Cardano are launching their smart contract this weekend as part of its Alozon network upgrade.

What Is Cardano (ADA) and How Does It Work?

Cardano (ADA) is the third largest cryptocurrency by market capitalization, a brainchild of Charles Hoskinson, one of the early co-founders of Ethereum. Cardano calls itself a third generation cryptocurrency that aims to solve scalability problems and energy consumption challenges that are prevalent in the regular Proof of Work (PoW) based blockchain platforms.

Unlike other blockchain projects that rely on community and open source development, Cardano has taken a very academic approach towards the development of the project that is inspired by ‘science publishing’. The Cardano project is developed based on peer-reviewed research, and each additional feature is reviewed and approved by academics before it becomes part of the Cardano project.

IOHK is the parent company behind Cardano, and has published a number of academic research papers on the consensus algorithm and the technology behind the platform. This article discusses the Cardano project, the underlying technology, and how it is different from its counterparts.

What Is Cardano?

Cardano is a scalable and energy efficient blockchain platform based on a Proof of Stake (PoS) consensus mechanism called Ouroboros. Charles Hoskinson claims that with Ouroboros consensus, Cardano is ~250 times more decentralized than Bitcoin.

Cardano was initially started as a research project back in 2015 to improve the cryptocurrency landscape at the time, preferably, the lack of scalability and high energy consumption. ADA is the native platform token of Cardano, named after Ada Lovelace, a famous 19th century mathematician.

Cardano Development Timeline

Here is a brief timeline of how the Cardano project has gradually developed:

Bryon: The first phase of Cardano called ‘Bryon’ was released on September 29, 2017. The Bryon phase only supported ADA transactions.

Shelley: The second phase was called ‘Shelley’ and was released in July 2020. Shelley brought staking to Cardano, allowing users to stake ADA and improve decentralization of the network.

Goguen: The third phase is called Goguen that was initially expected to be released in August 2021, but the tentative timeline is still not announced. Goguen is the most anticipated upgrade in Cardano that will bring support for smart contracts and issuing native tokens (just like ERC-20 tokens on Ethereum).

Basho and Voltaire: These are the two final phases of the Cardano project that are yet to be announced. Basho phase focuses on improving the scalability of the platform, and Voltaire will introduce a module for on-chain governance.

If you’re familiar with English literature, you might have noticed that all these development phases are named after famous English poets. Cardano has successfully completed the Bryon and Shelley phase, and the community is eagerly waiting for the launch of the Goguen phase.

The Ouroboros Consensus

One of the important distinctions of Cardano is the Ouroboros, which is the first blockchain consensus protocol to be peer-reviewed by renowned academics. Ouroboros is a Proof of Stake (PoS) consensus mechanism that uses a unique approach towards transaction validation and block production.

Ouroboros divides all the transactions in the pool into segments called ‘epochs’, that are further divided into different time slots. Ouroboros chooses a slot leader for each time slot segment (think of it as a validator) that can verify all the transactions and produce blocks.

Each slot leader (validator) gets a block reward in ADA, and this is how new ADA tokens are issued. The block reward isn’t fixed, and depends on the stake of the validator. The higher the stake, the higher the block rewards and vice versa.

Post a Comment