The team behind the Nervos blockchain has announced that it has partnered with IOHK, the company behind Cardano‘s development, to develop and improve the UTXO framework and make it suitable for decentralized finance (DeFi) projects.
— Nervos (@NervosNetwork) December 15, 2020
Indeed, as Cardano approaches the possibility of creating and developing smart contracts on this blockchain, a development environment needs to be created, and Cardano’s goal is to become more secure than that seen so far on the Ethereum blockchain.
The numerous problems and thefts that have plagued various Ethereum protocols this year have scared and worried many investors and users of these protocols, so much so that they are demanding greater security measures.
As some are aware, Cardano’s blockchain is gradually evolving and moving from PoW (Proof of Work) to PoS (Proof of Stake), although it still maintains a UTXO (Unspent Transaction Output) type system, similar to what can be found on Bitcoin.
In the press release, we learn that instead of enabling and transforming the UTXO system into an account-based system, they have decided to join forces and try to develop a system that improves UTXOs.
Partnership between Nervos and Cardano to improve UTXO
The goal of this partnership is to combine the research done by the Cardano team with that done by the Nervos team, so as to have a better picture of the possibilities to be implemented on the relative blockchains since both exploit this type of UTXO system, as recalled by IOHK’s CTO, Romain Pellerin:
“The Cardano and Nervos communities are working on similar research streams to offer robust smart contract technologies, native token standards, cross-chain asset transfers, and novel crypto primitives. It may be surprising to see PoW and PoS initiatives join forces, but we believe that our industry must collaborate more if we want blockchain technologies to be adopted widely.”
It was therefore preferable to upgrade a more secure UTXO system rather than start a new one, explained Nervos co-founder Kevin Wang:
“UTXOs are superior to account models in many ways and provide improved security, privacy, and scalability, all of which are critical for DeFi. By working with IOHK to further develop and define UTXO standards, we’ll continue to provide a secure alternative for the broader blockchain industry.”
Sure enough, next year it will be the turn of the Cardano blockchain to enter the DeFi industry. The team is already taking the first steps in this direction, including the possibility of making Ethereum’s smart contracts compatible, thanks also to the recent fork that introduced many new features.