- The next hard fork combinator event for Cardano will take place in mid-December and will implement the token locking.
- Token locking will be the basis for smart contracts and the creation of assets, in addition to ADA.
IOHK, the software company behind the development of Cardano (ADA), informed yesterday in a blog post about the upcoming hard fork combinator in mid December. This will introduce the token locking function and take the mainnet to another step towards the Goguen era. Internally this stage of development is also known as Allegra, named after Lord Byron’s daughter.
After the integration of metadata in Mainnet, the integration of token locking will be the next major upgrade for Goguen. According to IOHK, this is a relatively small technical change to the consensus protocol, which has a minor impact on the actual ledger. However, it is significant because it prepares the platform for smart contracts and asset creation, in addition to ADA.
What is Cardano’s token locking?
As Kevin Hammond, software developer at IOHK, explains, token locking is “a way of recording that a particular token is being used for a particular purpose”. Locking in this case means that a certain number of tokens are “reserved” for a certain period of time so that they cannot be sold to gain an advantage.
This can be, for example, a vote or the execution of a smart contract. Hammonds compares the process of token locking with earning dividends from shares:
We can compare this with earning dividends from shares. A person who buys shares in a company might be rewarded with a dividend from the company’s profits. Let’s assume that this dividend is paid at the end of each calendar year and requires the shareholder to have held their shares for the entire year.
If they were to sell some of their shares at the end of November, they would lose all the dividends for those shares for that year. They have entered a conditional contract with the share provider that gives them something of value (here, a dividend) in return for holding a specific token (here, a share) for a certain period (in this case, a full calendar year).
The locking of tokens is therefore indispensable for the realization of complex smart contracts. In addition, token locking is also an important component for the fifth and final development phase of Cardano, Voltaire, as it provides the basis for the future voting mechanism.
Under the Voltaire mechanism, which will be used for the first time in the voting on the Catalyst project, those ADA holders who wish to participate in the voting must “lock” some ADAs. This will prove that individuals have a certain number of votes, while the holder can continue to participate in the staking.
The introduction of token locking will take place behind the scenes for ADA holders, as the Daedalus and Yoroi wallets will be automatically updated. However, the nodes of the network must download and install the new version of the code in order to “agree” and reach a consensus.
More hard fork combinator will follow
According to Hammonds, after the implementation of the token locking system in mid-December, further hard fork combinator events for multi-asset and other smart contract functions will soon follow. Over time, this will lay the foundation for the creation of native tokens on the Cardano blockchain:
We’re in the final stages of quality testing and will start the testnet deployment process this month, with an expectation of moving to the mainnet around the middle of December. During 2021, there will be more upgrades using the combinator – multi-asset support is coming up – as the Cardano platform continues to fulfill its potential.