IOHK | WHY WE ARE BUILDING CARDANO | 06/28/2017    Where does one go to convince Bitcoin users to adopt Segregated Witness? How should the core developers of Ethereum measure community sentiment for bailing out the DAO? If the community fractures, is the cryptocurrency damaged beyond repair? In the worst cases, moral authority to act could simply devolve to whoever has the developers, infrastructural relationships and money, not the best wishes of the vast majority of the community. Furthermore, if a large portion of the community is inaccessible or disengaged due to bad incentives , then how can one truly know if their acts are legitimate? 4 Proposed cryptocurrencies such as Tezos provide an interesting model to examine where a cryptocurrency protocol is treated like a constitution containing three sections (Transaction, Consensus and Network) with a set of formal rules and process to update the constitution. Yet there remains much work to be done with incentives and over how exactly to model and change a cryptocurrency with a formal language. The use of formal methods, machine understandable specifications and merging a treasury with this process for financial incentives are being explored as possible avenues for inspiration. Ultimately, just the ability to propose a protocol change in a transparent, censorship free way with blockchain based voting should improve the process, even if more elegant solutions cannot be designed. Designing in Layers – Cardano Settlement Layer When designing great protocols and languages, one should not look to the future, but rather to the past. History provides a litany of examples of great ideas that are perfect on paper, yet somehow have not survived, such as the Open Systems Interconnection standards . History also provides happy accidents that have endured from TCP/IP to JavaScript. Some principles extracted from a historical view are the following: 1. You cannot predict the future so build in wiggle room 2. Complexity is nice on paper, but simplicity usually wins 3. Too many cooks spoil the broth 4. Once a standard is set it will probably stick around, regardless of whether it is suboptimal 4 See rational ignorance WHY WE ARE BUILDING CARDANO  Creative Commons Attribution 4.0 International License Page 7 of 44