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In this article, we’ll take a detailed look at Cardano, what the project is all about, where the network is heading, and what can make Cardano a strong competitor to Ethereum to be the go-to DeFi smart contract / blockchain.
What is the basic idea behind Cardano?
Cardano is a project that has its own blockchain who is capable of executing smart contracts. Based on a Proof of participation consensus algorithm, the network aims to be a scalable and secure solution for the masses. Potential use cases range from applied technology in education and government, to agriculture and health, and to functions that individuals can take advantage of.
Key points to remember
- Cardano’s goal is to deliver scalable and secure solutions that bring blockchain technology to the masses
- ADA, the network’s native token, is used for staking and running the Cardano platform
- With high transactions per second (TPS) and similar use cases, Cardano is a competitor to the popular Ethereum network
Cardano’s value proposition
With its Ouroboros Proof of Stake (PoS) consensus algorithm, Cardano aims to provide a scalable, secure and environmentally friendly Decentralized Financial System (DeFi) capable of running its own decentralized applications and therefore applied to various aspects of daily life. life. The team of developers behind Cardano includes respected names from the blockchain and DeFi space, who support the ambitious goals of the roadmap. The network also aims to offer its solutions to developing countries in Africa and Asia.
When it comes to Transactions Per Second (TPS), Cardano is ahead of many top blockchains. In addition, the speed at which the network operates should increase with each update, for true scalability.
Using a unique blockchain design, Cardano has two layers: the Cardano Settlement Layer (CSL), which is where peer-to-peer transactions occur, and the Cardano Computing Layer (CCL), which is a space for decentralized applications and is responsible for the security of the Cardano blockchain.
Cardano history and background
Cardano was founded in 2015 and only launched later in 2017, with the main vision of establishing a network that overcomes the main challenges of blockchain technology: scalability, interoperability and sustainability. The founders of the project include former Ethereum developers such as Charles Hoskinson, who is the co-founder of Ethereum.
ADA, the network’s pre-mined native token, was launched with the Cardano network in 2017. The total ADA token supply is 45 billion. The name ADA comes from the first recognized computer programmer of the late 19th century, Ada Lovelace, daughter of the poet Lord Byron (this is where the name of the first era of Cardano comes from, see below).
ADA – Cardano’s native token
Let’s take a closer look at Cardano’s native token, ADA. Currently, cryptocurrency can be sent and received by anyone in the world, while the respective transaction is permanently, secure and non-modifiable recorded and stored on the Cardano blockchain.
Additionally, ADA can be delegated (or pledged) to a staking pool. Staking pools are where the resources of many stakeholders are combined and used as one. These pools are the knots maintenance and operation of the Cardano network. The stake is ADA tokens that you can delegate to a staking pool (if you want to earn rewards from the transaction fees collected by that pool). You can do this in a convenient and user-friendly way via your Daedalus wallet. To be part of a staking pool, you must first have ADA. You can easily buy Cardano (ADA) here.
If you prefer to establish a staking pool, you must pledge all (or part) of your ADA holdings in your pool. The more ADA you promise, the more rewards the pool receives, making your pool more attractive to others who want to delegate their ADA.
ADA’s popularity in recent months can be attributed to the highly anticipated launch of Cardano updates, network competition with Ethereum, and generally positive sentiment in the altcoin market.
As the network grows and expands, the potential use cases of ADA also evolve – in the future you will be able to use your tokens for various applications and services on the Cardano platform. Meanwhile, ADA will be used as a token that manages Cardano’s DeFi ecosystem, provides voting rights, and represents a stake in the network.
And after
One of the most important next steps is fast approaching for Cardano: decentralized applications and smart contracts arrive in the blockchain.
Today we are delighted to announce that we have successfully launched the first testnet of our #Alonzo go out. #AlonzoBlue is our first alpha network, providing basic Alonzo node networking capability. 1/2https://t.co/z8shaZeIhq pic.twitter.com/Eg2t9PdM8x
– Input Output (@InputOutputHK) May 27, 2021
This update is called “Alonzo”. Currently in testing, this highly anticipated chain of events will allow Cardano to compete directly with Ethereum, both in terms of decentralized applications and smart contracts. Additionally, just like Ethereum, Cardano will also support the launch of native crypto tokens on its blockchain.
Cardano roadmap and important milestones
Cardano’s roadmap is divided into 6 time horizons, each with its own mainnet and derived from the others. They are named after various scientists, poets and philosophers.
- Byron is Cardano’s first mainline, named after Lord Byron, a 19th century poet. It started with the launch of Cardano in 2017 and allowed users to buy and sell ADA, Cardano’s native token. He also introduced the ADA Daedalus & Yoroi wallets.
- Shelley, named after a British poet Percy Shelley, followed and closed the Byron era in July 2020. The hard fork brought staking and more decentralization to the Cardano network. This is the most recently completed phase of the roadmap.
- Goguen, the current phase of Cardano, named after US computer scientist Joseph Goguen, includes the next big step: the Cardano network will be able to run smart contracts. The planned dates for the implementation of the latter vary, the update is expected to take place in Q2-Q3 2021.
- Basho, named after Japanese poet Matsuo Basho, will be the era in which Cardano reaches its final form. Side chains and compatibility with other blockchains like Ethereum will make Cardano a truly scalable network.
- Voltaire, named after the famous French thinker and writer, allows ADA holders to vote and decide the future of the Cardano network, hence the so-called era of “governance”.
Cardano vs. Ethereum
Cardano is often compared to Ethereum. However, alongside the similarities, there are currently some significant differences that set the two giants apart from each other. The Ethereum mainnet currently uses a Proof of work consensus algorithm, while Cardano opts for the concept of Proof of Stake.
On that note, it’s worth mentioning that Ethereum 2.0 will also bring the Proof of Stake algorithm to its network. When it comes to transaction speed and gasoline fees, Cardano seems to have an advantage over Ethereum as it is able to process transactions much faster than its rival, with lower fees overall.
When it comes to usability and practicality, it is not easy to say whether smart contracts from Cardano will actually prove to be a more optimal choice than those from Ethereum or not, as Cardano smart contracts are expected to be launched in the near future. That said, on paper, and according to the development team behind Cardano, it appears that with the successful implementation of the Alonzo update, the more flexible and easier environment for the Cardano network to develop contracts. smart people might have an advantage over Ethereum.
Final thoughts
While many are familiar with ADA, fewer people seem to know the fundamentals of the project. Given the notoriously high volatility in the crypto market, being informed about the motivations and people behind blockchain projects could pay off in the long run. Cardano is no exception, given that, as you read above, this is just the start of this innovative network.
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