Understanding Shelley: Network decentralization
Blockchains require a consensus protocol that allows the network participants to agree on how to add transactions to the ledger and its state at any given time. In the Cardano blockchain, the consensus protocol is Ouroboros, a proof of stake protocol developed by IOHK that has proven to achieve the same levels of security of Bitcoin while being more energy efficient.
The Byron Era
During the Byron era Cardano ran on Ouroboros BFT, a protocol that allowed only three entities to produce blocks: IOHK, Emurgo and Cardano Foundation. During this period, stake delegation was not yet possible and therefore producing blocks was not generating rewards.
Shelley Era: Network decentralization
Shelley means the decentralization of the network, passing from three entities producing blocks to more than a thousand, making Cardano the most decentralized blockchain.
Shelley era started on epoch 208 with the Shelley Hard Fork, which in simple terms means switching from the protocol Ouroboros BFT used in Byron to the new Ouroboros Praos, the protocol that enables stake delegation and stake pools.
With Shelley, every stakeholder has the right to participate in the protocol producing blocks. You can choose to run your own node (a private stake pool), or alternatively delegate your stake to a stake pool which will act on your behalf when you are elected slot leader.
Since the start of Shelley, more than 1,000 pools have been registered and are already producing blocks and generating rewards for their delegators and themselves.
The following steps in Cardano's development are Goguen (Smart contracts), Basho (Scaling) and Voltaire (Governance.)
Learn more in Cardano Roadmap