Cardano complexity increases with decentralization, native tokens, multi-asset support, smart contracts and new users. Threats will emerge.

Stable evolution. Cardano successfully onboards new users, developers, DApps, tokens, SPOs, oracles, companies. Threats are identified

At the end of this challenge, we should be asking ourselves: Did we manage to create a simple mechanism for identifying novel, emerging systemic threats to the Cardano ecosystem? We can't see the future now, but as events unfold we may be able to use our collective wisdom and senses to detect new dangers for the Cardano blockchain and its usage.

• Number of potential threats that have been submitted.
• Grading of the submitted threats by urgency
• Number of threats that have been identified as serious and systemic.
• Grouping of threat sources into categories and types to determine wider danger areas
• Number of Cardano stakeholders interacting with the threat alert mechanism
• Number of Catalyst proposals submitted and accepted for funding in subsequent funding rounds to directly address the most pressing identified threats.

Blockchain systems are a complex amalgam of technological, economic and social components that rely and are used by many stakeholders from different geographies and backgrounds. These systems are not isolated from the real world and unexpected threats may emerge from the dynamic interaction.
Cardano stakeholders (users, SPOs, DApp developers, partners, Exchanges, governments, companies) need a resilient system that is able to identify and grade developing threats to its own existence.
Currently some aspects of the Cardano system are fully centralized, some are becoming decentralized and some are fully decentralized. Stakeholders currently rely on the expertise of Input Output Global (IOG/IOHK) to provide services under contract to the Cardano ecosystem, but the contract is running out. Many stakeholders hope and desire that IOG will submit a new five-year plan for Cardano's development for funding.
However, even if it materializes as many of us (me included) hope, it will still be good to implement a decentralized threat alert system. Throughout Cardano's history and the history of other blockchains we have seen how threats can emerge slowly.
We often see debates about the dozens of network parameters and their impact on stakeholders, delegators, stakepool operators. There are also governance issues, fee issues, network issues for every blockchain. Often economic issues may apepar, competition from other blockchains, taxation issues regarding staking, the size of the blockchain itself. Future issues might appear as the price of a transaction, spamming the blockchain, attempted Sybil attacks, voting blocks by centralized exchanges that try to influence the network in favor of the interests of the exchanges. Etc…
In short, life and social and natural environments are unpredictable. The Cardano network may need to implement a decentralized threat alert system - that does not rely on one actor (IOG/Cardano Foundation/Emergo/you name it).
A simple threat alert system will alert all stakeholders to emerging issues that are increasingly seen as problems for the Cardano blockchain and as such may generate new funding proposals for dealing with them through funding rounds on Catalyst.
Think of it as the eyes and ears. In evolutionary biology, it was not by chance that eyes and ears and senses evolved on the front part of animal bodies, as they were the ones that were the first to enter new environments and needed to sense a threat before the threat overcame the system.
We need a simple threat alert mechanism to warn us about a not so visible threat that is gaining power and speed. Think of a carbon monoxide alarm. Simple detector for an invisible threat that is building up. Cheap, efficient - and invaluable. That is what this Challenge could lead to.
Stakeholders are the eyes and ears of Cardano. They just need a way of communicating what they are perceiving, so that the feedback can return back to the system. Then it can be dealt with through the existing Catalyst mechanisms and the entire Voltaire structure that is being developed.
Not all users can detect all threats to be sure. However, the Cardano ecosystem is becoming more diverse in terms of composition, roles, geographic displacement, technical capabilities, personal experience.
Some threats will be detected by stakepool operators, some will be detected by users, some might be first seen by developers, while other threats will be detected by participants in Project Catalyst.

Some examples of systemic threats that have not been identified or dealt with in other blockchain systems and which may jeopardize their ultimate survival or success are given below and some general threats.
I'm including a Cardano related threat that has been resolved, number 7 - just to illustrate that our ecosystem has not been immune to problems.

1. growing mining centralization in Bitcoin (BTC)
2. unsustainable gas fees in Ethereum, delays in protocol changes, staking issues (ETH)
3. alleged non-compliance with securities legislation in US (XRP)
4. inability to agree on a mechanism to fund ongoing developments or setup a treasury (ETC)
5. 51% attacks and rearrangement of blocks (ETC)
6. Founder abandonment risk - when founder leaves (EOS)
7. Unexpected problems inside one of the key ecosystem partners (ADA) - this refers to the period when the Cardano Foundation was headed by its previous chairman and executive director Michael Parsons, which was widely seen by the Cardano community as a dysfunctional period for the Cardano Foundation
8. Stagnation in evolving the protocol and onboarding new developments (BTC)
9. Threats from proliferation of blockchain clones - think Bitcoin clones Bitcoin Cash (BCH), Bitcoin SV (BSV), Bitcoin Gold (BTG), Bitcoin Diamond (BCD).
10. Ongoing scams and crypto phishing attempts are evolving. The more successful Cardano becomes, the more it may be unwillingly associated with scams - in the eyes of users who fall prey to these scammers, leading to negative publicity.
11. Sybil behavior in evidence. Proliferation of stakepools held by one owner and the consequent increased leverage of such stakepools on the Cardano ecosystem. For example, major centralized exchanges and some pool operators are setting up dozens and dozens of stakepools with the consequent right to have an outsized influence on the future of the Cardano blockchain. "The higher the leverage of the system, the worse its security (to see this, consider that with leverage above 50, launching a 51% attack requires a mere 1% of the total resources!)"** according to IOHK (ADA)
12. An unexpected or gradual collapse of one of the key partners in the Cardano ecosystem (IOG/Cardano Foundation/Emurgo) - could happen, although we all hope it won't
13. You name it … it hasn't occurred yet, but someone in our ecosystem is already noticing it and wants to warn us about it
    ** https://iohk.io/en/blog/posts/2020/11/13/the-general-perspective-on-staking-in-cardano/
    Important note: This is a Fund6 Challenge Setting proposal - for a future challenge in Fund 6. This means I am not personally applying for funding in this challenge! The proposed budget of USD50,000 would go to fund proposals developed by future proposers in Fund 6 who would apply to find solutions to this challenge. I have no proposed solutions nor am I suggesting the best way of addressing this Challenge it will be up to proposers in Fund 6, if this is selected as a future Challenge.

50000