developed. Hydra follows the “State Channel” L2 architecture for

achieving this scalability, as shown in Figure 5.1, as follows:

Figure 5.1: Cardano’s L2 solution with “Hydra”

Now, let’s say there are a group of participants who wish to do some

business transactions among each other. Even if they join the

ecosystem in the first layer, the individual transactions are sent to a

Hydra head that can complete the verifications, and finally send a

cumulative transaction to the first layer or the main ledger to get

updated.

5.4 Scalability and Performance

As per Cardano, ”Each Hydra head can process around 1000 TPS

and there is room for further optimization. So, with 1000 pools,

Cardano could theoretically be able to scale up to 1 million TPS and

the finality of the transactions will be very fast. Hydra enables

horizontal scaling.”

Ouroboros Hydra breaks new ground in PoS scalability. With Hydra,

Cardano can really become the alternative to the current fiat money.

5.5 Development