Cardano Hard Fork: How Will It Change the Blockchain?

September 29, 2022

Cardano Hard Fork: How Will It Change the Blockchain?

Cardano is the first blockchain platform to be built through peer-reviewed research, to be secure enough to protect the data of billions, scalable enough to accommodate global systems. Cardano’s blockchain is a constantly updated chain of blocks that contain data such as transaction records. The network is kept decentralized and secure by validators that are incentivized with rewards in the blockchain’s native token ADA. Read more about Cardano hard fork in the new StealthEX article.

The next update that was scheduled for Cardano was the Vasil hard fork, which significantly improves and enhances Cardano’s capabilities. Named after Vasil Stoyanov Dabov, a Cardano community member and ambassador who passed away in December 2021 due to a pulmonary embolism, the Vasil hard fork will bring numerous upgrades to network capacity.

Article contents

1 Before the Cardano Hard Fork

Before the Cardano Hard Fork

Cardano’s development evolved in a series of defined stages: first, a foundation based on security and correctness. Capability, scalability, and expressiveness come next. The Byron federated era, and the Byron reboot – which rebuilt the core platform – closed with the Shelley upgrade in the summer of 2020. Shelley transformed Cardano into the most decentralized proof-of-stake platform in the world, with almost 3,000 active stake pools.

In preparation for the new Vasil upgrade, at the beginning of September, the decentralized finance cryptocurrency experienced a significant increase in the amount of capital flowing into its market cap. In particular, Cardano has seen over $2.1 billion enter its market capitalization over the last seven days as it went from $14.6 billion on August 29 to $16.7 billion on September 5.

Vasil preparations have been underway for some time across the entire Cardano ecosystem. The core engineering teams at IOG and the Cardano Foundation, SPOs, dApp developers, and exchanges have performed integration efforts, with positive results. Speaking during a Twitter live stream in August, Cardano founder Charles Hoskinson told the public that while ‘extensive testing’ is still being conducted, the Vasil hard fork could take place in mid-September.

The Gist of the Cardano Vasil Hard Fork

There are a number of Cardano Improvement Proposals (CIPs) that are ready to be implemented to the network. In the Vasil hard fork, the CIPs implemented are geared around improving the usability, and increasing the capacity of the Plutus smart contract language. These are:

Cardano Improvement Proposal 31

Creating a new way for developers to reference an input allowing them to look at the result of an output without having to spend it. Datums in transaction outputs provide a way to store and access information on the blockchain. Prior to the Vasil hard fork, the output must be spent to know the information of the datum attached to that output.

Vasil allows developers to reference this information without having to use the output. This optimizes transaction throughput and increases concurrency.

Cardano Improvement Proposal 32

The objective of this CIP is to allow datums to be attached to outputs instead of the datum hashes. Currently, since the datum’s hash is attached to the output, the full datum is required to finish the process. By implementing this update, developers can code scripts that point to the inputs directly.

Cardano Improvement Proposal 33

The proposal allows reference scripts to be attached to outputs. So, the reference scripts are used to satisfy the validation requirements. These Plutus reference scripts will, in turn, make transactions smaller, and make the validation process more efficient.

The implementation of these CIPs will improve network performance. At the same time, they’ll change many of the ways Plutus is used today. Many of the developers currently operating on Cardano will have to learn these new concepts.

Diffusion Pipelining

Diffusion pipelining is an upgrade towards block propagation time. It’s important to improve network scalability as the Cardano blockchain sees more dApp deployment. The core of the diffusion pipelining is to have blocks be transmitted without full validation while at the same time making changes to the consensus layer to improve block propagation across nodes.

The main information that must be preserved for propagation is the block’s header, basically all the metadata associated with the block and the hash referencing the previous block. The body of the block is preserved on the metadata contained in the next block, so that would make the network resistant to DDoS attacks even without full block confirmation.

The update will also lead to an increase in the size of the block. That would give much more space to data to be saved into each block added to the ledger. The final result is that these combinations of improvements and optimizations will lead to a much faster and scalable network.

Cardano Vasil Hard Fork Date

On September 23, Input Output Global team activated the upgrade in the main Cardano network and commented on it.

News of the upgrade has seen social media chatter about ADA increase by 35.16% over the past seven days from Monday, according to market intelligence platform Santiment, third behind Ripple and Ethereum.

The new upgrade will be the blockchain’s most significant since its Alonzo hard fork in September last year, which brought functionality for smart contracts for the first time. The Vasil upgrade aims to bring increased functionality, performance, scalability, and interoperability to the blockchain through new features and improvements. New Plutus v2 features and enhancements will enable dApp developers to create exciting experiences, while diffusion pipelining unlocks the potential for greater throughput and network capacity.

The hard fork combinator event was launched while the Vasil hard fork functionality was to become available on September 27, which is one epoch after the hard fork. The Cardano developer community remains excited ahead of the second scheduled event.

One of the crypto experts, Rick McCracken, commented on the state of the network 3 days after the hard fork combinator event was launched. According to Rick, block propagation times remain consistently near 300 milliseconds, which is a drastic drop from about 1,600 milliseconds recorded before the hard fork. Network sync is around 99%, which represents a high-performance network. This comes as part of the Vasil release is Diffusion pipelining.

Consequences

After Ethereum’s Merge, Cardano’s Vasil hard fork was the most anticipated event for the crypto community this year. However, despite the fact that they have developed both blockchains, the anticipated spike in prices for ETH and ADA didn’t come. On the contrary, ADA price tumbled to almost a year-low of $0.42 after the Plutus V2 activation. Historically, the ADA price always went down after every hard fork.

Popular analyst Peter Brandt warned that the ADA price has formed a descending triangle. It indicates the price could dive below $0.33.

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