Cardano (blockchain platform)

Cardano is a public blockchain platform. It is open-source and decentralized, with consensus achieved using proof of stake. It can facilitate peer-to-peer transactions with its internal cryptocurrency, ADA.[6]

Cardano
Denominations
Symbol₳
Codecardano-node
Subunits
 1⁄1000000Lovelace
Development
Original author(s)Charles Hoskinson & Jeremy Wood
White paperCardano whitepaper
Initial release27 September 2017 (2017-09-27)[1]
Latest release1.35.5 / 27 January 2023 (2023-01-27)[2]
Code repositoryhttps://cardanoupdates.com/
Development statusActive
Written inHaskell
Operating systemCross-platform
Developer(s)Cardano Foundation, IOHK, EMURGO
Source modelFree and open-source software
LicenseApache License
Ledger
Timestamping schemeProof of stake
Block time20 seconds
Block explorerAdatools_explorer

Pooltool_explorer

Cardanoscan_explorer
Circulating supply45 billion[3]
Valuation
Exchange rateFloating
Market capUS$5 billion (2018) [3] US$56.3 billion (2021)[4]
Demographics
Official user(s)~3215 stake pools globally (as of Jan. 2023)[5]
Website
Websitehttps://cardano.org/

Cardano's development began in 2015, led by Ethereum co-founder Charles Hoskinson. The project is overseen and supervized by the Cardano Foundation based in Zug, Switzerland.[7][8] When launched in 2017, it was the largest cryptocurrency to use a proof-of-stake blockchain, which is seen as a greener alternative to proof-of-work protocols.[9]

Cardano co-founder Charles Hoskinson. (2022, Web Summit)

Background

Charles Hoskinson and Jeremy Wood set out their plans for Cardano in 2015, with the platform launching in 2017.[10][11][12] Hoskinson had left Ethereum after a dispute with another co-founder, Vitalik Buterin. Hoskinson wanted to accept venture capital and create a company, while Buterin wanted to keep it as a nonprofit organization.

After leaving, Hoskinson co-founded IOHK, a blockchain-engineering company, whose primary business is the development of Cardano, alongside the Cardano Foundation and Emurgo.[12] As of 2021, Frederik Gregaard is known to be the CEO of the Cardano Foundation.[13]

The three contributors to Cardano have the following roles:

  • Cardano foundation: based in Switzerland, aims to standardize and promote the ecosystem.
  • IOHK: a blockchain engineering company responsible for building the Cardano blockchain.
  • Emurgo: responsible for commercial applications.[3]

The platform is named after Italian mathematician Gerolamo Cardano, while the cryptocurrency itself is named after the English mathematician Ada Lovelace. The Ada sub-unit is the Lovelace; one Ada = 1,000,000 Lovelaces.[14] Cardano differentiates itself from many other cryptocurrencies by focusing on scientific research and working together with universities.[3][15]

Technical aspects
Cardano technical overview. (2019)

Design

Atypically, Cardano does not have a white paper. Instead, it uses design principles intended to overcome issues faced by earlier cryptocurrencies such as scalability, interoperability, and regulatory compliance.[16] Cardano claims that it overcomes problems found in other cryptocurrencies: mainly that Bitcoin is too slow and inflexible, and that Ethereum is not safe or scalable.[17] Like Bitcoin, Cardano uses a UTXO ledger model, though it is an extended version (EUTXO)[18][19] to facilitate smart contracts and scripting languages.[20]

Cardano uses a proof-of-stake (PoS) protocol named Ouroboros;[21] this is in contrast to Bitcoin and Ethereum, which use proof-of-work protocols (though the latter switched over in 2022).[22] Proof-of-stake blockchains use far less energy than proof-of-work chains.[22] This is achieved by eliminating the computing resources that a proof of work algorithm requires.[23] In February 2021, Hoskinson estimated the Cardano network used 6 GWh annually, less than 0.01% of the 110.53 TWh used by the Bitcoin network as calculated by the University of Cambridge.[24][25][3]

Within the Cardano platform, Ada exists on the settlement layer. This layer is similar to Bitcoin and keeps track of transactions. The second layer is the computation layer. This layer is designed to be similar to Ethereum, enabling smart contracts and applications to run on the platform.[17]

The cryptocurrency Ada (ADA) can be stored on Cardano's native digital wallet named "Daedalus".[3] Daedalus wallet is a full node non-custodial desktop-based wallet that enables individuals to stake on Cardano. As a full node wallet, it downloads a full copy of the entire Cardano blockchain transaction history. Users face the risk of losing access to funds if the seed phrase is lost or stolen. The review in Investopedia highlighted the wallet's security and noted the lack of mobile support, lack of support for other tokens, and lack of an "onramp" to purchase assets with money.[26]

Development phases of Cardano, or "eras", are named after notable figures in poetry and computer science: Byron, Shelley, Goguen, Basho and Voltaire. The current era Basho focuses on scaling the blockchain. Voltaire, is intended to be the final era, and which is planned to add voting and treasury management functionality to the blockchain through previously introduced smart contract functionality. Once Voltaire is complete IOHK has said it plans to release the development of the network entirely to the community.[23]

Staking

“Staking” enables the transaction and validation protocol of Cardano. The staking protocol offers rewards to those who “validate”—or confirm— transactions on the blockchain. To become a validator, holders of Cardano must “stake”—or pledge their ADA. Validators are selected based on the size of their stake, among other factors. The protocol selects from Cardano users who have committed or “staked” a minimum number of tokens to validate transactions. Staked ADA is delegated to a "node" where these nodes act as "staking pools" for multiple users. A person or entity operating a node is called a “node operator".[27][23][3]

Decentralized Finance

Cardano implemented decentralized finance (DeFi) services on September 12, 2021, including an upgrade to enable smart contracts and the ability to build decentralized applications (DApps).[28] Also included is Plutus, a Turing-complete smart contract language written in Haskell, and a specialized smart contract language, Marlowe, designed for non-programmers in the financial sector. Cardano's smart contract languages allow developers to run end-to-end tests on their program without leaving the integrated development environment or deploying their code.[29][30]

History
Cardano (ADA) currency symbol.

Cardano was funded through an initial coin offering (ICO).[3] Cardano reached a market cap of $77 billion in May 2021, which was the fourth highest for a cryptocurrency at that time.[31][32]

In 2017, IOHK partnered with the University of Edinburgh to launch the Blockchain Technology Laboratory.[33][34] The lab had six post-doctoral and professorial positions with up to 35 jobs created in total, and was led by Aggelos Kiayias, developer of Ouroboros (protocol).[35]

Advertising agency MBLM ranked Cardano 26th for brand intimacy out of 600 brands in August 2022, in between Ford and Nestlé and the highest rank for a cryptocurrency. Citing an MBLM partner, advertising industry magazine Ad Age said Cardano's high ranking "can likely be chalked up to the gambling element of crypto".[36]

Applications

Applications of the Cardano blockchain include:

  • In 2018 IOHK signed a memorandum of understanding with the government of Ethiopia to consider the use of Cardano in its coffee supply chain.[37] The partnership with the Ethiopian government also investigate other ways to deploy Cardano in the country.[38]
  • In 2019, the Ministry of Education in the country of Georgia signed a memorandum of understanding with the Free University of Tbilisi to use Cardano and Atala, IOHK's decentralized identity software, to build a credential verification system for Georgia.[39]
  • In 2019, New Balance announced a pilot program on the Cardano blockchain so buyers could track the authenticity of OMN1S Kawhi Leonard basketball shoes.[40]
  • In April 2021, IOHK and the Ethiopia Ministry of Education announced plans for an identity and record-keeping system on Cardano and Atala for the country's five million school pupils.[41]
  • In 2021 Hoskinson began working with electronic dance music DJ Paul Oakenfold to release an album, Zombie Lobster, on the Cardano blockchain.[42]
  • In 2021 IOHK and Dish Network announced a collaboration to investigate the use of distributed ledger technology.[43]

Regulation
See also: 2020s commodities boom

In the United States, the proposed Digital Commodities Consumer Protection Act would treat Cardano and other cryptocurrencies as commodities, which could then be regulated by the Commodity Futures Trading Commission (CFTC).[44][45]

References
  1. "Releases - input-output-hk/cardano-sl". Retrieved 28 October 2020 – via GitHub.
  2. "Releases - input-output-hk/cardano-node". Retrieved 28 January 2023 – via GitHub.
  3. "Cryptocurrencies and blockchain" (PDF). European Parliament. July 2018. Retrieved 29 October 2020. What distinguishes Cardano from Ethereum, and from many other cryptocurrencies, is that it is (one of the first) blockchain projects to be developed and designed from a scientific philosophy by a team of leading academics and engineers
  4. Sandria, Ferry (3 June 2021). "Cardano & Nervos Collaboration, Easier Crypto Transactions". CNBC (in Indonesian). Retrieved 3 January 2023.
  5. "Cardano Blockchain Explorer".
  6. "Die Grundlagen der Cardano-Kryptowährung". hamburg-magazin.de (in German). 26 June 2020. Archived from the original on 4 July 2020. Retrieved 2 July 2020.
  7. "Bitcoin's Smaller Cousins". Bloomberg L.P. 20 December 2017. Archived from the original on 26 June 2018. Retrieved 25 December 2018. Cardano, backed by the Zug, Switzerland-based Cardano Foundation, is a decentralized public blockchain that aims to protect user privacy, while also allowing for regulation
  8. "ZUG: Ex-Tezos-Mann geht zu Cardano". luzernerzeitung.ch (in German). Luzerner Zeitung. 20 February 2018. Retrieved 7 July 2020.
  9. "What is Cardano? The 'green' crypto that hopes to surpass the tech giants". The Independent. 18 May 2021. Retrieved 22 August 2021.
  10. "Ethereum Cofounder Says Blockchain Presents 'Governance Crisis'". Fortune. Retrieved 1 April 2020.
  11. "ICOs explained". CNBC. 6 October 2017. Retrieved 25 December 2018. ethereum co-founder Charles Hoskinson says it has become increasingly more challenging to regulate this new asset class" and "ICO market could crash
  12. Au-Yeung, Angel (7 February 2018). "A Fight Over Ethereum Led A Cofounder To Even Greater Crypto Wealth". Forbes Magazine. Retrieved 12 July 2020. IOHK's key project: Cardano, a public blockchain and smart-contract platform which hosts the Ada cryptocurrency.
  13. "Cardano Unveils Multiple Strategic Partnerships at the Cardano Summit 2021, Pioneering Use Cases across Climate Restoration". PRNewswire (Press release). 28 September 2021. Retrieved 3 January 2023 – via Bloomberg News.
  14. "What is Ada?". Retrieved 23 October 2020.
  15. "Blockchain believers hold fast to a utopian vision". Financial Times. 27 January 2017. Archived from the original on 19 December 2018. Retrieved 3 January 2023.
  16. "The Blockchain Galaxy A comprehensive research on distributed ledger technologies" (PDF). Deloitte. 6 May 2020. Retrieved 29 October 2020. The distinctive feature of Cardano is its "research-first" approach to design.
  17. "Cardano: a rising cryptocurrency". Mashable. 24 February 2018. Retrieved 25 December 2018. Cardano claims it will solve most of the issues that plague well-established cryptocurrencies such as Bitcoin and Ethereum
  18. Chakravarty, M. M., Chapman, J., MacKenzie, K., Melkonian, O., Peyton Jones, M., & Wadler, P. (2020) “The extended UTXO model”, in International Conference on Financial Cryptography and Data Security (pp. 525-539). Springer, Cham. https://link.springer.com/chapter/10.1007/978-3-030-54455-3_37
  19. Brünjes, L., & Gabbay, M. J. (2020) “UTxO-vs account-based smart contract blockchain programming paradigms”, in International Symposium on Leveraging Applications of Formal Methods (pp. 73-88). Springer, Cham. https://link.springer.com/chapter/10.1007/978-3-030-61467-6_6
  20. Lamela Seijas, P., Nemish, A., Smith, D., & Thompson, S. (2020) “Marlowe: implementing and analysing financial contracts on blockchain”, in International Conference on Financial Cryptography and Data Security (pp. 496-511). Springer, Cham. https://link.springer.com/chapter/10.1007/978-3-030-54455-3_35
  21. Badertscher, Christian; Gaži, Peter; Kiayias, Aggelos; Russell, Alexander; Zikas, Vassilis (15 January 2018). "Ouroboros Genesis: Composable Proof-of-Stake Blockchains with Dynamic Availability". Proceedings of the 2018 ACM SIGSAC Conference on Computer and Communications Security. CCS '18. Toronto, Canada: Association for Computing Machinery: 913–930. doi:10.1145/3243734.3243848. hdl:20.500.11820/7f97233f-23d4-4568-87bc-254875f7a34c. ISBN 978-1-4503-5693-0. S2CID 44109228.
  22. Volpicelli, Gian M. "A blockchain tweak could fix crypto's colossal energy problem". Wired UK. ISSN 1357-0978. Retrieved 13 May 2021.
  23. "Cardano (ADA): What Is It and How Does It Differ from Bitcoin?". Investopedia. 6 May 2020. Retrieved 31 January 2023. The distinctive feature of Cardano is its "research-first" approach to design.
  24. "Bitcoin's wild ride renews worries about its massive carbon footprint". CNBC. 9 February 2021. Retrieved 13 February 2021. Bitcoin has a carbon footprint comparable to that of New Zealand
  25. Ponciano, Jonathan. "Cardano Surges During $300 Billion Crypto Crash As Musk Eyes Sustainable Bitcoin Alternatives". Forbes. Retrieved 13 May 2021.
  26. "Daedalus Cryptocurrency Wallet Review". Investopedia. 20 December 2020. Retrieved 14 February 2023. Daedalus Wallet is a single-asset, desktop-based wallet
  27. "Kraken to Discontinue Unregistered Offer and Sale of Crypto Asset Staking-As-A-Service Program and Pay $30 Million to Settle SEC Charges" (PDF). U.S. Securities and Exchange Commission. 9 February 2023. Retrieved 14 February 2023. To settle the SEC's charges, the two Kraken entities agreed to immediately cease offering or selling securities through crypto asset staking services or staking programs
  28. BI India Bureau (13 September 2021). "Cardano can now mint NFTs, run DApps and more — but the creators themselves are asking people to keep their expectations in check". Business Insider India. Times Internet Limited. Retrieved 7 October 2021.
  29. "Say Hello to IOHK's New Cardano Blockchain Tools, Plutus and Marlowe". Crowdfund Insider. 11 December 2018. Retrieved 18 February 2019. Where programming Ethereum requires coding in two languages, Solidity for the on-chain code and Javascript for the off-chain parts, and other systems suffer a similar split, Plutus is the only system that provides an integrated language for both, based on Haskell
  30. Emma Newbery (2021) "Why Cardano Could Be an 'Ethereum Killer'", The Motley Fool, July 2. https://www.fool.com/the-ascent/cryptocurrency/articles/why-cardano-could-be-an-ethereum-killer/
  31. "What is Cardano? The 'green' crypto that hopes to surpass the tech giants". The Independent. 18 May 2021. Retrieved 6 June 2021.
  32. "Cryptocurrency goes green: Could 'proof of stake' offer a solution to energy concerns?". NBC News. Retrieved 6 June 2021.
  33. "Beyond Bitcoin - IOHK and University of Edinburgh establish Blockchain Technology Laboratory". The University of Edinburgh (Press release). Retrieved 31 March 2020.
  34. "The University of Edinburgh is launching a blockchain research lab with one of the cofounders of Ethereum". www.insider.com. Retrieved 25 October 2020.
  35. "Edinburgh laboratory to bring 35 jobs" (PDF). The Times. 25 February 2017. Archived (PDF) from the original on 26 December 2018. Retrieved 31 January 2023. The Edinburgh lab will be IOHK's international research headquarters as it works with additional university partners around the world.
  36. "Crypto brands perform surprisingly well in brand intimacy report". Ad Age. 17 August 2022. Retrieved 23 November 2022.
  37. "Startups push blockchain beyond cryptocurrency". Nikkei Asia. 2 July 2018. Retrieved 31 January 2023.
  38. Phillips, Ruari (11 June 2018). "Ethiopian government-Cardano Technology team up on blockchain". East African Business Week. Retrieved 27 March 2020.
  39. "Ministry of Education signs deal with Cardano Atala". Forbes Georgia. 17 June 2019. Retrieved 27 March 2020.
  40. "Sneakers meet the blockchain in New Balance shoe authenticity pilot". SiliconANGLE. 17 October 2019. Retrieved 28 March 2020.
  41. Sorkin, Andrew Ross; Karaian, Jason; Kessler, Sarah; Merced, Michael J. de la; Hirsch, Lauren; Livni, Ephrat (27 April 2021). "Tesla Makes Money (Including From Selling Cars)". The New York Times. ISSN 0362-4331. Retrieved 28 April 2021.
  42. Sunkel, Cameron (28 September 2021). "There's a New Paul Oakenfold Album Arriving on the Cardano Blockchain". EDM.com. Retrieved 2 October 2021.
  43. Steven Vaughan-Nichols (2021) “Dish partners with FreedomFi to deliver 5G hotspots”, October 26, ZDNet. https://www.zdnet.com/article/dish-partners-with-freedomfi-to-deliver-5g-hotspots/
  44. "Customer Advisory: Understand the Risks of Virtual Currency Trading". Commodity Futures Trading Commission.
  45. "Bitcoin Basics" (PDF). Commodity Futures Trading Commission. December 2019. Retrieved 31 January 2023.
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