Despite the strenuous bear market conditions, so far, 2022 has been the most active year for Cardano. The largest Proof-of-Stake blockchain has deployed many updates to increase its throughput and user experience. According to IOHK, by mid-June 2022, Cardano served as a technical platform for over 1,000 dApps. Undoubtedly, this has further fueled the need for higher scalability.
In response to the growing user and developer needs, IOHK announced the Vasil hardfork earlier this year. The event aims to deploy significant improvements to make Cardano’s network faster and cheaper. Ultimately, it will be the biggest and most anticipated implementation for the Cardano community. Here’s what you need to know about the Vasil hardfork:
What is a hardfork?
A hardfork is a term used in blockchain technology, which designates a radical change in a network’s protocol. Typically, all nodes or stakers must agree with the proposed changes before implementing them on-chain. All nodes and users must adopt the new protocol rules and software version if accepted. Ultimately, old blocks and transactions become invalid because they don’t adhere to the new decrees, thus making them irrelevant.
In essence, hardforks can be an efficient way to make crucial changes in the blockchain fundamentals. However, they can also create permanent divergence among the blockchain community. Prime examples of user dissatisfaction resulting in such hardforks are the Bitcoin Cash (BCH) and Bitcoin SV (BSV) forks. The Ethereum (ETH) and Ethereum Classic (ETC) hardfork is another case prompted by The DAO hack. In other words, hardforks may have two core reasons — collective agreement on improvements or partial community disagreement.
Who is Vasil Dabov?
Vasil Stoyanov Dabov was a Bulgarian mathematician, Cardano Ambassador, and long-time member of the Cardano community. Arguably, he was mainly known for contributing to the IT sector and blockchain technology. Still, he also had other passions, including the evolution of human consciousness and environmentalism.
He single-handedly planted over 10,000 Ginkgo Biloba and other endangered tree species during his lifetime. He associated his belief in Cardano’s Proof-of-Stake consensus algorithm with Gingko’s longevity and resilience. Cardano’s July 2022 hardfork was named after Vasil Dabov to commemorate his contribution to blockchain history.
What are the 4 improvements Vasil hardfork will bring to Cardano?
Through gradual and consistent improvements, Cardano has rapidly developed its network and dApp ecosystem. To ensure complete visibility, transparency, and predictability, Input Output implements the Cardano Improvement Proposals or CIPs. They serve as formalized design documents that present and describe new features to the community.
In this regard, the Vasil hardfork includes several proposals which will dramatically improve Cardano’s performance and allow many dApps to launch on mainnet. Here are the 5 most essential updates that Vasil hardfork will bring to Cardano:
CIP 31 — Reference inputs
The CIP-31 update is fundamental to improving the blockchain’s throughput by introducing “Reference Inputs”. The solution addresses the drawbacks in the eUTXO ledger design that require spending and recreating UTXOs.
Instead of spending the transaction output to see it, CIP-31 will facilitate access to stored data on the blockchain, eliminating the extra step. In other words, users can simply look at the reference input without using the actual data. Ultimately, the update will improve the scalability and resource efficiency, advancing the performance of on-chain data providers.
CIP 32 — Inline datums
CIP-32 is another update to streamline the communication between dApp participants. At their core, datums are pieces of data attached to outputs. However, this hasn’t been the case, as they are implemented in hashes of datums. This mechanism causes massive inconvenience, especially for the spending party.
Thanks to the “Inline Datums”, Cardano will attach the datums directly to the outputs. As a result, the reduced volume of data will simplify the communication between users. Moreover, dApps will become far more efficient and convenient to use.
CIP 33 — Reference scripts
“Reference Scripts” is another update that will dramatically improve the throughput and efficiency of Cardano. CIP-33 affects Plutus scripts by eliminating the risk of bloating the blockchain and reaching the size limit.
The solution addresses the need to satisfy script requirements during validation by replacing individual scripts with universal ones. That way, transactions will point to reference scripts instead of entire scripts. As a result, they will become much smaller and more easily processed, allowing dApps to operate quickly, cheaply, and efficiently.
CIP 40 — Collateral outputs
The last CIP focuses on improving the user experience in terms of wallets. Considering Cardano’s UTXO model, all wallets must set collateral to interact with dApps. The following feature also represents an outdated method of DDoS protection, which takes the sender’s collateral if the transaction validation fails.
The “Collateral Outputs” update solves the issue by carrying out the matter more inclusively and fairly. Ultimately, it will improve the transaction validation process by allowing users to specify their collateral output manually.
Honorable mention — Diffusion pipelining
The diffusion pipelining upgrade doesn’t require hardforking and thus won’t be part of the Cardano Vasil upgrade. Still, it’s an improvement worth noting due to its timeline alignment with the more significant update. It aims to bootstrap block propagation by allowing nodes to pre-notify the incoming block’s peers.
That way, the latter can pre-fetch the new block body, saving valuable time. In turn, the spare time can be utilized in transmitting larger blocks or executing more resource-demanding Plutus scripts. It’s safe to say that this upgrade is essential for the continuous learning process of the Cardano blockchain.
How Vasil hardfork will benefit Aada Finance
To conclude, the Vasil hardfork will empower dApp developers to deliver simplified, cheap, and efficient code to Cardano. The long-awaited upgrade will also give way to lending and borrowing protocols like Aada Finance. The Aada V1 dApp is set to introduce several features, including the NFT bonds, partial interest payment, mixed asset loans, and many more. If you want to try out how the Vasil implementations will work on mainnet, feel free to try out our testnet dApp here.
