Welcome to this weeks Just The Metrics

Hello and GM,

here we are again, Just The Metrics, your weekly reliable source of information when it comes to crypto metrics, L1 comparisons, all about Cardano, and updates from the Cryptoverse.

And the best: all delivered as you explain it to your granny 👵🏻😄

Here's what we got this week:

1. Updates from the #Cardano Cryptoverse

• The Cardano360 July Edition

  • Vasil Hard Fork Updates

  • Governance Mechanisms in Project Catalyst

  • Project Updates from BookToken & Voteaire

2. Diving into Just the Metrics

• The L1-Assessment-Framework applied to Cardano

Ok, let's dig in!

Updates from the Cardano360 in July

Every month Cardano is giving an update on the latest events, development status-quo, and upcoming development activities. This is called Cardano360.

If you are a hard-core #Cardanian, you probably know that.

For all who have not seen it yet:

here is a 1-minute read for you, covering all the essentials from the Cardano360 July Edition so that you can save your precious time and don't have to watch it 😉

Let's see what was going on in July:

The change request number 1.35.2 has been released to the testnet, fixing issues that stake pool operators, DApp developers & internal tests have detected. So current focus lies on thorough testing and elimination of issues.

Here is the set of objective criteria for ecosystem readiness of the Hard Fork:

• Exchanges: targeting 80% completed integration by liquidity

• SPOs: need at least 75% updated to the final version of the node

• DApps: Backwards compatibility of Version 1 and Version 2

Take away: To ensure a smooth roll-out, continuous testing and issue cleaning take place. Hence, the roll-out of the Vasil Hard Fork Combinator will take a bit longer than anticipated.

Since we don't want to leave you hanging in the air, here is some background information on Hard Forks:

Generally, what is a Hard Fork?

A Hard Fork is an intentional modification to a blockchain that:

• Comprises radical changes to a protocol that makes previously invalid transactions valid or vice-versa

• Requires all users to upgrade to the latest version of the protocol

• Nodes without the upgrades will stop processing blocks

What to expect from the Vasil Hard Fork Combinator Upgrade?

The upgrade is part of the Basho Phase of the Cardano Roadmap which focuses on scaling as well as network and ledger optimization

The Upgrade mainly tackles 2 areas:

1. Updating the Smart Contract programming language Plutus

Result: Enable developers to build stronger, more effective dApps

2. Implementation of diffusion pipelining

Result: Higher throughput by allowing blocks to be transmitted without full validation & faster block propagation across nodes

How is the Governance in Project Catalyst assured?

For Project Catalyst Fund10 a new governance mechanism will be introduced called Liquid Democracy

• Liquid Democracy is a form of delegated democracy where an ADA holder engages in collected decision-making through a combination of direct participation and dynamic representation 

What does that mean for Project Catalyst voting process?

• ADA holders today can vote directly for as many proposals as they like

• With the introduction of delegated Representatives (dReps), in Fund10 instead of voting directly, they can delegate their voting power to one or more dReps

• dReps will vote on the proposal on behalf of the ADA holder

• The delegation of the voting power is optional and fluid, meaning it can be recalled and will reset after each Fund

The goal of implementing dReps:

In less than a year, Project Catalyst has become the world’s largest decentralized innovation fund. To facilitate continuing growth, the concept of dReps is introduced and will help to:

• Bridging voting power imbalances for low-value balance votes

• Increasing voting participation across more proposals

• Enhancing the quality of decision-making within each Fund

BookToken:

What it is: booktoken.io is an NFT marketplace for buying, reading and selling EBooks and Audiobooks

Why on Cardano: The main reasons are the opportunity for scalabilities and security the founders saw in the technical foundation of Cardano

What's the status quo: booktkone.io has been launched publicly on the 20th of July with the first NFT ebook and a DApp

Voteaire:

What it is: Voteaire is an on-chain voting application that provides tools for communities with fungible or non-fungible tokens to govern that community. It allows everyone in the ecosystem to create a poll. All results are weighted. All proposals and voters are stored publicly on-chain.

What's the status quo: The project is currently live on testnet.voteaire.io and is planning a private launch on the mainnet soon.

L1 Assessment Framework applied to Cardano

Crypto is an emerging asset class of the 21st century. And when making investment decisions in this particular asset class, it is important not to base them on hype or ever-changing narratives.

Especially in the light of recent events, it becomes more & more evident that fundamental and metrics-based decision-making is key for a profound project assessment.

So here is the Blockchain Trilemma as Assessment Framework

Let's take a look at certain metrics of Cardano that determine its degree of

• Security

• Scalability &

• Decentralization

General Decentralization Metrics:

Initial Token Distribution:

• Cardano had a fair coin distribution from the very beginning. This has set the tone for the decentralization of Cardano from the beginning onwards, which is a rare feat when we look at the current public blockchain landscape.

Number of individual staked wallets & staking ratio:

• Cardano has over a million staked wallets with a staking ratio of 71.2%, which reflects a high degree of decentralization.

Permissioned vs Permissionless Mode (Yes/No):

• Cardano is a permissionless public blockchain, with zero permissioned mode

Total number of validator nodes/relay nodes/stake pools:

• As of 31.07.2022, Cardano has 3182 stake pools/ validator nodes with an equal or more number of relay nodes, this shows a high amount of network distribution

Factors Enabling Decentralization:

Size of a full node: 69.62 GB

Minimum hardware & connectivity requirement for running a validator node/relay nodes/stake poolCPU:

• Intel or AMD x86 processor min 2 cores at 2GHz or faster

• Memory: 12GB of RAMStorage: 100-200GB

• Operating system: 64-bit Linux Broadband: 10 Mbps +

The relatively small size of the Cardano full node and the modest requirements of hardware are factors enabling its decentralization, which reflects in the high number of stake pools & users running full nodes (Daedalus)

General Security Metrics:

Cost of 51% attacks:

• For an attacker to control 51% of the Cardano network, it will cost over USD 9 billion, not factoring in the price appreciation that will occur with a buyer trying to purchase that much Ada

Vulnerability to denial-of-service (DoS) and distributed denial-of-service (DDoS) attacks:

• The high degree of Cardano's network decentralization (ca. 3200-6000 relay nodes) makes the vulnerability of a DDOS attack relatively low.

Propagation network types (a peer-to-peer propagation network or a relay propagation)

• Currently, Cardano has a relay propagation network, which is not optimal. Most likely this will change by the end of 2022

Factors Enabling Scalability:

Full Node/Partial Node Ratio:

• Considering the relatively low size of the Cardano full node, it should have a healthy Full Node/Partial Node Ratio. But no such metrics are available to the public.

Client Diversity:

• As of now, Cardano has only one client in the Haskell programming language, which is not optimal and client diversity is critical for the long-term viability of Cardano

General Scalability Metrics:

Transaction throughput:

• 7-8 TPS, which is pretty low for an L1

Active Layer 2s (rollups/state channels):

• Currently no active rollups/state channels.

Transaction latency & finality time:

• Around 5 minutes

Factors Enabling Scalability:

Status of data availability that enables rollups

• Poor data availability, not suitable for rollup implementation

Number of projects building Layer 2s (rollups/state channels)

• Rollups : 2 (Orbis & Milkomeda); State channels 1 (Hydra)

This is a really low number if we take the Ethereum ecosystem as a benchmark.

So how does now the overall verdict look like:

Decentralization: High

Security: High

Scalability: low-moderate

Cardano network shows a relatively high degree of decentralization & security, which makes it a solid L1 Blockchain.

It clearly lags in the scalability metrics.

But like every other public blockchain, Cardano is also in its pursuit to break the blockchain trilemma. Whether or not Cardano will be able to do it, only time can tell.

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.