Kadena’s public blockchain platform, originally conceived by Kadena founder Will Martino, is a braided, parallelized proof-of-work consensus mechanism that improves throughput and scalability while maintaining the security and integrity found in Bitcoin. In short, Kadena is a blockchain that is faster, more secure, and more scalable.

A consensus mechanism is how a computer network comes to agreement about what information is true or false. In a centralized system, such as a bank, a designated authority (the bank) is trusted to determine that information stays true. In a decentralized system, like a blockchain, a consensus mechanism becomes a set of foundational rules for how a network agrees upon and verifies valid transactions, preventing double-spending and fraud.

Proof of Work (PoW) refers to the consensus mechanism that was first realized with Bitcoin’s launch in 2008. It differs from other consensus mechanisms (e.g. “proof of stake”/PoS) in that it uses computational mining and cryptographic hashing to elect a leader who will add the next piece of information to the ledger. In proof of work, transactions are bundled into “blocks” and confirmed to the ledger through an energy consuming, probabilistic process that requires miners (those who own computers capable of) solving a cryptographic hash. Miners are rewarded newly created virtual coins (and sometimes network transactions fees) for their work.

Kadena’s public blockchain works by taking the foundation of a Bitcoin mining chain and parallelizing this work across multiple chains — each referencing their peer’s headers — in specific configurations (see below “Is Kadena a DAG?”) that allow for efficiency and better throughput.

For an in-depth explanation of the technical foundations of Kadena, start by reviewing the whitepaper.

For some recent (Oct 2018) follow-ups on security and addressing assumptions and misunderstandings about Kadena’s public blockchain, check out our post.

Kadena uses proof of work for a few key reasons:

Braiding chains together was first proposed for security purposes. By having multiple mined blocks at the same height each referencing each other’s past, the protocol decreases the duration of time where an attacker could get “lucky” against an honest network. Think of an attacker needing to flip 6 coins and get all heads (mine 6 blocks) vs needing to flip 12 coins and get all heads (mine 6 blocks from two related chains). The latter is harder. This same intuition applies to Kadena’s multi-chain configuration.

Kadena’s public blockchain scales by providing a mechanism to asynchronously produce many blocks on different peer chains all at the same height, with each block requiring a fraction of the hash power of the total network. This configuration drastically increases the number of transactions per second over the total network.

Kadena can scale to meet the needs of its users, but the scaling isn’t automatic. Initially, the main limitation to scaling is adoption. The public blockchain will **hard-fork to higher throughput configurations, but each hard-fork needs to be motivated by alleviating congestion as the upgrade to a larger network requires miners to procure more replicating servers. To upgrade from a 50-chain to 100-chain network, the 50-chain network needs to be congested and demonstrating continued adoption. Long-term, bandwidth becomes the main resource that is constrained.

All blockchains are technically DAGs. Kadena, like Bitcoin or Ethereum, is not an arbitrary DAG, as compared to a structure like that of Hashgraph, for example. Unlike Bitcoin or Ethereum, Kadena’s DAG structure is fixed and multi-channel. By fixing the DAG structure, Kadena limits the worst-case (e.g. real-world) performance. Arbitrary DAGs have known performance problems under adoption — they initially have many more execution channels, because transactions are largely unrelated, but as adoption picks up and killer apps appear on the platform the overall performance decreases because transactions become increasingly related.

Kadena’s public blockchain is a base-layer/layer-one architecture. Lightning network is a layer-two solution and can run on top of Kadena as an even greater force multiplier than it does on existing Proof of Work blockchains. Pact, Kadena’s smart contract language, has baked-in support for integrations of layer-2 scaling solutions (e.g. lightning, state channels and side-chains), ready to experiment with at testnet.

Sides chains are separate blockchains (with their own consensus ledger) that run outside of a “main chain.” While this may sound similar to Kadena’s public blockchain, our chains are NOT side-chains because (a) there is no “main” chain as all chains are peers and (b) every chain is advanced under the same consensus umbrella as its peers.

“Sharding” most commonly refers to splitting the network up into distinct partitions called shards, each falling under its own consensus region. Kadena’s partitioning differs from other methods of sharding because Kadena’s public blockchain maintains a global consensus umbrella.

Under sharding in Proof of Stake, each shard has its own ledger and subset of transactions that are independent from transactions that have been allocated to different shards within the same network. In PoS sharding, nodes and validators are only required to process transactions that are local to their respective shards. This allows for greater throughput as each node is only required to validate a small subset of transactions from the total that have been sent throughout the network. While funds can be moved between shards, the is no enforceable protocol-level requirement that the validators of shards overlap.

Forcing validators to validate every shard is untenable. Kadena differs from PoS sharding by using the economics of PoW. In Kadena’s public blockchain, it’s economically dominant for miners to mine/replicate/validate each chain (“shard”) in the Chainweb network.

Tokens are used to pay for computing power, known on other platforms as “gas,” on the blockchain.

Transaction costs will rise as the number of transactions rise on one chain. You can set up an account on a less congested chain, where transaction costs are cheaper, and move your tokens through a simple burn-receipt using on-chain SPV. Miners have economic incentive to cooperate with reconfiguring the network to a larger size when the entire network starts to become congested.

Tokens are moved across chains using a Simple Payment Verification (SPV) smart contract.

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