Conversations with Junior Blockchain Developer Part VI.
A: Welcome back!
B: Long time no see!
A: There is heated debate in Ethereum community now that their opinion is that introduction of StarkNet (zkRollup L2) solution effectively obsoletes every other L1 blockchain, would you agree?
B: I am very familiar with view of so called Ethereum Maximalists about this also some of they are covertly maximalists while appearing not to be. My short answer is no, but why no we need to dig a bit deeper…
A: How deep?
B: Deep enough
A: Ok, let’s start — Solana
B: If you assume that only one account based smart contract blockchain will win (which is not so obvious) then Solana is indeed a bit endangered because they if StarkNet really pulls off their main-net deployment this year then the only thing that makes Solana competitive is PoS with staking which allows one to earn yield and is environmental friendly. It is hard for me to believe that people really care for environmental friendly chain because sadly people don’t really think about earth too much and plus there are also ways to make mining on ETH environmental friendly by using renewable energy sources.
A: Except ETH miners don’t really use renewables sources to obtain electricity
B: This is true, there is much larger push in Bitcoin community albeit in both cases numbers are disappointing… also let’s not forget that PoW looses 98% of energy… this is pretty wasteful albeit deeeeeep PoS and PoW discussions we can save for other time…
A: Ok, but staking could be still convincing?
B: Absolutely! However, it may not be convincing enough if there is way to earn yield on DeFi Dapps on L2s of Ethereum and pay literally almost no gas fees (StarkWare zkRollup could easily mean 3000 — 2000 TPS) also considering the fact that Solana doesn’t really have 65.000 TPS (lol).
A: This is what they say, where is the trick?
B: 65k TPS is counting all consensus transactions which is mega marketing push.
A: So realistically what TPS does Solana have with ca 1100 validators?
B: Realistically it has about 350 TPS — as in user transactions.
B: I know, crazy right
A: Back to ZkRollups and other L1, what about Cardano?
B: Cardano is unique position for number of reasons.
It’s POS with eUTxO focusing on developing countries (e.g. Africa) with very unique PoS protocol called Ouroboros. Cardano’s staking means that there are no lock ups and no slashing, eUTxO means state is local not global like in case of Ethereum and Solana (account based systems) so it is much harder to hack smart contracts in case of eUTxO. Smart Contracts are live on main-net since 12 September and there has been zero value stolen yet.
A: Oh come on, DeFi Dapps didn’t release yet!!!
B: This is true but some DeFi Dapps will release this year and you can still hack NFT based smart contract, doesn’t have to be DeFi. DeFi hacks on Cardano of course will happen but I am 100% sure they will happen way way less often, this is because eUTxO has to some degree security build in by design (local state), this is completely downplayed by majority of people and very well understand by professionals. In this professionals doesn’t mean VC funds (sorry)… but rather professional blockchain researchers.
A: What else makes Cardano unique?
B: Since it is fundamentally different model and project, it has a chance to innovate, in fact I see Cardano a bit like a strong innovator with ability to potentially obsolete some projects and approaches in the future.
A: Maximalist view?
B: No, really eUTxO is a really powerful accounting model, SundaeSwap CEO explains it best in an interview with Hashoshi:
A: Is this all?
B: No, they have very high focus on optional KYC (where you agree) and their DeFi — once launch will be very very unique.
A: Why is that?
B: In Cardano thanks to eUTxO on DEXes, you can do something which is called programmable swaps and in case of lending products you can have so called x4 yield streams.
B: Yes, things like that are not possible on either ETH or Solana since ETH doesn’t even have a working PoS (only staking) and Solana has account based model with ca. 4 day lock-ups (Casper based consensus).
A: Is this all?
B: Of course not :), Cardano is heavily focusing on smart contract security, there will be Dapp certification program and Dapp market place with certifications and their work on Atala Prism (Decentralised ID Solution) could actually mean that DeFi products will be compliant.
A: I yes I heard Gary Gensler from SEC saying something like all today’s DeFi Dapps would not be compliant…
B: Yes, indeed, Cardano focused on developing world, which in many cases is friendly towards DeFi on blockchain solutions because they often have nothing and also DIDs on a blockchain make it not sound like money laundering and escaping tax man.
A: KYC is a serious privacy offender..
B: In case of Cardano it will be very similar to what Google and Android has, you will only be able to allow certain visibility to certain applications. If you want to you can limit as much as possible or even not show anything personally identifiable to any entity or individuals.
A: Some DeFi Dapps will require basically that you share at least something?
B: Yes, for compliance reasons you will have to share something but then perhaps privacy traction (privacy to others on chain but not privacy to those Dapps) will be allowed.
A: Then we are loosing verifiability… and moving to Banking 2.0
B: Yes, this could be the price to pay, look at Monero and privacy coins most of them are delisted from serious exchanges. It is dystopian to believe any government will allow privacy transactions between all citizens in the country and foreigners outside of the country.
A: Cardano has some way to do privacy transactions?
B: Currently only research paper, not implemented yet but it is possible yes and can be implemented relatively quickly (don’t quote on on this).
A: What about governance?
B: A yes, in case of Cardano aim is to have governance 100% in hands of community
A: Community, that sounds nice but actually these will be whales as voting is proportional to amount of ADA…
B: Well this is the first shot because it was easiest to implement but there will be representative democracy, you will vote on representatives, also some catalyst projects:
Check out Project Catalyst Innovation Community
Project Catalyst is a place where you can submit, browse, vote and comment on ideas. Hosted by IdeaScale.com.
are experimenting with idea of 1 person = 1 vote (e.g. by using DIDs like Atala Prism).
A: WOW, again so much valuable content, we have to wrap this up!
B: Sure thing, see you next time!
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