What Is Cardano?
Cardano is an open-source blockchain ecosystem running on a Proof-of-Stake (PoS) consensus protocol and built on Haskell programming language. It was founded in 2015 by Charles Hoskinson, a technology entrepreneur who was also a co-founder of the Ethereum blockchain.
The Cardano blockchain was named after Gerolamo Cardano, an Italian mathematician known for his achievements in algebra.
Since its inception, the Cardano blockchain and the developers behind it have aimed to utilize this technology and build a stable ecosystem for dApps and cryptocurrencies. The Cardano construction is overseen by three founding entities, Input Output (IOHK), Cardano Foundation, and Emurgo.
The crypto world is relatively new and full of problems that are yet to be tackled.
Hoskinson believed that the best way to approach and solve problems in the crypto world was by building a system stable enough to handle these challenges. As scalability is one of the main issues in other blockchain ecosystems, it was decided to split the blockchain into two layers. That said, Cardano consists of two layers, Cardano Settlement Layer (CSL) and Cardano Computation Layer (CCL).
Simply put, the settlement layer is a value ledger. It manages the path of value that changes when currencies undergo a journey between crypto senders and receivers. In other words, it tracks all ADA units on Cardano, allowing people to send and receive the coin.
Photo illustration: Freepik
The Cardano Computation Layer, however, can be thought of as Cardano’s brain. It’s a group of protocols that support the operation of smart contracts and assist in keeping the network’s distributed nodes connected. And by the way, Cardano has over 3,000 nodes running the network, making it the most decentralized Proof-of-Stake blockchain.
Why does this matter, you might ask?
Since Cardano divided the blockchain into two layers, the network can operate, process, and record information faster, resulting in higher transaction speeds.
Another interesting detail is that Cardano has undergone several developmental stages– four, to be more precise. Those stages are Byron, Shelly, Goguen, and Basho, all named after famous poets– well, all except for Goguen, named after a computer scientist.
Voltaire is the name of the final stage of the initial plan. This stage is about to be in motion, and as the ecosystem grows continually, we can expect some great updates soon.
As stated earlier, Cardano is built on a Proof-of-Stake consensus protocol, Ouroboros. The protocol was built in Cardano’s infancy, and it’s the first of its kind to eliminate unnecessary energy wastage that, for example, occurs on Proof-of-Work blockchain networks.
Stake pools, which are reliable server nodes managed by a stake pool operator to which ADA holders can assign their stake, are the foundation of the Ouroboros protocol. More importantly, they exist so that everyone can participate in network optimization regardless of their capability to keep the nodes running. Ouroboros, therefore, distributes network governance among stake pools and rewards them for adding blocks to the chain.
This matters because, contrary to working with PoS, improving networks that run on the Proof-of-Work mechanism is far from energy efficient. The lucrative rewards system attracts and encourages miners to compete instead of working together, resulting in poor performance.
As rewards are a good motivator, many compete for the prize, which ensures excessive electricity consumption. This can only slow down a network and cause its overload. Another disruptive factor that delays PoW-based blockchain’s performance is the above-average time needed to solve issues, again, due to constant competition.
Never happened at Cardano, though.
Cardano developers aim to turn this network into a foundation for financial and social systems. As a result, Cardano is the pioneer in successfully tackling interoperability, sustainability, and scalability issues– the most significant issues within all blockchain ecosystems.
Scalability is one of the most challenging issues tied to blockchain technologies. Due to the block production frequency and block size, Bitcoin, for example, can process only up to 10 transactions per second. With such a small transaction volume, the Bitcoin blockchain can’t even be considered the future of the global financial system.
Photo illustration: Freepik
Cardano developers, however, are utilizing various strategies, such as data compression (and soon the Hydra protocol), to ensure the network can process the number of transactions that occur within the ecosystem.
Another mission following Cardano’s earliest stages of development is reaching the level of interoperability that allows us to initiate cross-chain transfers. Milkomeda C1 is a project that delivers EVM compatibility to the network, allowing Cardano to become fully interoperable.
As a result, the Cardano blockchain is now a multi-functional platform that allows its users to interact with not just its native cryptocurrency but multiple currencies across several blockchains. Additionally, Cardano supports several smart contract languages, allowing users to create various projects on the network, including dApps and NFTs.
So, in a way, one could say that the basic answer to “What is Cardano?” is “a one-stop-shop for most of your Web 3.0 needs.”
Last but not least, Cardano is self-sustainable. Its governance system encourages input from the community, but it also pays people working on Cardano improvements. And since anyone who joins can benefit from this system, Cardano boasts one of the strongest crypto communities.
Cardano’s journey began in 2015, when its founding entities and Daedalus, a full-node ADA wallet, came to life, but it wasn’t until 2017 that the network went live. Only a year later, developers began working on the smart contract Cardano framework, and by 2021, users could mint native tokens on Cardano.
It’s safe to say that 2021 was indeed a good year for Cardano. The first NFT was minted on the blockchain, and with the help of the Alonzo hard fork, the network gained smart contract capabilities. Only a few months after the first NFT was minted, over two million Cardano NFTs joined the game.
A year later, Hydra, the technology that will elevate Cardano’s capacity to process transactions, was announced, and even the Cardano block size increased by 12.5%.
Of course, these are the most significant Cardano-related events that show Cardano’s capability of rapid growth. In less than six years, it went from a network that was built from scratch to one of the essential blockchain systems in the world.
With all this in mind, we can conclude that although Cardano may not be on top (yet!), it truly is a well-developed blockchain with a prosperous future. One of the reasons for its continued success is that Cardano is an evidence-based and research-backed blockchain. The developers behind the project have relied on peer-review research to utilize pioneering technologies that bring unmatching security, innovation, and many other benefits to the table.
Cardano boasts over 1100 successful projects on its network, ranging from marketplaces and identity solutions to NFTs and DeFi.
Source: IOHK Essential Cardano Guide
Cardano’s community is full of people who eagerly participate in projects, work on solutions and provide resources for others. As a result, you can find various community-built resources and tools needed to kick off your Web 3.0 journey.
On the other hand, some Cardano projects only focus on building decentralized exchanges. You can check out SundaeSwap, a decentralized trading protocol and the first automated market marker (AMM) on Cardano, or MuesliSwap, the first (and only) hybrid exchange in this ecosystem.
Cardano NFTs are underrated for one and one reason only. Cardano offers users to mint NFTs with minimal costs and environmental impact without compromising security. If that’s not a good reason to consider minting on Cardano, I don’t know what is.
Yes, Ethereum is the epitome of NFT minting, but we must consider the high gas fees that occur during minting and the impact these practices have on our fragile environment. If we can eliminate, or at least mitigate, both problems, and we can because we have Cardano, why not give it a chance?
Well, that’s a question for you– many NFT enthusiasts are already walking this path, and their projects are doing great, fantastic even.
For example, DEADPXLS is the first interactive NFT collection minted on Cardano. The people behind it are already working on new exciting projects, such as PXL Wars. This will become a crypto gaming platform allowing gamers to play and earn goodies for in-game efforts.
Aeoniumsky is another visionary dedicated to creating Cardano NFTs. Their futuristic, dreamy, surreal, and animated block series will take you on a unique journey. As you scroll through collections, you’ll feel as if the visuals before you are eager to tell you a never-ending story.
But what are NFTs without NFT marketplaces?
Cardano is a hidden gem hosting groundbreaking projects ranging from Metaverse to DeFi. Here’s only a fraction of them:
|Project Name||Sector||Project Description|
|MELD||DeFi||Non-custodial protocol for borrowing fiat and crypto|
|IAMX||Self-sovereign identities (SSI)||An SSI solution with an implemented reward system for identity holders|
|Fourier Labs||L2 scaling||Project revolving around building an Ethereum-compatible platform for dApp development|
|SecurityBot||Cyber security||Scam prevention bot|
|Wolves of Rome||Blockchain gaming||A trading card game|
|Pavia||Metaverse||Immersive virtual world|
ADA, which has gotten its name after Ada Lovelace, a famous mathematician, is the native cryptocurrency of the Cardano blockchain. As Cardano runs on PoS, ADA cannot be minted. Instead, ADA holders can simply stake the coins for rewards by joining one of the many staking pools within the ecosystem.
The market highly values this crypto asset, and its market cap shows it. At the time of writing, ADA’s market cap was well over $12.19B, making it one of the top ten cryptocurrencies by market cap.
You can exchange ADA within the Cardano network, but you will also find it on all prominent crypto exchanges, including Binance, Coinbase, and Kraken. Still, it’s worth adding that ADA is not a high-reward cryptocurrency, which is why some investors avoid it in the first place. Its price fluctuates, but these oscillations are sometimes barely noticeable unless you hold a significant number of coins.
Source: Yahoo Finance
It’s not nearly as valued as Bitcoin, whose price can skyrocket and make you a relatively decent fortune in a few days. But, it also won’t drop to such an extent that it would scar your investments permanently. And while some don’t appreciate its nature, it’s a haven for many investors.
If you own ADA currency, you can stake it, keep it in a separate crypto wallet, or exchange it for another currency. You can also use it to cover transaction fees on Cardano or make purchases. You can sell it or give a portion to a friend if you don’t like it. Up to you. What matters is that, like most cryptocurrencies, ADA is very flexible.
These, of course, are just the basics. As there’s no way to fit it all in one article, the next article will explore the differences and similarities between Cardano and Ethereum. Stay tuned!