Cardano is a cryptocurrency founded by Charles Hoskinson, a co-creator of Ethereum. Find out how it's quickly becoming a leading DApp development platform.
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What is Cardano (ADA)?
Cardano Blockchain and Practicality
Fast forward to 2021, and the Cardano ecosystem has undergone several upgrades. Cardano uses a unique architecture that employs a dual-layer system, which is distinct from most other blockchain platforms. Its settlement layer (CSL) allows ADA token holders to send and receive transactions almost instantly at low fees, while its computational layer (CCL) serves as the foundation of the rest of Cardano's functionality.
The Cardano blockchain splits time into divisible epochs (around five days), which are further divided into slots. To achieve consensus, the network randomly nominates a few nodes to validate new blocks for every slot. These selected nodes are known as slot leaders.
Slot leaders can mine their specific epoch or slot, and the higher their stake, the better their chances of being selected. If the slot leader fails to oversee the creation and confirmation of blocks, the next slot leader is elected for that epoch or its subpartition.
Currently each epoch can contain up to 432,000 slots. This enables the network to process a considerable number of transactions, all while hugely reducing network congestion, gas fees, and helping to maintain consensus on the network.
The ADA Token
Token rewards are usually earned in two ways: either through delegating a stake to a stake pool operated by other validators (usually for small stakes) or through running a stake pool. On Cardano, staking works on a cyclical basis, which can make staking ADA highly profitable. Users are incentivized every epoch (every five days) and the platform offers a 4.5% annual interest rate on all stakes.
The Cardano protocol is still in development and its roadmap can be broken down into five phases. In contrast to most blockchain development teams, Cardano's approach is more modular. Though the phases are split into different “eras,” the Cardano team is working on all of them simultaneously: – each era can be seen to resemble a development track rather than a fixed timeline.
The network’s first phase, Byron, took its name from Lord Byron – a poet and father to Ada Lovelace. This era marked the creation of the network's primary architecture. It also witnessed the implementation of the protocol's basic functionality to ensure the smooth running of the network and its core technology.
The Shelley era established a higher degree of decentralization on the platform. Starting with the launch of Cardano's mainnet, Shelley saw the Cardano ecosystem shift away from the federated Byron era to more of a reliance on community-run nodes. This era also saw the introduction of delegation and incentivization schemes.
The subsequent era, Goguen, brought smart contracts to Cardano, enabling the creation of decentralized applications on the network using its smart contract development language, Plutus. During this time, Cardano also implemented a multi-currency ledger to facilitate the creation of new, natively supported tokens.
The fourth era, Basho, will involve scaling the blockchain network, adding solutions focused on enhancing its performance and stability. It will also introduce interoperable sidechains, which will significantly help Cardano to handle higher throughput levels, along with parallel accounting styles that can facilitate greater interoperability for Cardano and its applications.
Voltaire is designated as the final era of Cardano. Voltaire will establish an autonomous, decentralized network, transferring the responsibility for Cardano's future to the community. Instead of development and maintenance being undertaken by a centralized entity like the Cardano Foundation, the community will itself be tasked with upholding the network. The community will take its cue from Cardano’s treasury, voting and delegation systems in order to accelerate its evolution into a full-fledged, self-sustaining, decentralized protocol.
Participants will also be able to help the network grow by proposing improvements for stakeholders to vote on, and the protocol will distribute transaction fees to fund various development activities suggested by these improvement proposals.
Outlook for Cardano
The Cardano Foundation contracts two other organizations to help build the network's ecosystem: global blockchain solutions platform, Emurgo and blockchain research and development firm IOHK.
Emurgo is commonly referred to as Cardano's commercial and venture capital arm, whereas IOHK is Cardano's technology arm, which focuses on leveraging peer-to-peer innovations to provide financial services.
In terms of smart contract capabilities, Ethereum is relatively less tolerant of bugs and errors, ehreas Cardano's CCL offers more flexibility in case changes need to be made to deployed applications. In addition, Cardano also allows users to set customized rules for confirming transactions.
Cardano is an incredibly ambitious project and, as with any grand venture, things don't always go according to plan. Over the years, the Cardano team has missed multiple deadlines on its roadmap, taking a deliberately slow route and forgoing the first-mover advantage it could have had. Nevertheless, this project – once an underdog – has emerged as one of the most promising alternatives to Ethereum and other third-generation PoS-based blockchains, which merge features from different blockchains onto a single network.
Although there's still a lot of work ahead, the Cardano team is well equipped to face these challenges. Its founder, Charles Hoskinson, consistently posts video updates to the team's development progress online, sharing details about the latest research being conducted and their plans for the future.
The industry as a whole has come a long way from the "get-rich-quick” scheme labels of the early days, building an entire generation of viable financial applications that can address multiple use cases as part of a decentralized ecosystem. Despite the various criticisms that have been leveled against it, Cardano remains one of the most popular blockchains in the industry due to its rigorous approach to research and development, robust consensus mechanism and aspirations to establish an autonomous, decentralized and self-sustaining governance model.