Interesting links

Settlement vs Computation Layers

Quick post on a recent whiteboard video from Charles covering side chains and digging into the architecture of Cardano.

He explores the original essay which outlined a settlement layer (essentially Ourobouros which is now in place) with highly secure, reliable and decentralised characteristics, and associated computation layers (or side Chains) which can rely on the settlement layer to provide security but can be customised based on use case.

This approach is needed to circumvent the blockchain trilemma (Speed versus Security versus Decentralisation), which due to fundamental limitation of physics and computer science places limits on settlement times assuming you want to maintain a high degree of security and decentralisation (pre-requisites for a layer 1 solution).

Candidates for side chain frameworks include Cosmos and Hyperledger, with initial applications including World Mobile.

The exciting aspect here is the increased value that starts to accrue to the base settlement layer as side chains start to utilise its security guarantees. This promises to provide additional transaction fees that will be needed to progressively replace the rewards from staking which (like Bitcoin) are designed to progressively reduce over the course of 100 years until they approach zero.

The capability to interoperate with Cosmos or Hyperledger side chains would be a significant step forward and one that will accelerate wider Cardano adoption.