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Understanding Cardano (ADA)
Cardano (ADA) is a blockchain and digital currency that was launched in 2017 by Ethereum co-founder Charles Hoskinson. The Cardano project aims to build a more robust and decentralized blockchain than Ethereum.
Let’s dig into an overview of the Cardano project, its native token ADA, and how the network works.
What is Cardano (ADA)?
Cardano is a blockchain network and cryptocurrency built on a unique proof-of-stake consensus algorithm called Ouroboros. The Cardano team employs a team of PhD-level researchers who are constantly investigating ways to improve the project. This scientific approach has led to the development of a new smart contract platform called Plutus.
How does Cardano (ADA) work?
The Ouroboros protocol enables users to earn rewards for staking their ADA tokens and keeping the network secure. Ouroboros is a proof-of-stake protocol, meaning that ADA holders are required to not trade or sell their coins to be eligible to earn ADA rewards.
Here’s how the Cardano blockchain works:
- If users want to send ADA tokens to someone else, they need to initiate a transaction through their chosen platform.
- The transaction is broadcast to the network, where it is pooled into a block with other new transactions.
- The block of transactions is verified by Cardano blockchain participants called “validators.” Validators check and confirm that the transactions are valid. New ADA tokens are also minted during the verification process.
- Once the block of transactions is verified, it is added to the Cardano blockchain. The new ADA tokens are paid to validators as a reward for processing transactions and keeping the network secure.
- The digital wallet balances of the senders and receivers of ADA tokens are updated to reflect the completed transactions.
Projects hosted on Cardano
Some of the projects hosted on the Cardano network include:
- Sundaeswap: Sundaeswap is a decentralized exchange that allows users to trade digital assets without the need for a centralized intermediary. Sundaeswap is powered by smart contracts that enable it to function as an automated market maker.
- Ardana: Ardana is an asset-backed stablecoin and decentralized liquidity pool that, like Sundaeswap, allows users to trade digital assets without the need for a centralized intermediary. The Ardana pool is backed by a variety of assets.
- Meld: Meld is a trustless lending protocol that allows users to borrow and lend digital assets without the need for a centralized intermediary. The protocol utilizes smart contracts to facilitate lending and borrowing directly between users.
- Drunken Dragon Games: Drunken Dragon Games is a gaming platform that allows users to trade gaming-related digital assets. The platform uses Cardano smart contracts.
- Empowa: Empowa is a project that aims to make affordable housing more accessible in Africa. The project utilizes smart contracts to allow users to buy, sell, or rent properties without the need for a centralized intermediary.
- ERGO DEX: ERGO is a smart contracts platform that supports a decentralized exchange called ERGO DEX. This exchange is connected with both the ERGO and Cardano blockchains, in order to access liquidity on both blockchain networks.
- Liqwid: Liqwid is an open-source, algorithmic protocol that lets users earn interest on deposits and borrow assets. Users have a number of yield options to earn ADA.
A brief history of Cardano
Cardano’s founder, Charles Hoskinson, has been in the blockchain space since 2013 when he joined the Ethereum founding team. After a brief stint as Ethereum’s Chief Executive, Hoskinson formed the blockchain development company IOHK in late 2014. IOHK’s key project is Cardano.
Cardano was launched in 2017 by Hoskinson and his team. The blockchain’s development is proceeding in creatively named phases:
- Byron: The first phase, “Byron,” laid the development foundations of Cardano, from 2017 to March 2019.
- Shelley: Beginning in March 2019, Cardano commenced the second phase, “Shelley,” which focused the blockchain’s development work on decentralization.
- Goguen: Cardano is currently in the midst of the Goguen phase, which includes work on smart contracts.
- Basho: The next phase is intended to be “Basho,” which focuses on scaling the blockchain.
- Voltaire: The final planned phase, called “Voltaire,” is designed to focus on governance.
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