How we will launch Shelley

Introduction

In this section, Charles Hoskinson introduces the video and explains that he will be discussing the launch of Shelley. He also mentions that launching Shelley is a complicated process due to the transition from a federated model to a completely decentralized model.

Launching Shelley

In this section, Charles Hoskinson discusses the process of launching Shelley and how it differs from launching a normal cryptocurrency or hard fork.

• The transition from a federated model to a completely decentralized model requires a systematic and careful approach.

• To explain the process, Charles Hoskinson will use a digital whiteboard in a screencast presentation.

Federated Model

In this section, Charles Hoskinson explains what the federated model is and how it works.

• Byron was released in September 2017 and runs in what's called a federated mode.

• A collection of core consensus nodes are responsible for running the network by making blocks.

• Since the beginning, those nodes have been operated by three entities: The Cardinal Foundation, Ergo, and IOHK.

• When people install Daedalus, they have access to all blockchain history and can validate it.

Interdependency Between Users And Core Consensus Nodes

In this section, Charles Hoskinson explains how there is an interdependency between users of the system and core consensus nodes.

• Nodes communicate with each other by sending transactions back-and-forth.

• Transactions are made into blocks by the federated network.

• Full nodes can validate these blocks.

Transition From Federated World To Dynamic World

In this section, Charles Hoskinson discusses how they plan on transitioning from Byron design (federated world) to Shelley design (dynamic and decentralized consensus algorithm).

• The goal is to go from a static and federated world to a dynamic and decentralized world.

• They invested about five years of research into building a class of protocols living in a superset of protocols called proof of stake.

Incentivized Test Net

In this section, Charles Hoskinson discusses the incentivized test net.

• The first step was to see if they could get people who would be willing to run Cardano outside of that federated set.

• Launched in December 2019, the ITN is its own cryptocurrency with staked pools and delegation. It's a full version of Shelley without the Byron history.

• The ITN was used to gather data on parameters such as how much ADA is staked, how many stake pools there are, and network quality.

Phased Transition From Byron Reboot To Full Shelley

In this section, Charles Hoskinson explains how they plan on transitioning from Byron reboot to full Shelley.

• Step one was getting everyone onto Byron reboot.

• Built into Byron reboot was basically everything needed for Shelley except for the consensus algorithm.

Shelley Upgrade Phases

In this section, Charles Hoskinson explains the different phases of the Shelley upgrade.

Byron to Shelley Upgrade

• Byron OTFT is what users are installing when they install Byron reboot.

• Parallel to Byron OTFT, a series of Shelley Haskell test nets will be released.

• The first test net is an internal Friends and Family test net for prominent state pool operators.

• The second test net is a node with CLI for stateful operators who participated in the ITN to start rebuilding and redeploying their infrastructure.

• An internal alpha will be done before doing the actual node plus command line Shelley test net.

Balance Check

• The balance check will contain everything - the node, wallet Dedalus, and consolidated history of both Byron and Shelley.

• This will be end-of-life for ITN so no more rewards will be honored at that point.

• Exchanges will be given a full listing experience.

Shelley Upgrade Phase

• After the balance check runs for just a little bit, we're going to enter the Shelley upgrade phase.

• Users can download a new wallet that has all the logic for staking and delegation in the Daedalus user interface.

• Users can see state pool registration on Daedalus user interface.

Shelley Hybrid Phase

In this section, Charles Hoskinson explains the process of transitioning from Byron to Shelley and how the hybrid phase works.

Upgrading to Shelley Wallet

• The consumer can download the new Shelley wallet.

• Exchanges have to upgrade.

• People need to upgrade in the network.

• A heart fork will be triggered.

Transitioning from Byron to Shelley

• Once the heart fork is triggered, all Byron relays are shut off.

• No more Byron code will run anymore.

• If any exchange is still left on Byron, wallets would be locked until they upgrade.

• We then enter the Shelley hybrid phase.

The Deeper Ammeter and Federation

• When we enter the hybrid phase, blocks will be made in two ways: by a federation and stake pools.

• The federation will still make some blocks but not get any rewards.

• Stake pools can start registering and operating when everyone has Shelley clients.

• Slots are made by stake pools and core consensus nodes controlled by D parameter ranging from 0 to 1.

Gradual Decentralization

• D starts at 1 which means 100% of slots are made by core nodes.

• Epoch by epoch, D gradually decrements so that more slots are made by stake pools that are registered.

• There's no limit to state pools that can register; K parameter could technically go up to 5000.

• Regardless of what D value is set, 100% of state pool rewards go to state pools operating on it.

Metrics for Decentralization

In this section, Charles Hoskinson discusses metrics for decentralization during the hybrid phase.

Metrics for Decentralization

• Two things could happen with D:

• Hit some metrics (e.g., network quality) and feel good about it, so we shut off the federation completely.

• Set some amount of time regardless of network quality.

• This is a phased way to gradually open up block by block to centralization.

Epochs

• Epochs will range between four to five days.

• Final parameterization for epoch length is still being worked out.

• Decrementing D by 0.1 per epoch would take about two months; decrementing D by 0.2 per epoch would take about 20 days.

Control Mechanism

• The hybrid phase allows for both OPFT blocks and blocks made by stake pools or Ouroboros Praos (or Sprouse).

• These are not test nets but actual people making blocks with rewards going through.

• The system ensures that we can responsibly retire the federation without causing catastrophic issues to the network.

Participation in Testnet

In this section, Charles Hoskinson talks about the participation rate of Tron and Tasos in comparison to Cardano's testnet. He mentions that Cardano has a good number of participants for a testnet.

Participation Rate Comparison

• Tron and Tasos have higher participation rates than Cardano.

• Despite this, Cardano has a good number of participants for a testnet.

• The phased approach with three events gives people plenty of time to upgrade their infrastructure.

Decentralization

In this section, Charles Hoskinson discusses decentralization and how it is achieved in the context of Cardano. He also introduces the Heart Fork Combinator as an innovation created by Cardano.

Achieving Full Decentralization

• Full decentralization means all blocks are produced by stake pools.

• The Heart Fork Combinator allows for graceful transitioning from one consensus system to another without loss of availability or performance.

• Upgrading tens of thousands of nodes is non-trivial, but simulations and formal methods have been used to verify the design.

Graceful Entry into Shelley

In this section, Charles Hoskinson talks about how Cardano plans to transition into Shelley with minimal disruption.

Smooth Transition into Shelley

• Simulations have been run on switchovers from no PFT mode to prowess.

• A new website will be released along with Shelley upgrade phase.

• Users only need to download the new version of Daedalus and wait for the hybrid phase to begin.

Introduction to Shelley Testnet

In this section, Charles Hoskinson introduces the Shelley testnet and explains how users can get involved in testing it.

Getting Involved in the Shelley Testnet

• Users can get involved in the first Shelley Haskell testnet by creating a state pool, running a state pool, and communicating with other state pools.

• Everyday consumers can participate by verifying that reward consolidation is correct during the balance check phase.

• Stake operators and exchange builders can begin their burn-in phase and integration phase once everything is ready to go for them on the address side.

Upgrading to Shelley Hybrid

In this section, Charles Hoskinson discusses the importance of upgrading to Shelley Hybrid and what users need to do to prepare for it.

Migrating from Byron Infrastructure

• Once the Shelley hybrid phase has begun, no Byron infrastructure will work anymore. Users must migrate by downloading the new node and restoring their old wallet to this new thing.

• There will be guides on how to do that migration as people have done it before if you participate instead of ice test at your start your wallet there that's an example of a migration.

• It's important to understand that you must upgrade to be able to continue using Cardano once the Byron phase has come to an end because no Byron infrastructure will be running anymore.

Decentralization Parameter in Ouroboros Praos

In this section, Charles Hoskinson talks about decentralization parameter in Ouroboros Praos.

Importance of Decentralization Parameter

• The decentralization parameter in the Ouroboros Praos is mostly an operational component and a safety component.

• The operators of the Michelle Yeoh 50 nodes are uncompensated, and 100% of the rewards go to the set of blocks made by the or Spruce stick pull operators.

• It's in everybody's best interest for this to go away as quickly as possible, so our hope is to decrement it rapidly.

Future Upgrades

In this section, Charles Hoskinson discusses future upgrades to Cardano.

Upgrading Cardano

• The hard fork combinator model gives us a clear path for doing more upgrades to the system.

• All future upgrades will actually be less complicated than this because we will never again go from a federated to a decentralized system.

• There will certainly be hard forks in the future, but those hard forks aren't going to dramatically change the system as much as this one did.

Conclusion

In this section, Charles Hoskinson recaps what was discussed about Shelley and its launch phases.

Launch Phases of Shelley

• Shelley is going to be launched as a series of phases starting from the Byron reboot era to the Shelley upgrade.

• We have built-in suspenders and have checks and balances that we can get through this upgrade without major disruption.

• These phases have been tested aggressively with simulations and formal methods, and we don't think there's going to be any major issues there.

Shelley Upgrade Path

In this section, Charles Hoskinson discusses the upgrade path for Shelley and its subsequent phases.

Upgrading to Full Shelly Node

• To avoid issues during the Shelly hybrid phase, it is important to upgrade to a full Shelly node.

• Exchanges and manufacturers will have a window of time to upgrade before the buyer infrastructure is turned off.

The Hybrid Phase

• During the hybrid phase, 100% of blocks are made with Shelly logic, delegations are turned on, and stake pool registrations are enabled.

• An increasing amount of the network is being manufactured by state pools themselves rather than OVF daemons.

The D Parameter

• The D parameter decrements epoch by epoch from 100% down to zero.

• It will either hit zero naturally over time or once predetermined metrics are met after final post-mortem on the instead of ice test.

Fully Decentralized Shelly Phase

• After entering the fully decentralized Shelly phase, Cardano is completely operated by a dynamic and decentralized consensus algorithm.

• This provides great security guarantees and benefits with super-fast performance that can transcend several hundred transactions per second over time without optimizing for Hydra or anything else.

Upgrades and Parallel Work

• Upgrades such as Gobin and multi-asset support will be straightforward due to hard fork combinator idea and prep work done previously.

• Shelley, Gogan Basho, and Voltaire are all being worked on in parallel with each other.

De-risking the Upgrade Path

• The upgrade path de-risks the most significant and Lara piece of work, which opens up an easy transition to Gogan and Voltaire.

• Backward compatibility was carefully thought through for Byron to ensure that all nodes can look at history from September 2017 moving forward and validate every transaction.

Shelly Upgrade Phase

In this section, Charles Hoskinson discusses the upcoming Shelly upgrade phase and how it will be rolled out.

Friends and Family Phase

• The Friends and Family phase is already starting to set up.

• Duncan has a Shelly node running himself, and they are wiring some things to it.

• Aparna will make some announcements about it.

Upgrade Phase

• Once they've reached the balance check, getting to the upgrade phase is very straightforward.

• They plan to have an upgrade phase of about four weeks.

• It's entirely reasonable to have a short upgrade phase because it's not really that hard for the user to download a node.

• For enterprise integrators, the balance check predates the upgrade phase, giving them a few extra weeks of lead time to build against that.

Documentation

• All details discussed here will be broken down as they get closer in exhaustive detail.

• Videos made blog posts made tutorials and guides made by the community somebody foundation going over each and every one of these things and giving a lot of parameters and so forth

• They're trying to get a single source of truth with Cardinal work refresh so that once it's ready to go, you just have to go to one website no matter what you're looking for.

• They're rewriting Cardinal Docs at the moment so all documentation will be redone as they enter into the Shelly upgrade phase so that people can use that documentation where they see fit to build their infrastructure.

Moving from Federated Model

In this section, Charles Hoskinson talks about how moving from federated models can be done using Cardano as an example.

Moving from Federated Model

• This is also a great way for any cryptocurrency to go from a federated model to a decentralized model.

• For example, you could replace up here Cardno with ripple so if x RP wanted to go from their federated consensus to a different consensus model, this would be a functional way to do that.

• Ethereum is going to be a little different because they're going from a work-based system to a state-based system but had they been federated so you can actually move the system from the existing system to this.

Evidence-Based Approach

• They've been moving in an evidence-based way throughout this entire process.

• The ITN gave them an enormous amount of data on what those metrics should look like for how they can lower D from one to zero and also gave them a good sense of the overall level of participation network.

• They were expecting maybe 10% - 20% given the nature of it being a test, but they got four times more than the low-end, which is pretty amazing.

Code Quality

• The high Byron reboot and the ability they've had to navigate that codebase and quickly change things add things in just such a graceful way is an excellent indicator of the overall code quality that they're entering Shelly into.

• Shelly really doesn't feel like an alpha product that's going to require months and months of debugging and tuning to get to a point where it's usable; it really does feel like a production system as they pull these components together.

Cardinal and Shelly Upgrade

In this section, Charles Hoskinson talks about the uniqueness of Cardinal and how they can use simulations and formal methods to verify that things can't go wrong. He also discusses the upcoming Shelly upgrade cycle and what users should expect.

The Magic of Cardinal

• Simulations and formal methods are used to verify that things can't go wrong.

• It took a long time to get here, but the community is with them.

• Users should look for the product workshop at the end of the month where dates will be given for when nodes CLI test will hit.

• Users should check their wallets out to make sure that their ITN rewards are consolidated together.

Upcoming Shelly Upgrade Cycle

• Installing a new wallet is all that's needed during the upgrade phase.

• Daedalus will turn on during the Shelly hybrid phase, allowing users to rotate their wallets as they see fit.

• Each phase of the upgrade cycle will be discussed in more detail with content videos provided.

• The process is going to be rapid, so users need to stay informed by watching Twitter feeds and subscribing to YouTube channels.

• If you miss a date, don't worry; stuff is going to be pushed out on a weekly or daily basis.

Conclusion

• Users are encouraged to ask questions in comments or tweet at Charles Hoskinson.

• The upgrade to Shelly is expected to be smooth and graceful.