The 'Academic' blockchain
- Founded in 2015 by Charles Hoskinson, a co-founder of Ethereum
- Multilayered architecture allows for scalability, low transaction fee's as well as smart contracts
- Native currency is the token ADA
- Scientific approach, using peer reviewed academic paper and a rigorous methodology.
Cardano was founded by Charles Hoskinson, a co-founder of Ethereum, in 2015. It is a third generation 'Proof-Of-Stake' blockchain that is known for being the 'academic' project, with much of the project emerging from peer reviewed academic studies. The project is open source, and is written in the Haskell programming language and supports smart contracts, much like Ethereum.
Cardano is referred to as a 'third generation' blockchain, as it is built upon the first and second generation blockchains (Bitcoin and Ethereum respectively), which is evident in its purpose built Proof-Of-Stake protocol and its multi layer blockchain structure.
Back in 2015 Charles Hoskinson believed that Ethereum needed to evolve as a project, so he and Jeremy Wood founded IOHK (Input Output Hong Kong), which is a research and development project with the aim of using blockchain technology to bring financial innovations to the world. Cardano is one of their innovations, and IOHK are contracted to work on the project, alongside .
The three elements that Cardano set out to solve were:
Ethereum, the largest smart contract enabled blockchain suffered greatly from its lack of scalability and sustainability, and in this respect Cardano is a more modern blockchain that is purpose built to tackle issues that have plagued the ethereum ecosystem since it gained popularity.
- The Cardano Settlement Layer (CSL) – where all the transactions are carried on.
- The Cardano Computational Layer (CCL) – used to deploy smart contracts and govern the network.
These layers can interoperate and communicate with each other, which allows transactions to be carried out even when the network is computing smart contracts or experiencing essential updates.
This is a consensus mechanism where users can become validators themselves by staking Cardano and running a node. This is much more environmentally friendly and other blockchains are following suit, including Ethereum, until the merge. Cardano was purpose built as PoS, which can be seen as superior to the first and second generation blockchains. This consensus mechanism is called 'Ouroburos Proof-of-Stake'. By utilising Ouroboros, the network see's improved diversity and decentralisation. This is primarily achieved by dividing time into epochs. For each epoch, a new set of validators is voted in by the system.
Cheap gas fees
Ouroboros allows Cardano to offer small transaction fees on its network. The average cost of a transaction on Cardano costs around 0.1 ADA, which is only a few cents at time of writing. Ethereum gas fee's are currently around $15.
The Cardano roadmap is famously split into five eras: Byron, Shelley, Goguen, Basho, and Voltaire. Each era is centered around a set of functionalities that will be delivered across multiple code releases.
According to Cardano, even though the eras will be delivered sequentially, the work for each era happens in parallel, with research, prototyping, and development often in progress all at once across the different development streams.
- 1.Byron : Foundation
- 2.Shelley : Decentralisation
- 3.Goguen : Smart Contracts (Launched sep 12th 2021 as Alonso Hard Fork) - This era added the ability to build decentralized applications (DApps) on Cardano.
- 4.Basho : Scaling - (Yet to launch)... This scaling update will bring in sidechains, allowing for even better network scaling.
- 5.Voltaire : Governance - This era will see the launch of voting and treasury systems to fund further development of the network.
The Alonso hardfork launched the Goguen era in Sep 2021 and caused the price of ADA to jump by 116%
So how does Cardano approach its development process? Well, they use the following principles:
Unlike many other blockchains, Cardano does not rely on technical foundations taken from Bitcoin or other cryptocurrency systems. Instead it relies on peer-reviewed academic research papers to build its techonology
They have a prototyping team which works with the research team to make the theoretically possible and actual product.
Technical specifications are made based on research and prototyping results, which help make sure that the final code stays true to the initial vision set out in the research.
The engineers at IOHK use 'formal development methods' which are strenuous mathematical techniques that test the software works. this level of testing usually only takes please in key systems like those that control space flight or high-volume banking software.
IOHK and Cardano use Haskell. This 'functional programming language' is easy to test and verify and is less prone to human error.
Two layers, one for settlement and one for smart contracts. This creates efficiency.
Other blockchains employ the same multi layer technology, so it is not unique
Cardano has overcome one of the major hurdles of decentralised blockchain technology - it is scalable.
Cardano is not currently fully decentralized
Cardano has an extensive and well qualified development team.
Because of it's peer reviewed and academic approach, development can be slow
It has academic backing and involves academic, peer reviews
There are reported issues with Cardano and ledgers.
ADA is highly liquid and available on multiuple exchanges
Cardano is an open-source