Founded in 2015 by Charles Hoskinson, previously co-founder of Ethereum, Cardano is an L1 Proof-of-Stake blockchain designed to be environmentally sustainable and scalable.
The network’s native coin, $ADA, is used to pay transactions and secure the network, hence playing a key role in the network’s consensus mechanism called Ouroboros.
Let’s now delve into what are the features of one of the most capitalized crypto projects on the market.
Summary
Cardano: features and operation
The initial idea behind the development of Cardano was to go and develop a so-called “third-generation” blockchain, which could go and provide developers with a highly scalable and energy-efficient open-source smart contract platform.
One of the features that differentiates Cardano from other PoS blockchains is the design of its native consensus mechanism, Ouroboros, which focuses on maximizing the randomness of the choice of the block leader, i.e., the validator nodes in charge of proposing new blocks on the blockchain.
Increasing the randomness of the choice of block leader allows the blockchain to avoid the creation of patterns that would render the security of the network fallacious, increasing the possibility of exploits and DDoS attacks.
The current version of Ouroboros, called Ouroboros Praos, is currently the third version of the network consensus mechanism, and provides security and scalability improvements to the network.Â
Future noteworthy updates include Ouroboros Crypsinous, which will adopt zero-knowledge technology to further improve the network’s privacy.
The Cardano blockchain is divided into two layers: the Cardano Settlement Layer (CSL) and the Cardano Computing Layer (CCL).
The first layer is where transactions are validated by the network’s consensus mechanism, while the second is in charge of executing the functions of apps using the network, through the use of smart contracts.
Another plus point of Cardano is its excellent latency, which allows the blockchain to quickly spread data regarding block validation throughout the network, reaching 95% of participants in about 5 seconds.
Cardano’s development roadmap is divided into “eras,” named after characters related to the literary and scientific worlds.
The current era, called Basho, focuses on the scaling capabilities of the network, with a view to preparing for Voltaire, which will be the final stage of the network, which will be equipped with governance and treasury management mechanisms.
The Cardano ecosystem: dApps and DeFi
The Alonzo hard fork on 12 September 2021 provided the network with the ability to support smart contracts, paving the way for the development of dApps on the blockchain.
Currently, the TVL (Total Value Locked) locked on the chain stands at $155M.Â
The two most capitalized dApps are Minswap, the leading DEX, and Indigo, a stablecoin issuing protocol.
When compared to the capitalization of the $ADA token, which stands at $14B, we can see that DeFi‘s development on the blockchain is still quite immature.
Among the most liquid pools related to Cardano we can find the ADA/WBNB pair on PancakeSwap V2 , with liquidity standing at around $4M.
Conclusions
Although it turns out to be one of the most market-capitalized crypto projects, we got to see how the development of the network is still far from being finished, and how the dApps available on the blockchain are still under-utilized and in the embryonic stage.
Future technical updates to the network, among them the introduction of zero knowledge technology, still give the protocol room for development and adoption.
Will Cardano be able to increase its base of dApps and users and remain in the top 10 (it is currently 7th) of the most capitalized crypto projects, or will it be overtaken by next-generation blockchains?
