Highlights from Community Talks | Bitrue x Cardano Foundation “Ask Me Anything” Session
15th February 2023 — Bitrue’s Chief Strategy Officer, Robert Quartly-Janeiro, sat down with the Director of Engineering of Cardano Foundation, Dr. Sebastian Bode for an “Ask Me Anything” session on Twitter Space. Dr. Sebastian holds a Ph.D. in Mechanical Engineering and Computer Sciences from the University of Braunschweig and a Master’s degree in Computer Science from the University of Applied Sciences, HTWK Leipzig, Germany. With his previous experience across financial services, the automotive industry, and the research sector, he leads the Engineering and Integration Teams in driving development both internally and with partners.
Let’s dive into the main Q&A during the session without further ado!
Q1. Could you give us an introduction to Cardano and the Cardano Foundation, please?
Sure thing. Let me start with the Cardano Foundation. So, what is the Cardano foundation? We are an independent and Swiss-based nonprofit organization that is responsible for stewarding the advancement of the public permissionless blockchain called Cardano. And also, we are one of the three founding entities of the whole Cardano space besides IOHK or nowadays IOG and Emurgo. And what is Cardano? Cardano is a proof of state-based blockchain. And let me directly emphasize that. We are a proof-of-stake blockchain with only a positive incentivized staking mechanism. So there is no slashing, no funds locking on Cardano. We have a smart contract platform. We support tokens, which are called native assets in the Cardano space, and strong metadata features. One of the most important things is we have a very vibe brand and diverse community and developer ecosystem.
Q2. Could you give me a sense of some of the primary use cases and capabilities of ADA?
Let me start on a very high level; what Cardano’s use cases are, is we are a general-purpose blockchain. So, we are not focused on very specific applications like the supply chain sector or something like that. But we have an emphasis on building for the social and financial use cases out there and are trying to improve how society works together. One of these includes upgrading traditional systems for businesses and institutions. Sometimes, we refer to them as legacy businesses (industries that have been in the space for hundreds, 50 years, decades, etc). We try to help them to upgrade to a decentralized operation model or just to use the blockchain (wherever it makes sense for them), that’s not only companies but mostly also institutions if you think about things like voting systems and stuff like that.
Then, of course, we are also looking into supporting the blockchain native companies, which are DeFi companies mostly, or other financial protocols that build on blockchain technology. All that is merged alongside all the movement that was kicked off by Bitcoin, actually. In some very concrete ways, on Cardano, you can find various DeFi protocols, decentralized exchanges, stablecoins, and voting systems being built on top of Cardano. Of course, we also have NFT Marketplaces. You can have NFTs and any NFT-based application on top of Cardano. Interestingly, there are also some less mainstream applications that we host. For example, one of them is done collaboratively with UNHCR, a branch of the United Nations, which takes care of refugees and we are helping them as part of our Global Impact Challenge. We set up a stake pool, take the staking rewards earned by that stake pool, and forward them to any projects that they are running, which is a super interesting use case for me. This is probably something that can easily be referred to as ‘Blockchain For Good’.
Q3. What are some of the major milestones of the Cardano Foundation and ADA?
Cardano’s been live since 2017. And the first thing I’d like to say is, we had no downtime on the mainnet since then, which is a remarkable achievement, I’d say. And we started small, as probably every blockchain company after the first implementations, having a permission network running, which was migrated into a so-called incentivized testnet. So, still kind of a limited environment with a limited amount of participants, but already showcases how the Cardano technology can work. Then, we transition towards a completely public and permissionless blockchain operation model based on our stake pool operators which operate the validator nodes or full nodes, depending on from which ecosystem you came from. We introduced the native assets as one of the next development steps. That’s already a while ago and they are heavily used by a lot of utility applications.
We have strong metadata features, which was one of the next features introduced before. In 2021, the smart contract platform was released during the Alonzo upgrade. And in the last year, we’ve been mostly working on the scalability features of Cardano, enabling people to build applications that scale resulting in more transaction throughput and more efficient smart contracts that leverage the blockchain infrastructure more efficiently. Also, of course, we have been looking into scalability approaches like state channels and side-chains and updating the network stack to become more resilient against network attacks or for any downtimes.
Q4. What makes Cardano unique? What mission do you and the team have?
Yeah, let me try to give you one answer personally and one on behalf of the Cardano Foundation. So, what I like or what makes Cardano very unique to me is the community. I think the cool thing about the Cardano community is they are super transparent and at the same time, supercritical. So, whenever we implement something or do not do something, they make sure we know. And that’s something I really appreciate because it helps us get better and also sometimes points us towards directions that we just cannot see as an entity (Cardano Foundation) that we are. So, I really appreciate that. Sometimes, it can be very hard to take on this critique, but it’s always appreciated.
From the Cardano Foundation’s point of view, I’d say, or what I again want to stress is the POS system. The staking system that we have in place is a positively incentivized staking system. We have no locking or slashing of any funds once they are staked into a pool. So, as a user, you always can at any time, unstake your funds, so to say. And they never get locked, which is a good thing, I’d say, and also is favorable when it comes to financial regulations.
When it comes to the mission for this year, we really put a focus on strengthening the operational resilience of Cardano by introducing more independent and decentralized blockchain monitoring, as well as looking into providing better education to make the ecosystem more accessible. Also, of course, we are heavily looking into adoption by onboarding industries, companies, and institutions to build on Cardano because that’s definitely what is needed as the bear market goes.
Q5. Can you talk about some of the projects built on Cardano and what industries they are in?
Yeah. Besides the synthetic stablecoin, DJED, there will also be an asset-backed stablecoin, USDA launched by Emurgo this year, which is a great thing. One of the use cases we most recently worked on together with the guys from Emurgo. Earlier, I mentioned also the UNHCR-related use case and the stake pool with the charity application behind it. And for me, coming from an engineering background, I really appreciate that and we are also looking into applications in the industrial IoT sector, especially the application of SSIs (Safe Sovereign Identity systems) and decentralized identifiers. These are interesting fields to research and deploy because they could overcome some of the challenges that the guys in the industry have that were related to centralized PKI systems, a lack of resilience, or some of the challenges that were there for years. They will now be able to overcome these through the introduction of a decentralized and trustless platform like Cardano. That’s interesting to me. Most recently, we are also looking into a supply chain traceability solution and proof-of-origin for products with the Republic of Georgia. These digitalize their processes to ship. For example, shipping wine to foreign countries. The process becomes much more secure, digitalized, and hopefully efficient by applying blockchain technology.
Q6. Has the bear market affected building in any way?
Yeah, so that’s a good question, and I don’t want to lie. The bear market, of course, has affected Cardano, like every other L1 blockchain. But, there are also good things to it. For example, as the Director of Engineering, I can focus on building very specific things. We look into market validation or almost immediate market validation because everything you will build during a bear market needs that market validation. You’re not just building it because it’s so much fun building it. This is difficult for me to express as a German speaker, but I hope I made the point.
However, what is evident is that we also need to provide. Besides the technical education that we are already providing for our community and people who want to build on Cardano, we also extend our support to the community when it comes to building robust business models. We have a great program that’s called Project Catalyst where you can apply for funds to finance work that is being built on the Cardano ecosystem, regardless of whether it is applications or infrastructure tools. With that being said, however, one part that we needed to improve in the past was in terms of helping businesses build a robust business model on Cardano so that those businesses can withstand bear markets as we have at the moment.
Q7. What are your most important next priorities?
Sure. Frederik Gregaard recently released a strategy video for the Cardano Foundation in 2023. Those are the three focus areas we are looking into for the following months. It’s adoption, education, and operational resilience. Adoption is pretty easy. We are talking to companies about concrete use cases, helping companies and institutions build on Cardano. That’s one of our focuses.
Then, it’s about education, which has two sides. One is providing general blockchain education to understand what blockchain is, what it is probably not, and for which use cases it works for which use cases not. We not only provide this education to people who want to build on a blockchain or those legacy businesses I’ve been talking about, but also to institutions so that they understand and can make more informed decisions when it comes to deciding on the legislation of a particular country or the European Union (for example). That’s one thing.
Lastly, operational resilience. This also has two sides to it. One is, of course, network monitoring. We look into if all the network traffic is okay? How the transactions are handled? Are they handled fairly? What kind of burden is put on the stakeholder operators that operate on the Cardano infrastructure? The flip side of operational resilience is decentralization. This is what we are looking into, together with the other founding entities and the community. We look into how we should set up an open governance model for Cardano so that everyone can participate in the decision-making regarding paving out the future for how Cardano works and how it will evolve in the nearer future.
Q8. Collaborations and partnerships can be key to business success, what does Cardano look for when considering technical and/or commercial partnerships, and what makes effective partnerships in crypto work?
Cool. Yeah. So, let me start with how we select partnerships. Every week, I run through a huge exercise with our Partnerships team where we list all the companies and organizations that had reach out to us and want to build on Cardano or collaborate with us. They either have a good use case in mind or they are just interested in how they could use blockchain technology. We are having initial calls with them to figure out which use case or in which use cases. They are currently looking into their problems, and we analyze those together with them, but of course, internally, at the same time, we evaluate if those use cases fit with Cardano’s philosophy.
For example, do those use cases have a positive impact on society? However, there are also more straightforward things we are taking into consideration: the financial feasibility of the use cases. Does it provide additional adoption for the Cardano protocol at all? And then, there’s also the technological feasibility of it, because although you can build everything on top of Cardano, there are things that are easier to build on top of Cardano than other things. Sometimes, it just makes sense for someone to go with another protocol. Although it’s hard to say this, coming from the Cardano Foundation, but that’s the way it is. Based on that rating scheme, we approach the companies we are talking to and then work out how to collaborate with them.
When it comes to making those collaborations successful, it’s like doing regular meetings and catching up on how things are going. I have a Technical Integration team that helps the guys run the Cardano components like the nodes, and they also teach the partners how to use the different components on the API layer (like chain indexers and any libraries you need to build an application).
Also, we are a spokesperson when it comes to collecting all the requirements of those partners and forwarding them to. For example, IOG does the core network development. Whenever there’s a new feature or a protocol update needed, we collect those requirements and discuss with our partners at IOG how to best approach those challenges.
Q9. What are some of the ways in which Cardano contributes back to the crypto community?
Yeah, there are three things to it. The first thing is mostly done by IOG, which is research. There were things released last year, like, the Edinburgh Decentralisation Index (EDI), which is a measure that evaluates how decentralized a blockchain protocol is. There are many research questions around this and also there is some argument about if those kind of indices make sense at all. But yeah, that’s definitely a topic that needs to be tackled by someone, and that’s something we are doing. We also have the Ouroboros BFT Consensus algorithm that IOG developed, which is also used by other blockchain protocols. In addition, we have released many other research papers that touched not only on Cardano-specific topics but, in general, on decentralization and how to implement or overcome blockchain-specific challenges. That’s one part.
The other part is education. As I already mentioned, we are not only educating people who want to build on Cardano. We are also trying to educate and promote blockchain technology to regulators, institutions, and governments so that those people can make informed decisions instead of decisions that are probably not so well informed. There’s a considerable effort that we are making there. Charles Hoskinson is very prominent in taking action to provide that kind of education for people.
The last thing is related to events. We are trying to provide platforms for the community and companies that want to build on Cardano. There’s a particular event that I’d like to mention, and it’s the Cardano Summit. We had a very successful Cardano Summit last November, where our organizing team spent a tremendous amount of effort to make this event a success. It was a huge success because it brought together many people from the community, IOG, Cardano Foundation, Emurgo, and companies that want to build on blockchain technology in beautiful Luzanne in Switzerland. There will be another Cardano Summit held this year in fall, I guess, where we will try to do the same thing again and I hope it will be even more successful than last year.
Q10. What is the outlook for Cardano in 2023 and beyond?
Yeah, let me not predict the ADA price (chuckles). I’m probably the wrong person to do this technology-wise. There are scaling technologies we are looking into like the Hydra Heads project and Mithril, which is a project that looks into faster syncing the full nodes. That could be interesting for centralized exchanges or everyone that runs a node because they can spin up those nodes quickly. We are working on new smart contract platforms so we can have alternatives to Plutus. Also, the side-chain framework has recently been developed by and released by IOG. So, interoperability with other blockchain networks is a huge topic for us in 2023.
Regarding the governance side of things, it’s the Cardano Improvement Proposal (CIP). The CIP process enables the community to influence how the Cardano protocol gets further developed. It’s an open-source activity and open-governance activity. In a transparent way, it lets the community and us decide on how we should approach certain challenges that we are trying to overcome. It can be very technical, but it is also entirely related to governance processes and others. Then, it’s the Cardano Summit, which I already mentioned, which is definitely one of the focuses of the Cardano Foundation this year.
We are also looking into a couple of financial services use cases. For now, we are evaluating its feasibility. That’s one example of my team’s tasks with the guys from the Financial and Partnerships here at Cardano Foundation and for the future.
Before this, we were in the so-called Basho era, which looked into making Cardano more scalable and applicable for more extensive applications. We are now in the Voltaire era, looking intensely into more substantial community involvement, open governance, and better open-source software development, especially regarding governance. Yeah, that’s what will come in 2023 and the years after.