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Who is Cardano being built for?

Published 6.4.2023

Who should decide who Cardano should have served best? Many people would answer that no one because a decentralized network should have no leader. They believe that the blockchain should be launched and then no major changes made. Another possibility is that all users who have skin in the game will make the decisions. Through democratic voting, they can collectively decide to change the protocol. One group may benefit from the changes, but the other may lose. The change may, in principle, satisfy only some, so it may cause an exodus of some users. Cardano will have on-chain governance. Let's think about what approach is most appropriate. Is Cardano heading in the right direction?

TLDR

  • Teams have essentially launched not only blockchains but also movements or communities of sorts.
  • A protocol capable of change may suit the majority, but minorities may go elsewhere.
  • A change-resistant protocol cannot respond to changes in the external environment. It will either survive as it is or cease to exist.
  • The community needs to trust the protocol, and the only way to do that is to control it.
  • As opinions differ on what the mission of the Cardano project actually is, opinions will differ on what new features to implement or how to improve the protocol.
  • The mission of Cardano is linked to wider adoption, and so we do well to rely on the wisdom of the crowd.

Views on the future will change over time

Cryptocurrency adoption is going from the bottom up. In the beginning, there is always a team that defines the mission of the project and its philosophy. They implement the basic principles into the source code. This creates a technology solution that has a defined mission. Around each blockchain, users begin to unite and use the network for financial and social interaction, but at the same time share the ideals and mission of the project. You could say the team has essentially launched not only the protocol itself but a movement or community of sorts.

As the number of new users grows, different opinions about certain parameters or features of the protocol may begin to prevail. Newcomers may have different needs or expectations than those of the older generation of users. Is it fair to listen to the opinions of new users and debate with them about possible changes? Should the protocol be changed to suit a wider group of users?

If the philosophy of the project is that it should not change and remain more or less as it is from the beginning, there is nothing to debate. Is that an advantage? Not changing the protocol is equivalent to the following attitude: 'Adopt the protocol as it is or go elsewhere'. The advantage of resistance to change is stability and a certain durability. Certainty is a highly valued quality in the financial world.

However, this approach may have several disadvantages. Blockchain is a technology and does not exist in a vacuum. Each protocol is entirely dependent on the Internet, the team that maintains the source code, development funding, etc. Moreover, a protocol has some properties that can be reliable, sufficient, and of a high standard once it is launched. Over time, the quality of these properties can erode, become obsolete, insufficient, or of poor quality.

A change-resistant protocol cannot respond to changes in the external environment. Thus, there are only two ways a blockchain can survive. Either all properties are set from the beginning so that they will persist without change for ages, or the protocol will cease to exist due to some fatal flaw or shortcoming. Of course, it may happen that the team and the community eventually agree on a change that will ensure the survival of the protocol.

Cardano will have on-chain governance so that the protocol can be changed. The attitude could be described as the following: ‘The majority can change the protocol to suit itself at the expense of the minority’.

Note that both attitudes will not meet the expectations of 100% of the population. In the first case, users may not adopt the protocol because something doesn't suit them from the start and they have no chance to change it. In the second case, the changes may cause an outflow of users who are not comfortable with the change.

It is clear that the older generation of users adopted the protocol because of certain features and the philosophy of the project. If the newcomers start to disrupt this with their views and are able to push for changes, the older generation will be unhappy.

Let's illustrate this with one specific case.

The older generation may have reservations about using KYC as they see it as a betrayal of Satoshi's ideals. Satoshi wanted to solve the trust problem. But can it be interpreted that he was 100% and in all cases against KYC? Many financial transactions require knowledge of the identity of the participants. If we don't have a reliable technological solution, we have to use existing ones. As cryptocurrencies grow into existing structures, there may be a need for integration with existing systems. This will inevitably lead to questions about how to approach KYC.

The rejection of KYC is not only a manifestation of distrust in the state and a desire for a different social order (which is a legitimate position) but also the inability to use cryptocurrencies for ordinary financial transactions such as unsecured loans.

The problem is that there are countries where people are happy with their governments and countries where the opposite is true. How should the protocol deal with this dilemma? Should the protocol remain resistant and thus possibly unsuitable for part of the population, or universal to suit almost all needs?

Does the older generation of users (and the team) have the right to maintain the original philosophy and mission of the project, or do the newcomers have the right to impose their will because there may be many more of them (and they may have more decision-making power)?

The ability to adapt is key to survival

We believe Cardano is moving in a good direction. The protocol's ability to adapt to external conditions and to conform to the will of the majority is preferable to being resistant to change. Let's look at a few reasons.

We don't think it's possible to build a protocol that will survive for decades or even centuries. It is theoretically possible to build a phenomenon, a movement, rules, or something similar, but the implementation (technology) has to change and adapt to technological progress. Cardano can survive a century, but only if it keeps evolving. If humanity invents something better than the Internet (which seems unlikely at this point), Cardano will only survive after some form of reincarnation.

The demise of the Internet is a somewhat extreme case. It is important to think about things like decentralization, the long-term economic sustainability of the project (security budget), funding for protocol and ecosystem development, etc.

Historically, we know that the decentralization of some older blockchains is dramatically declining and there is talk of exhausting security budgets, i.e., the problem of losing network security. These are concrete problems today and will very likely be faced by any project based on similar blockchain principles.

To not address a serious problem is basically waiting for the slow demise of the project, or for a miracle. You can't rely on miracles, so the only possible solution is to modify the protocol to keep its key properties to a high standard.

Of course, it is possible that the community may accept the degradation of key features of the protocol. But is this a sustainable approach in the long term if there are alternatives? We dare not predict the future, but it is unlikely, as weaknesses can usually be exploited.

A resistant attitude to change by the team and the community cannot ensure the key features of the protocol at a high level in the long term. Tools and processes should be provided to help the community address emerging or existing protocol issues. The community needs to trust the protocol, and the only way to do that is to control it. Sooner or later, deterioration of the protocol's properties must inevitably lead to a loss of trust. The community may feel powerless if it is unable to provide a remedy.

Newcomers may have requested to modify the protocol because they believe it will help them realize their goals. There will be groups that disagree with each other. In a democracy, we have tools to deal with this, and you all know them. It is voting. We believe that the protocol should evolve in a way that best serves the majority. This is not 100% true, of course, and we should make sure that the original philosophy and mission of the project remain the same. That's nice to say, but it's harder to achieve when it comes to specific changes.

Cardano's mission is to become a global financial and social operating system. It is not a fight against governments, and it is not necessarily a fight against fiat currencies. One may see Cardano as an alternative to the current financial and political order, the other wants Cardano to be a replacement for it. As opinions differ on what the mission of the Cardano project actually is, opinions will differ on what new features to implement or how to improve the protocol.

The best way to move forward is to look for solutions that suit the majority. The minority must adapt, compromise, or leave. That's the reality.

We do not believe that Cardano should be controlled by a minority who will use it for their own agendas. In that case, Cardano could remain in the hands of that minority forever, and wider adoption would be a distant dream. But the mission of Cardano is linked to wider adoption, and so we do well to rely on the wisdom of the crowd.

The views of the older generation of users may conflict with those of newcomers, but we have to accept that. There should be a platform where the positions of all groups can be discussed in a substantive way. The result of the debate should be decided by voting. Everyone who owns ADA coins, and thus has skin in the game, should have a say in the direction of the project.

Is it okay that current Cardano properties can change in exchange for higher adoption? We think so, but the crowd will make the best decision.

Conclusion

Cardano should serve as many users as possible. Ideally, it will be more versatile and retain key features. Being more versatile does not necessarily mean that the first layer has to change. The biggest innovations are likely to occur in the second-layer solutions. However, the Cardano protocol will need to be modified from time to time, and it is good that the ADA holders will decide on this.

Protocols have a technological basis and their properties will, by their nature, erode over time. From our perspective, it would be a mistake not to react to the deteriorating properties of a protocol. We need to build an aware and educated community that will steer the direction of Cardano in the best possible way. Cardano cannot have a single leader, it needs a community.

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