The Cardano network, with ADA as its native currency, operates on a decentralized, distributed ledger technology infrastructure, utilizing a proof-of-stake consensus mechanism as opposed to the proof-of-work protocol implemented in projects such as Bitcoin. The design of Cardano aims to increase scalability and performance, making it a more efficient alternative.
- Cardano is a decentralized and open-source blockchain platform designed for the development and execution of smart contracts and dApps.
- Cardano is considered a third-generation blockchain, utilizing a multi-layer architecture and a proof-of-stake consensus mechanism called Ouroboros.
- Founded in 2015 by Charles Hoskinson, a co-founder of Ethereum, Cardano is research-driven and its technology is developed based on peer-reviewed academic research.
- The Cardano project is overseen by the Cardano Foundation, IOHK, and EMURGO.
Ethereum’s co-founder Charles Hoskinson started developing Cardano in 2015, and the platform was launched in 2017. The platform aims to provide financial services to the unbanked population of the world.
The platform’s native currency is called ADA, named after Augusta Ada King, Countess of Lovelace, who is considered the first computer programmer. ADA is used in the PoS mechanism and awarded to users who participate in securing the network.
How does Cardano Work?
Cardano aims to be one of the most environmentally sustainable blockchains. To achieve this, it uses a Proof of Stake consensus algorithm called Ouroboros, which is more energy-efficient than that of Bitcoin, namely Proof of Work.
Proof-of-stake (PoS) is a more recent consensus algorithm used by blockchain networks to achieve distributed consensus. In a PoS system, a new block’s creator is chosen in a deterministic way, which depends on their stake in the network. This means that the more stake a user has, the more likely they are to be chosen in creating the next block, and thus earning the associated rewards.
In contrast to proof-of-work (PoW) systems, PoS systems don’t require any significant compute power. This makes them way more energy-efficient and sustainable than the former.
PoS systems also typically offer higher transaction throughput and faster confirmation times than PoW systems, making them well-suited for applications that require fast and scalable transaction processing.
Cardano’s blockchain is made up of two separate layers: the Cardano Settlement Layer (CSL) and the Cardano Computation Layer (CCL). The CSL is the first layer, responsible for handling transactions and maintaining the ledger that records accounts and balances. It uses a PoS consensus called Ouroboros to validate transactions.
The CCL makes up the second layer – the layer designed to support smart contract execution. This layer is built for creating and executing dApps on the network. The CCL is built on top of the CSL, and the two layers work together to provide a secure, scalable, and flexible Cardano blockchain as a whole. for a wide range of applications and use cases.
The two-layer architecture of Cardano allows for greater flexibility and versatility than single-layer blockchain platforms, allowing the support of a wide range of use cases and applications while also providing a high level of security and scalability.
What Is Cardano Staking?
Cardano staking describes the process of holding a certain amount of the native cryptocurrency of the Cardano platform, called ADA, in a wallet and delegating it to a stake pool. Staking allows users to participate in the Cardano network by becoming a “validator,” which means they are responsible for verifying transactions and adding them to the blockchain.
In return for their contribution to the network, validators receive rewards in the form of newly minted ADA. The exact earned amount of rewards depends on a few factors, including the amount of Ada they have staked, the performance of the stake pool they belong to, and the overall health of the Cardano network.
Cardano Smart Contracts
Cardano smart contracts are programs that are executed on the Cardano blockchain. They are self-executing contracts with the terms of the agreement between two parties directly written into lines of code. The code and the agreements contained therein are publicly accessible, transparent, and verifiable. Smart contracts on the Cardano platform are executed on the Cardano Computation Layer (CCL).
Cardano’s smart contract platform is designed to be superior in security, scalability and flexibility when compared to other platforms. The use of a multi-layer architecture, a formal verification process, and the high-level programming language called Plutus make Cardano’s smart contract functionality potentially more reliable and robust than other blockchains.
Smart contracts on Cardano can be utilized for a various applications such as insurance, supply chain management, voting systems, and many more. They provide a secure and transparent way to automate complex business processes and enforce the terms of an agreement without the need for intermediaries.
Cardano is a research-driven project, and the development of its technology is based on peer-reviewed research. Cardano’s core team which is led by Charles Hoskinson, comprises researchers, engineers, and developers who are dedicated to advancing the state of blockchain technology through scientific inquiry and rigorous testing.
The Cardano platform and its underlying tech have been the subject of numerous research papers by academics, which have been published in respected journals and conferences. These papers cover wide ranging topics, including the design and implementation of the Ouroboros PoS algorithm, the use of formal methods for verifying smart contracts, and the scalability and security of the Cardano platform.
By publishing its research and making its technology open-source, Cardano aims to contribute to the broader blockchain community and foster collaboration and innovation in the field.
Cardano (ADA) FAQ
– How Is Cardano Different From Bitcoin?
While both Cardano and Bitcoin are decentralized, open-source blockchain platforms, they have been designed with different goals and use cases in mind. Cardano focuses on providing a secure, scalable, and flexible environment for the development and execution of smart contracts and dApps, while Bitcoin’s primary focus lies on serving as a decentralized digital currency.
– How To Mine Cardano?
Cardano uses a proof-of-stake (PoS) consensus algorithm, which means that it is not possible to mine new ADA, the native cryptocurrency of the Cardano platform, using traditional mining hardware and software. Instead of mining, users who want to participate in the network can do so by staking their ADA holdings and becoming a “validator.”
Validators on the Cardano protocol are responsible for verifying transactions and adding them to the blockchain. They are selected randomly to create new blocks, and they receive rewards in the form of newly minted Ada for their efforts. The exact amount of rewards earned by a validator depends on a number of factors, including the amount of Ada they have staked and the performance of the stake pool they belong to.
– How To Stake Cardano?
To stake Cardano, you need to first have a certain amount of ADA in disposition. You can acquire Ada by purchasing it on a centralized or decentralized exchange.
- Once you have gotten some Ada, you will need to choose a Cardano wallet that supports staking. There are a few options available, including the official Daedalus wallet and the Yoroi wallet. Once you have installed and set up your desired wallet, transfer your Ada into it.
- Next up, you’ll need to “delegate” your Ada to a stake pool. Stake pools are groups of users who pool their Ada together to increase chances of being selected to validate transactions on the Cardano blockchain and earn the rewards for doing so. You can browse stake pools based on factors such performance, fees, and reputation.
- After delegating your Ada to a stake pool, you can then sit back and wait for your share of the rewards to be distributed. The exact amount of rewards you earn will depend on the performance of the stake pool and the amount of Ada you have staked.
It’s important to note that staking on the Cardano platform is a long-term commitment. You will need to keep your wallet online, and your Ada delegated to a stake pool in order to continue earning rewards. You can also choose to “un-delegate” your Ada at any time, but this will typically incur a waiting period before you can withdraw your funds.
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