Following Bitcoin and Ethereum, Cardano is marketed as a third-generation blockchain. Cardano claims to be a more scalable, secure, and efficient alternative to Ethereum and other decentralized application platforms.
Decentralized applications (dapps) are similar to smartphone apps. The primary difference is that dapps run independently of a third party. They achieve this autonomy by employing smart contracts, computer programs that perform specified functions when certain circumstances are satisfied.
For example, you might design a collateralized lending dapp that lent money to anyone who put money in a wallet beforehand. In this case, the smart contract would be set to send the loan to the borrower as soon as the collateral wallet received the funds. If the borrower fails to make timely payments, the smart contract could liquidate the collateral (keep the locked cash).
An initial public offering (IPO) of 25,9 billion ADA tokens commenced in September 2015, and the currency launched in 2017. In addition, the Cardano protocol's marketing and development firms each received 5.2 billion tokens. They are IOG, Emurgo, and the Cardano Foundation. IOG got 2.46 billion, Emurgo 2.06 billion, and the foundation 648 million.
ADA was worth $0.02 when it began publicly traded. Prices soared to an all-time high of $1.31 in just 96 days, matching the rest of the crypto market's 2017 bull run.
ADA's price, like most crypto assets, plummeted in 2018. In November 2018, it was $0.02.
It took over two years for ADA to rebound to $1.31. A new bull market cycle in early 2021 propelled ADA to $2.46 in mid-May. Prices fell between May and July before rising again. In early September 2021, ADA hit a new all-time high of $3.10.
Cardano's native blockchain is separated into two levels to boost efficiency. Them:
Cardano Settlement Layer (CSL): Used to facilitate ADA-native token transfers
Cardano Computational Layer: Smart contract execution
The Cardano blockchain uses a consensus process called “Ouroboros” to discover new blocks and add transaction data to the network. In this PoS system, ADA owners either “stake” their coins in other participants' pools or become pool operators themselves.
Ouroboros employs a five-day epoch mechanism to create new blocks. Each era has 21,600 slots, or one every 20 seconds. To create a new block for a slot, a stake pool is assigned randomly to that slot.
While anyone can start their own staking pool, it does require some technical knowledge. After each epoch, the stake-pool operator and stakers share the rewards for adding new blocks to the chain (five days). The benefits are proportional to how many coins each person stakes.
The more coins in a stake pool, the more likely it is to be chosen as a slot leader and add the next block to the chain. Considering them as lottery tickets. Having more tickets increases your chances of winning but does not ensure it. To prevent huge pools from dominating the system, each staking pool has a “saturation parameter” that reduces rewards if they reach capacity. That encourages ADA stakers to move their coins to smaller pools.
Ouroboros consensus is unlike Bitcoin's proof-of-work (PoW) mechanism, which requires users to compete using specialized computer equipment to discover the next block.
The Cardano blockchain platform is still in development and will launch in five stages:
Byron: The project's ADA cryptocurrency and native wallets, Yoroi and Daedalus.
Shelley: Delegated staking and the emergence of distributed stake pool operators.
Goguen: Cardano smart contracts and custom fungible and non-fungible tokens were launched here.
Basho: The “scalability phase” will see sidechains launched alongside Cardano's primary network.
For Cardano to become a self-sustaining community project, a new voting and treasury mechanism will be built.
Cardano would allow external developers to build bespoke tokens comparable to ERC-20 tokens on Ethereum, as well as dapps utilizing smart contracts written in a new high-level programming language called “Plutus” based on Haskell.
Financial experts will be able to design their own smart contracts for business using “Marlowe,” a programming language established by Cardano to enable creating smart contracts easier.
Cardano will add sidechains to boost scalability. These are secondary blockchains that can be used to execute microtransactions, store wallet info, and deploy dapps. Sidechains are supposed to reduce labor on the master chain and assist prevent congestion, allowing for speedier transactions.
Decentralized governance is another component of the planned growth that will eventually turn Cardano into a totally community-driven enterprise. This is a mechanism where ADA holders stake their coins to vote on new project proposals. The more coins you stake, the more votes you get.
Cardano is being developed by three independent entities as it works towards decentralization.
IOG: IOG, formerly IOHK (Input Output Hong Kong), is in charge of developing the Cardano platform. Charles Hoskinson, a co-founder of Ethereum, is the CEO and co-founder.
Cardano Foundation: In charge of marketing, collaborations, and global expansion.
Emurgo: Helps fund Cardano developers, businesses, and startups.
In September 2021, the Cardano system issued its Alonzo hard fork upgrade, requiring all participants to upgrade to the current version. Alonzo was unique in that it enabled smart contracts on the Cardano blockchain for the first time, allowing for native dapps and other functionalities.
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