It looks like 2020 may be the year when the highly anticipated proof-of-stake (PoS) blockchains finally arise. We are talking about Ethereum and Cardano and the fact that both are planning to re/launch in Q1 of 2020.
Ethereum, which is the second biggest blockchain in terms of its digital asset market capitalization, wanted to move to PoS since 2014. According to Vitalik Buterin – PoS will be the key to Ethereum maturity, adding that:
“Ethereum 1.0 is a couple of people’s scrappy attempt to build the world computer. Ethereum 2.0 [with PoS] will actually be the world computer.”
PoS has been theoretically present since 2012, but its related applications such as Tezos, EOS and Cosmos did not show any sign of surpassing proof-of-work (PoW) platforms in terms of market value or usage.
The difference with PoS is going to be that validators will own currency that they verify. According to its advocates, PoS would be significantly more scalable, secure and sustainable than the blockchain systems we use now, but the final word has not yet been spoken.
On the other hand, Cardano, the now 11th largest cryptocurrency in terms of market capitalization, is planning to upgrade its PoS platform as a public network.
At the moment it is governed by a federated structure of transaction validators, consisting of the Cardano Foundation, Emurgo and Input Out Hong Kong (IOHK) and of course attracted some criticism for being a bit concentrated.
CEO of IOHK, the company backing up Cardano, Charles Hoskinson noted that with the new release, Cardano will have 100 times more users running its software than any other PoW system, like Ethereum or Bitcoin.
Speaking of next year’s network upgrade, called “Shelley”, he added that:
“This marks the starting point for handing the [Cardano] protocol completely to the community.”
Of course, different opinions gravitate around the public media. For example, CEO and founder of multi-blockchain service Staked believes that 2019 is already a very good year for PoS.
“You’ve had millions of dollars of proof-of-stake assets running without a hitch and not spending billions on electricity costs,…Now, you’re going to see big projects like Cardano and ethereum taking these results even further. We’re definitely excited.”
“There’s probably five or six what we call large-market-size proof-of-stake coins and Cardano is one of them. It’s why we got into this business. All these big, exciting projects are either moving to PoS like ethereum or launching with PoS like Cardano.”
All eyes on Cardano
In general we may see Cardano as a test case of the PoS systems growth for the global audience. In contrast to PoW, PoS systems depend on internal user encouragement methods.
As Hoskinson reminded, it took years of research to figure out the correct ratio of penalties vs rewards for a PoS blockchain.
In terms of Cardano’s roadmap, Kathleen Breitman, co-creator of Tezos, noted:
“I can tell you for a fact it’s extremely unromantic and extremely unpleasant to watch a proof-of-stake network evolve. … It’s an extraordinarily hard task to switch to a PoS network or to launch a PoS network. The reason why is because there’s so much more coordination cost, more than anything else. It’s not a trivial task.”
As part of their development phase “Goguen”, Cardano intends to include smart contract functionality that will enable decentralized apps.
In the next phase, called “Basho”, they plan to increase scalability by enabling 10,000+ transactions per second. Detailed information about every phase and what the future holds for Cardano can be found in their roadmap.
Not an easy task
During their ICO in 2017, Cardano managed to raise $62 million. A year later, Hoskinson bragged about IOHK earning “nine figures” in revenue while finalizing partnerships for the project. During the annual Cardano Summit, they announced the most recent corporate partnership – the one with New Balance.
Except Goguen, Shelley and Basho, IOHK are also working on an enterprise blockchain solution called Atala. Hoskinson is the man behind all of this success.
His team has grown from two persons in 2015 to 200 today. For executive director of the Ethereum Classic Cooperative, Bob Summerwill, Hoskinson’s squad is a “world-class development team” which focuses on academic peer review.
The truth is that, to drive this project forward, Hoskinson will need to keep good relations with his project partners, no matter if he likes it or not.
Hoskinson was an original member of the founding team of ethereum until he was asked to leave in June 2014. This discord came because Hoskinson desired a corporate structure, but Vitalik was bent on remaining a foundation.
It seems Hoskinson has a couple of serious projects in his pipeline. Creating the reliable PoS system that everybody dreams of and resolving all governance questions will not happen in a year or two.
As Hoskinson comments:
“It’s still very early days.”