Input Output Global (IOG), the software firm behind the development of Cardano (ADA), has highlighted the necessity of Hydra, a layer 2 scaling solution of the Cardano network.
In a blog post a few days ago, Sebastian Nagel, a Software Engineering Lead at IOG stated that just like any permissionless blockchain, Cardano faces challenges when trying to scale to achieve the throughput required to support applications in the real world, such as payment, identification, game, or mobile services.
According to Nagel, as Cardano (ADA) grows in global adoption, there have been growing concerns on the need to prevent transaction fees from becoming too high and transaction history from becoming too large.
Sebastian Nagel noted:
“Cardano transactions incur fees. The people who run the network (in the case of Cardano, the stake pool operator community) need to be rewarded appropriately for the part they play, so fees need to be set at a sustainable level.
“Users want to pay fees they deem acceptable. In addition, the blockchain needs to be protected against Denial-of-Service (DoS) attacks, for example. Fees can therefore not be set so low as to open up undue risk – DoS events must be made prohibitively costly to a potential attacker. Storage is also a concern, as an ever-growing transaction history can lead to storage problems. Effectively, the most successful blockchains risk becoming ‘victims’ of that very success.”
Nagel further stated that the two notable concerns can be addressed using the solution embedded in Hydra. He described Hydra as a solution that aims to maximize throughput, minimize latency, incurring low to no costs, and greatly reducing storage requirements.
He added that by providing more efficient means of processing transactions off-chain for a set of users, while using the main-chain ledger as the secure settlement layer, Hydra keeps security guarantees while remaining loosely coupled to the main chain.
Basic Hydra Head Protocol Has Been Implemented
According to Nagel, there have been productive moves to make Hydra a reality on the Cardano network. He said the basic Hydra Head protocol has been implemented as a proof of concept hydra-node.
Nagel added that a developer preview will be made readily available during the upcoming Cardano Summit. Through this, developers will be enabled to run one or more hydra-nodes online, open a Hydra Head with a limited number of participants, and feeding transactions to it.