Why The Hydra Layer 2 Solution Is Important To The Cardano Network
September 20 2021 - 7:00PM
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IOHK, the developer behind the Cardano network, has announced a new
solution for the network. Following the launch of smart contracts
on the network, it has moved on to other projects to make sure that
the network meets all of the needs of its developers. This has
shone through in the latest release from the developer, called
Hydra. The Cardano hard fork brought to the forefront the
possibilities for more development. Even as developers outside of
the main Cardano project develop their own solutions and protocols
that run on the network, IOHK is continuing its work in making the
network more scalable and safe for its users. This is why the
release of the Hydra Layer 2 solution is important to the
ecosystem. Layering Hydra On Top Of Existing Layer 1 Blockchain
Hydra is a Layer 2 blockchain solution built to run on top of the
existing Layer 1 blockchain on Cardano. Hydra uses isomorphic state
channels which basically will use the same ledger representation
over and over again to provide uniform, off-chain ledger siblings.
These are referred to as Heads by the developers. This puts things
like NFTs, native assets, and Plutus scripting directly into a
Hydra Head, which acts basically as an extension of the current
existing system. Related Reading | Cardano Founder Charles
Hoskinson Says He Wants To Eliminate The Need For CEOs And
Presidents This Layer 2 solution will provide the much-needed
scalability that is required for networks with high use rates to
maintain the required throughput for applications built on the
blockchain. Hydra will work side by side with Cardano’s existing
Layer 1 solution to provide a smooth user experience. Why Hydra Is
Important For Cardano As things like decentralized finance (DeFi)
make their way into the Cardano ecosystem, it is imperative for the
network to provide suitable fee structures and security on the
blockchain. This is where Hydra comes in. The Layer 2 protocol will
not only help to scale the network but will also help to bring down
fees to a sustainable level. This comes in the form of setting a
fee structure that is both acceptable for the stake pool operator
community, given that Cardano runs on proof-of-stake and fees that
users deem acceptable. Related Reading | Cardano Trends Down,
ADA In Danger Of Sliding Back To $2? Hydra will help to set these
fees to a low enough point that it is not a problem for its users,
while also preventing the fees from being low enough to encourage
Denial of Service (DoS) attacks. Also, as the transaction history
grows on the Cardano network, storage will become a problem over
time. A Layer 2 solution like Hydra will mitigate against these
problems in the future. ADA price trending low towards $2.0 |
Source: ADAUSD on TradingView.com “Hydra is a layer 2 scalability
solution that seeks to address all these concerns and aims to
maximize throughput, minimize latency, incurring low to no costs,
and greatly reducing storage requirements.” More information on
Hydra will be available at the Cardano Summit scheduled to happen
on the 25th-26th of September 2021. Featured image from Peoples
Gazette, chart from TradingView.com
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