What Is Cardano (ADA)
Cardano is one of the largest cryptocurrencies globally with a market cap approaching $40 billion. With smart contract integration right around the corner, it is time to take a closer look at one of the most promising projects in the space. Cardano provides a flexible, sustainable, and scalable platform for running a wide variety of decentralized applications.
- Cardano is one of the largest cryptocurrencies in the world, launched by Charles Hoskinson.
- Ouroboros improves upon traditional PoS by integrating epochs and slot leaders.
- Cardano’s native token is ADA.
- Cardano uses functional programming languages – Haskell (for its source code) and Plutus (for its smart contracts).
- Cardano development has been split into five eras – Byron, Shelley, Goguen, Basho, and Voltaire.
- We are currently in the Goguen era.
A Brief History Of Cardano
Launched in September 2017 by Ethereum co-founder Charles Hoskinson, Cardano has become the flag-bearer of the third-gen blockchains. Cardano’s goal is to create a smart contract platform that’s highly scalable and energy-efficient. The consensus mechanism – ouroboros – has been peer-reviewed by researchers from the University of Edinburgh, Tokyo University, and other institutions.
What Is Ouroboros?
Ouroboros is a type of proof-of-stake (PoS) algorithm that depends on the token-holder’s stake for block production and decision-making. This makes it a much more scalable and cleaner option than proof-of-work (PoW), which uses real-world computation resources to achieve consensus.
Ouroboros also improves on traditional PoS by introducing the concept of epochs and slot leaders.
Oh, if you need to brush up on PoS quickly, read this.
Alright, so how does Ouroboros work? Let’s take a look.
- The Cardano Network splits time into periods called epochs. These epochs are further split into 20-second slots.
- One slot leader is elected during each slot, and that slot leader can only validate one block. This means the block production time for Cardano is around 20 seconds.
Slot leaders play an important role in the Cardano ecosystem. This is why Cardano needed a robust system to make sure that they get elected as fairly as possible. This is a brief overview of how the system works:
- To be considered for qualification, one must hold at least a 2% stake in Cardano. These stakeholders are called electors.
- The more stake the stakeholder has in the system, the more chance they will be elected as slot leaders.
- If the slot leader fails to generate a block during their slot, they will need to wait until they get re-elected.
ADA Tokenomics, Storing, and Staking
Cardano’s native token is called “ADA,” inspired by Ada Lovelace – an English mathematician and writer. ADA has two main functionalities within the Cardano ecosystem:
- To make peer-to-peer transfers.
- To get staked within the network.
One can use Cardano’s official wallet – Daedalus– to store and stake ADA tokens. However, Daedalus happens to be a full-node wallet that requires you to download and store the entire Cardano blockchain. If you are a casual user, you can use the Exodus wallet to store and stake ADA. Staking ADA is simple, and the best part is that it doesn’t lock up your tokens. You may still freely move around your tokens. However, that will have a direct impact on your rewards.
Smart Contracts With Formal Verification
Another interesting thing that makes Cardano unique is its choice of programming language. The source code of Cardano has been written in Haskell, while the smart contracts will be written in Plutus. Both Haskell and Plutus are functional programming languages that are provably secure via formal verification.
Formal verification is the collective term for techniques that use static analysis based on mathematical transformations to determine a system’s correctness. Simply put, we can properly verify if a particular system can work error-free or not. Can you imagine how important this functionality is in the current smart contract landscape?
How often do you hear horror hack stories of people losing millions of dollars because of vulnerabilities in the smart contract code?
Nowadays, with the rise of DeFi, these smart contracts often deal with millions, if not billions, of dollars. With formal verification, it will be possible to verify the viability of a smart contract mathematically.
Stages Of Cardano Development
These are the five stages of Cardano’s blockchain development – Byron, Shelley, Goguen, Basho, and Voltaire.
- Byron: The first stage of Cardano development enabled the buying and selling of ADA tokens.
- Shelley: During this upgrade, Cardano became a proof-of-stake system. ADA holders could either stake their token directly or delegate staking responsibilities.
- Goguen: Cardano is currently in the Goguen era and its primary focus is bringing in smart contract functionality and native tokens.
- Basho: In this stage, Cardano will become scalable by bringing in sidechain functionality and interoperability.
- Voltaire: This is the final stage for Cardano wherein the entire network will become a fully self-sustainable and decentralized platform.
How Do I Buy ADA?
Oh, and before you do, make sure that you finish our quiz! ⬇️