency asset once the main network is running. The ERC-20 tokens were temporarily locked into smart contracts that hold a certain amount of Ether. Once the projects were able to build their blockchain, the ERC-20 tokens from the smart contract could be exchanged for the native asset for that blockchain.

As a standard, ERC-20 provides uniformity of technical and protocol standard. This allows developers to follow a procedure, much like how developers create API for their application to communicate with other applications. This reduces complexity of understanding each type of token implementation. A tremendous benefit it brings to the Ethereum blockchain is enhanced liquidity, since Ether or ETH is required to purchase the tokens. That can affect the price of ETH in terms of market cap.

The structure of an ERC-20 token contains 6 functions, 2 events, and 3 token information functions. These functions are invoked and can be be called within a smart contract. From the ERC-20 specification, the following are the 6 functions:

1. totalSupply(): Total supply of Token.

2. balanceOf(address _owner): The balance in the _owner address.

3. Transfer(address _to, uint256 _value): Sends a token of _value to address_to, triggering the Transfer event.

4. transferFrom(address _from, address _to, uint256 _value): Sends a pass from the address_from _value to address_to, triggering the Transfer event.

5. Approve (address _spender, uint256 _value): Approve _spender to extract a certain amount of money.

6. Allowance(address _owner, address _spender): Returns the amount that _spender extracted from _owner.

Decentralized Apps or DApps also support ERC-20. These apps run on top of the Ethereum blockchain. The DApp can be used to query information or even to execute a smart contract. Developers can use the functions when dealing with digital tokens created on the Ethereum blockchain.

The following are the 2 events that are triggered by the functions:

1. Transfer(address indexed _from, address indexed _to, uint256 _value): Triggered when the token is transferred.

2. Approval(address indexed _owner, addressindexed _spender, uint256 _value): Triggered when the approve method is successfully called.

The token also needs to be set with any of these 3 types of token information:

1. Name: Name of the issued Token.

2. Symbol: The name of the Token issued. For example, EtherCent token or ECT on https://rinkeby.etherscan.io/token/0x8caca3dbb57ecb058a82209effde5bf647459771

3. Decimals: Set how many digits this token can reach after the small digits. Generally, the set value is 18, which means that it can reach 18 digits after the decimal point.

The following is an example ERC-20 token created on the Rinkeby test network.

Since Ether (ETH) was released prior to the ERC-20 standard, it does not actually comply with the specification. As a result, this led to the creation of Wrapped Ether (WETH). This is an ERC-20 token that represents Ether at a 1:1 ratio (1 WETH = 1 ETH) which can be exchanged for other ERC-20 tokens.

Since the popularity of ICOs have waned in 2020, ERC-20 tokens are not as common. They are still in use mainly by projects that have not yet released their own native tokens or by new projects that are testing token development (usually on a test network). By keeping their ERC-20 tokens locked with ETH, they are providing a sort of promise to their holders that they can convert it for more value in the future. The converted tokens can then be used within those blockchain projects as a medium of exchange or store of value.