Hydra - Cardano´s scaling solution

2022년 11월 15일

Blockchain Trilemma
Cardano's approach to the blockchain trilemma of security, scalability, and decentralization is twofold;

First, the project uses a unique proof-of-stake algorithm called Ouroboros which allows users to earn rewards for validating transactions on the network. This consensus algorithm is incredibly energy efficient, meaning that it can be run on a large number of nodes without the need for special hardware.

Second, Cardano has a treasury system that funds future development of the platform. This two-pronged approach gives it a unique advantage in the blockchain space. Cardano also uses a unique system of layered protocols, which allows it to scale without sacrificing security or decentralization.

To tackle this scalability, IOHK has drafted a scientific paper by the title of ‘Hydra’. It is a layer 2 solution, soon to be deployed on the Cardano blockchain. The image depicts the basis of Hydra.

It shows that Cardano’s blockchain can simply confirm that the 30 ADA coins that once left to ‘Hydra’s head’ are returned to the blockchain. The number of coins never change. It is just that in the second layer (Hydra), coin ownership might have changed, giving Alice 20 ADA and Bob and Carol each 5. The benefit is that a lot of quick transactions between lots of users can happen at the second layer without directly affecting the blockchain. Hence, more speed and less fees.

Additionally, every stake-pool (the ones confirming transactions on the network due to the ouroboros mechanism) can open one of these Hydra heads. One head is designed to cover 1000 TPS. This means that as the project grows, the number of stake-pool operators will grow too which in turn enables more Hydra heads and thus more throughput and TPS. A linear growth model, and the first of its kind.

(Note¨this an extremely simplified exampled in layman terms. It should give a simple idea to the not so tech-savvy and encourage one to do more research)