TL;DR: Decentralization is a core value of the Cardano community and of SundaeSwap Labs. Our ISO model \u2014 though it was designed to support the ideals of decentralized governance by not spinning up our own SPOs and by putting SPO selection to a vote \u2014 led to a small decrease in an important metric of blockchain decentralization. That said, Cardano is still less centralized than most other top blockchains, and SundaeSwap is announcing further steps to support decentralization. These include a proposed Reverse ISO, in which participants are rewarded for delegating ADA to Single Pool Operators who received at least one vote in the original ISO\/Scooper vote, and additional initiatives to be announced in the coming weeks and months, including more details on the formation of the SundaeSwap DAO.<\/em><\/p>\n Vote on the Reverse ISO proposal here:\u00a0<\/span>https:\/\/tinyurl.com\/sundaevote<\/span><\/a><\/p>\n <\/p>\n The ISO concept as originally envisioned was an exciting way to promote new protocols, reward community members, and reinforce adoption of one of Cardano\u2019s key features, all while lending a hand to many of the community\u2019s Stake Pool Operators. And the idea worked.\u00a0Too well<\/em>. The community responded with such enthusiasm that we saw a massive concentration of ADA staking power in the SPOs elected by the community for the SundaeSwap ISO. As SPOs began to approach saturation, the community started to express concerns, and not just about the potential tapering of ADA staking rewards but also the concentration of staking for the SundaeSwap ISO. That concentration seemed to be running counter to one of the core values of the Cardano network: decentralization.<\/p>\n This is not the first time a DeFi protocol\u2019s approach to achieving and improving decentralization have been challenged, and it won\u2019t be the last. Maintaining the ideals of decentralized finance will require a constant balancing act with the preservation of transaction security, regulatory compliance, the practicalities of governing an early-stage but fast growing dApp, and no doubt many other areas. But decentralization is not just an ideal for the network: it is a core value to SundaeSwap Labs and our community.<\/p>\n SundaeSwap is committed to supporting genuine decentralization in all aspects of the DEX operation. Owning SUNDAE is not just a badge of membership in a community; it is the governance token for the SundaeSwap DAO that will launch this summer when the Cardano parameters allow. Decentralization represents the very ideals that helped build and grow the Cardano community.<\/p>\n But, given this is early days, there is far more we can do to uphold that ideal. We have appreciated the active and productive conversations going on in both the SundaeSwap and Cardano communities that have helped reinforce this priority. Given the size of our own community, the SundaeSwap ISO diverted a lot of delegation away from smaller pools with individual operators, and started a trend\u00a0towards<\/em>, rather than away from, centralization. While many have suggested we address this by putting our thumb on the scale of the SPO community vote, we didn\u2019t feel that was the right approach either, and so we thought long and hard about the nature of decentralization, and how we might help reverse this trend. .<\/p>\n Decentralization is a word that our industry leans heavily on, It is at the core of what we do, and an idea that has ignited a fire in the minds of many.<\/p>\n When we conceived of the ISO, one of the key aspects was how decentralized it was: with such a low barrier to entry, anyone could participate, and anyone could secure some amount of voice in the DAO being formed around the SundaeSwap protocol.<\/p>\n At each step of the ISO process, we tried to let the ethos of decentralization guide our decision making process:<\/p>\n It is ironic, then, that one of the fair criticisms that people have leveled against the model is around the role it has played in centralizing Cardano itself. An unintended consequence, fueled by the intense and overwhelming excitement for our project, is that we have concentrated nearly 7 billion delegated ADA behind 40 different stake pool operators. In the epochs leading up to the launch of the ISO, this even reduced our\u00a0Nakamoto Coefficient<\/a>\u00a0(the de-facto standard for measuring decentralization) from\u00a025 to 22<\/a>.<\/p>\n The above trend certainly doesn\u2019t spell doom for Cardano; it\u2019s still larger than many other chains, and\u00a0this time last year<\/a>\u00a0the Cardano community was celebrating a Nakamoto coefficient of 18. The effort and coordination it would take to coerce 22 different entities to act against the stake they themselves have in the success of Cardano is staggering to comprehend.<\/p>\n Still, as a trend, it is concerning. As a highly visible project in the Cardano space, and one which often serves as an example for future projects, we\u2019ve been thinking deeply about how we can contribute to reversing that trend.<\/p>\n More important than what we have done is what we do next. It is clear to us that the DEX should support small single pool operators and play an active role in increasing the ecosystem\u2019s minimum attack vector (MAV<\/a>), And the best place to do that is to empower the Single Pool Operators that currently receive a little more than 21% of the total ADA delegated on the blockchain.<\/p>\n Over the past few days we have noticed many community members (even some of our scoopers) encouraging delegators to move from ISO pools on February 14th. With the ISO soon coming to an end, we felt that some of the Cardano community, in the same way that frustration boiled initially, would not be enthusiastic about SundaeSwap intervening in the flow of staked ADA once again.<\/p>\n As such, we would like to propose the following program to the community to vote on. Although this vote is not a formal governance vote, it will allow us to see the general sentiment and if it\u2019s something the Cardano community would like to see us act on. We would love to hear your opinions on our proposed incentive program above on Twitter and around social media in general.<\/p>\n We are incredibly excited to share our proposal of SundaeSwap\u2019s Reverse ISO. You can think of it as \u201cISO 2.0,\u201d or a \u201cSingle Stake Pool Offering\u201d \u2014 but we\u2019re just going to go with \u201cReverse ISO.\u201d<\/p>\n How will it work, you ask? An extra 30 million SUNDAE will be delivered to delegators who delegate to any single pool operator that received at least one vote in the initial ISO and Scooper selection vote. The Reverse ISO will commence after the snapshot is taken on February 24th and run for 5 epochs, until March 21st. A list of qualifying stake pools will be made available on the SundaeSwap website in advance of the launch.<\/p>\n To be eligible to receive rewards from SundaeSwap\u2019s Reverse ISO, simply delegate to an eligible single pool operator and stay delegated for the full 5 epochs. SUNDAE tokens will be distributed via our own faucet, at the same time we distribute the SUNDAE ISO rewards outside of DripDropz for those who do not want to pay the DripDropz service fee.<\/p>\n We hope this proposal will help redistribute the delegation and bring the MAV back to where we all want it to be, as well as support smaller pools who are key to keeping Cardano decentralized.<\/p>\n
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