Cardano is a decentralized, open-source blockchain platform designed for peer-to-peer transactions. Run by users through a community voting system, Cardano aims to uphold fundamental principles such as scalability, sustainability, interoperability, decentralization, transparency, and ecosystem efficiency. As a third-generation proof-of-stake blockchain, it features both a settlement layer and a highly flexible, sustainable, and scalable platform for running smart contracts and developing decentralized apps.
What Makes Cardano Different?
Cardano, considered a third-generation layer 1 blockchain, stands out from its predecessors, Bitcoin and Ethereum, by effectively addressing the blockchain trilemma — the challenge of achieving decentralization, security, and scalability simultaneously. This advanced ecosystem confidently claims to overcome these barriers without jeopardizing any of the three aspects.
One unique aspect of Cardano is its absence of a whitepaper. Instead, it follows a data-driven and academic approach, with papers outlining its development and future plans made public. As a result, expert engineers, computer scientists, and developers from around the world can review and analyze these papers, ensuring structured and peer-reviewed research precedes any updates on the network.
This rigorous and transparent method sets Cardano apart from the approach often seen in other blockchain projects. By focusing on research and incorporating inputs from scientists, Cardano demonstrates its commitment to developing a highly secure, scalable, and decentralized blockchain protocol, meeting the needs of various industries and services through technology and governance improvements.
How was Cardano Founded?
Cardano was founded by Charles Hoskinson, who was also a co-founder of Ethereum. However, Hoskinson had a disagreement with Vitalik Buterin, another co-founder of Ethereum, which led him to leave the team. Hoskinson had a vision of turning Ethereum into a for-profit entity, while Buterin wanted to keep it as a non-profit organization.
Upon leaving Ethereum, Hoskinson co-established Input Output in 2015, a prominent company dedicated to blockchain technology research and design. Cardano has been significantly backed by this organization. In the span of 2015 to 2017, the Cardano project managed to accumulate around $62 million through ICOs. The mainnet launch took place in September 2017, concluding the year with a nearly $18 billion market cap. Notably, Cardano is still progressing through its developmental phases.
Cardano Foundation
The Cardano Foundation, an autonomous non-profit institution located in Zug, Switzerland, holds the responsibility of managing and supervising the Cardano blockchain's advancement and its ecosystem. With its focus on promoting adoption and forging partnerships, the organization strives to nurture and expand the Cardano community.
IOHK - Input Output Hong Kong
IOHK, established by Charles Hoskinson and Jeremy Wood, is an international technology firm specializing in the creation of blockchains for various institutions, enterprises, and governments. As the leading force behind the Cardano network, IOHK designs, develops, and sustains this innovative ecosystem. The company's diverse team, spread across the globe, contributes not only to Cardano's ongoing development, but also actively engages in researching and promoting academic pursuits in the blockchain field.
Emurgo
Emurgo, a counterpart to IOHK, focuses on fostering commercial growth within the Cardano ecosystem. As the profit-driven branch of Cardano, its mission is to facilitate adoption by investing in capital ventures. With offices in the USA, Singapore, India, Japan, and Indonesia, Emurgo supports a diverse range of start-ups across various sectors, such as financial services, healthcare, supply chain, retail, the public sector, and IoT.
What is ADA?
ADA is Cardano blockchain's native currency, utilized for transaction fees and supporting the ecosystem's governance model. Individuals can stake their tokens and become validators, earning rewards in the process. The coin is named in honor of Ada Lovelace, a renowned British mathematician and daughter of esteemed poet Lord Byron. Regarded as one of the earliest computer programmers, Ada Lovelace created the first algorithm for a machine in 1843. In the Cardano system, the smallest ADA unit (0.000001 ADA) also called a Lovelace.
Consensus Mechanism
Cardano employs a unique proof-of-stake (PoS) consensus protocol called Ouroboros Praos. This method is more efficient and environmentally friendly compared to the proof-of-work (PoW) systems utilized by Bitcoin. With Ouroboros Praos, Cardano can process approximately 500 transactions per second without relying on energy-intensive computational power.
The Ouroboros system operates by dividing the time into epochs, each containing 432,000 slots. A single slot lasts for one second, while an epoch-span is five days. Within each epoch, 21,600 slot leaders are selected to validate transactions and record them on the blockchain.
These slot leaders are chosen from staking pools based on the amount of ADA staked and a random seed. The greater the stake in a pool, the higher the probability of being nominated as a slot leader. This efficient consensus protocol not only promotes transaction speed but also fosters a more scalable and secure network.
Cardano's consensus mechanism is constantly evolving, with developers seeking ways to further enhance its transaction processing capabilities. This makes Cardano an attractive platform for future growth in the blockchain space. The integration of Ouroboros Praos and staking pools sets Cardano apart from its competitors, offering a promising alternative to traditional PoW systems.
Smart Contracts
Cardano harnesses the power of smart contracts to facilitate automated agreements without intermediaries enabling users to set specific conditions that trigger execution on the Cardano blockchain. This streamlines transactions and minimizes the need for constant user interaction, making the process more efficient and transparent.
Cardano Tokenomics
Cardano has a fixed maximum supply of 45 billion ADA. Multiple ICO sales distributed a total of 25.93 billion ADA to early investors, which accounts for 57.6% of the maximum supply.
Only 11.5% of the maximum supply, or 5.19 billion ADA, was distributed among the three founding organizations. This allocation is notably lower than that of competitive projects like Solana, Aptos, Sui, and Avalanche, which allocated significantly more to their founding organizations.
Upon Cardano's launch, 31.11 billion ADA tokens were available in circulation, while 13.89 billion ADA were set aside as network reserves for future distribution. The distribution of ADA tokens is as follows:
- Initial public sales: 25,927,070,538 ADA (57.6%)
- Reserves: 13,887,515,354 ADA (30.9%)
- Cardano Foundation holdings: 648,176,761 ADA (1.4%)
- Emurgo holdings: 2,074,165,644 ADA (4.6%)
- IOHK holdings: 2,463,071,701 ADA (5.5%)
The Future of Cardano
Cardano's potential hinges on its capacity to achieve forthcoming milestones and deliver on its roadmap commitments. Cardano's growth persists as more organizations recognize its potential and accumulate the cryptocurrency. As the development team maintains momentum in constructing the ecosystem and fostering the community, Cardano's long-term presence in the market seems promising.
Regarding Cardano wallets and rewards, the future might bring increased innovation and user-friendly features. As Cardano advances, the wallets available for users might develop to offer improved security, functionality, and additional rewards opportunities. The growth of the project could lead to the creation of new incentives for users, giving them more reasons to invest in and use Cardano.