Intermediate
PublishedJan 18, 2023Updated on Feb 10, 20235m
Summary
Cardano is a proof-of-stake blockchain project whose potential has yet to be fully realized. It is a "third-generation" blockchain that addresses scalability issues inherent in second-generation blockchains, similar to the much-anticipated Ethereum 2.0 .
The development of Cardano is a fusion of a scientific idea and a great deal of academic research. With the release of Shelley in 2020, Cardano is one step closer to its goal.
Since its launch in 2015, the Cardano project and its associated cryptocurrency ADA have attracted widespread attention from the community. The development of Cardano adheres to a serious and rigorous academic attitude, which is somewhat different in the field of cryptocurrency.
The Cardano project is largely developed by Input Output Hong Kong (IOHK), a technology company founded by Charles Hoskinson. Hoskinson was also involved in the early development of Ethereum.
What exactly is Cardano? What features does it have planned in the long-form roadmap? Let's find out.
Cardano is a general-purpose blockchain based on a peer-review mechanism in the academic research field. Its multidisciplinary development team consists of engineers, mathematicians, scientists and business elites.
The projects being developed in the platform adopt scientific methods. According to the founders, Cardano's core design principles are security, scalability and interoperability.
ADA is Cardano's native currency and is used to perform operations in the Cardano blockchain, and the relationship between the two is similar to that of Ethereum (ETH) and Ethereum.
The development task of Cardano is completed by multiple business departments: IOHK develops the Cardano protocol, the Cardano Foundation supervises the project, and EMURGO is responsible for business development and increasing the application rate. IOHK has also been involved in the development of Ethereum Classic (ETC).
The Cardano roadmap consists of five phases: Byron, Shelley, Goguen, Basho and Voltaire. The first stage is Byron. The main task of this stage is to release the network and launch basic functions such as ADA transfer. In 2020, the Shelley hard fork was implemented to deepen the level of decentralization. Currently, nodes are operated by the Cardano community, and stake pools are managed by ADA holders.
As of December 2020, functional smart contracts cannot yet be deployed on blockchain platforms. As part of the roadmap, Gugen upgrades will complete the above features. After Gugen is the Basho phase, focusing on scalability and interoperability optimization. The final Voltaire phase will introduce a treasury system, solving governance issues.
As a "third-generation" blockchain , Cardano aims to solve the scalability problems of the first generation (such as Bitcoin ) and the second generation (such as Ethereum ).
Proponents of the above-mentioned generational argument believe that the previous generations of blockchain encountered bottlenecks, and the throughput that could be processed was fundamentally limited. This makes it impossible to apply efficiently on a global scale. This problem is reflected in the volatility of bitcoin and ethereum transaction times.
Cardano cites VISA's computing power as a comparison in the official document:
The network reported an average of 1,736 transactions per second (TPS), with a maximum throughput of 24,000 TPS.
Cardano hopes to increase throughput in a number of ways. One of the core methods is its proof-of-stake (PoS) consensus mechanism, called Ouroboros. The security guarantee of this mechanism is obvious to all, and the energy consumption is lower than that of Proof of Work (PoW) .
To further improve scalability, Cardano has launched a Layer 2 solution called Hydra, after the mythical creature of the same name. In the Hydra scheme, as new nodes continue to join, the network throughput will continue to increase.
Another key feature of Cardano is the Hard Fork Coordinator. With its support, blockchain hard forks without interruption or reboot. The success of the Shelley upgrade demonstrates the effectiveness of this approach.
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As mentioned earlier, the strength of Cardano lies in the academic and scientific concepts behind it. At present, the development team of Cardano has released more than 90 white papers involving the underlying technology. The project has a well-defined roadmap, and the network wants to be inherently secure, scalable and interoperable.
Although not yet operational, the Cardano blockchain will support scalable smart contract functionality in the future. Cardano sees VISA as a competitor, targeting hardware limitations theoretically. It can use all the necessary building blocks to be a potent fintech disruptor.
Similar to Ethereum, Cardano's potential use cases are many, but it only wants to be the base layer on which applications are built.
Like other projects in the cryptocurrency space besides Bitcoin, Cardano has made big promises but has yet to fully deliver. Cardano has great ambitions for infrastructure construction, but the development progress is relatively slow.
ADA is Cardano's token, named after the 19th-century mathematician Ada Lovelace. 57.6% of the ADA supply was issued through an initial coin offering (ICO) . During this period, Cardano raised a total of $62.2 million.
This token is not only a digital currency, but also a medium of transactions on the Cardano network (similar to ether in Ethereum transactions).
ADA holders have a share of the Cardano network, can use ADA in the equity pledge pool and receive pledge rewards. Binance Money also supports Cardano staking.
Daedalus, an open-source desktop software wallet developed by IOHK, can be used to store ADA. It is a full-node wallet, and users must download the complete Cardano blockchain, and each transaction should be verified to maximize user security.
Yoroi and AdaLite are light wallets for ADA that can be used without downloading the full blockchain. ADA can also be deposited into cold storage hardware wallets such as Ledger and Trezor through Daedalus, Yoroi, and AdaLite.
The Cardano project is an ambitious project to create a blockchain infrastructure for the cryptocurrency ecosystem. Although the progress of the project is slower than expected, its ambition is high.
Will this third-generation blockchain project eventually grow into a dominant platform for smart contracts? Or will it be preempted by other projects? Will a fourth-generation blockchain that is better than it appear? As the Cardano roadmap continues to advance, the answers to the above questions will be revealed one by one.
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