Project Name: Cardano
Project Ticker: ADA
Twitter Account: https://twitter.com/Cardano
Whitepaper: Click here for the whitepaper.
What Is ADA?
Cardano is a smart contract platform that offers a high level of scalability and security thanks to its layered architecture and has the goal of allowing changemakers, innovators, and visionaries to make positive global changes. Cardano has created a network of scientists from various universities, including the University of Edinburgh and the Tokyo Institute of Technology, so they can review protocols before publication, in collaboration with Cardano's non-profit foundation, which is based on the philosophy of science and academic research.
What Does ADA Offer?
Cardano strengths are its academic and scientific approach. The development team has published more than 90 whitepapers on Cardano's technology, including the opinions of experts around the world. The team ensures that all the technology developed goes through a peer-reviewed research process, which shows that bold ideas can be questioned before they are confirmed. According to the team, this academic rigor helps make the blockchain resilient and stable, making it more likely that potential shortcomings can be predicted in advance. In 2020, Cardano launched the Shelley Update to make its blockchain “50 to 100 times more decentralized” than other major blockchains. At the time, Hoskinson predicted that this would pave the way for hundreds of assets to work on his network.
The Cardano team has also said that they have developed the project with both end users and regulators in mind. Aiming to find a middle ground that balances the need for regulation along with the principles of decentralization based on Blockchain Technology, Cardano has the important goal of improving the three main elements of blockchain: Scalability, Interoperability and Sustainability.
According to Cardano founder Charles Hoskinson, there are three generations of blockchain:
- The first generation is Bitcoin, or what Hoskinson calls digital gold.
- The second generation is Ethereum.
- The third generation is Cardano which combines the positive aspects of the first and second generations and eliminates their shortcomings.
Cardano focuses on different systems to solve the three core issues in blockchain, which are Scalability, Interoperability, and Sustainability.
Cardano provides high scalability and security with its layered architecture. Cardano’s platform consists of two layers:
Cardano Settlement Layer (CSL): It is used to settle transactions using ADA, Cardano’s cryptocurrency.
Cardano Computation Layer (CCL): It is used for smart contracts. Cardano’s hierarchical structure allows it to be used as a medium of exchange while also allowing the generation of smart contracts.
To increase TPS, the Cardano team has developed the Ouroboros consensus, an algorithm that uses the Proof of Stake (PoS) protocol. Ouroboros is customized to reduce energy use and the time it takes to create new blocks.
Ouroboros checks the distribution of coins in the ecosystem and divides time into periods. Each period is then divided into epochs. Each slot has its own randomly selected slot leader. Slot leaders act like the miners in Proof of Work (PoW), who create the blocks added to the blockchain. But they can only create one block during their time and confirm transactions and add them to the block. If a slot leader somehow misses his chance and fails to form the block, he has to wait until he becomes the slot leader again. It is normal for one or more epochs to remain empty (before blocks are formed), but most of the blocks (more than 50%) need to be formed, even if some epochs remain empty.
Slot leaders have a vital role in the ecosystem. The users who own 2% of coins are called voters, and they elect epoch leaders. At the same time, the more coins they have in the system, the greater their chances of being elected as slot leaders. Thanks to the Ouroboros consensus, the number of epochs in periods can be increased and more than one period can be carried out at the same time. That's why Cardano has high scalability.
The second most important feature of Cardano is that it uses RINA (Recursive InterNetwork Architecture). Thanks to RINA, Cardano eliminates the bandwidth problem and increases scalability. Blockchains are stored in P2P (peer-to-peer) networks. All validators receive a copy of the blockchain with new transactions. However, if thousands of transactions are executed per second, validators need a high degree of network bandwidth to be able to download the current blockchain, which is not sustainable.
Instead, Cardano uses RINA to divide the network into subnets, facilitating the growth of the entire network. Each validator is part of a different subnet. At the same time, validators can communicate with other networks. Another problem Cardano aims to resolve is interoperability. Cardano aims to enable interoperability by becoming an “internet of blockchain”. The Cardano team thinks that a single cryptocurrency cannot be used to manage everything in the future. They think that there will be more cryptocurrencies, each having their own protocols and set of rules. However, cryptocurrencies do not work with each other now. For example, ETH cannot be exchanged to ADA without an intermediary. The interest of governments and banks in cryptocurrency has increased and they are now using it more, but some of them do not quite trust it. Cardano states that this situation is related to three main questions:
- Who made the transaction?
- Who is the receiver?
- Why was the transaction made? (Unknown metadata)
Therefore, Cardano will allow metadata to be included in a transaction, if desired. Thus, banks and governments will use cryptocurrencies more.
For sustainability, the Cardano team has built a Treasure. Thus, the funds collected in ICOs will not be insufficient after a while and project development can continue. The Cardano Treasure is described by the team as follows: The treasury accumulates by taking a small percentage from transactions. The treasury itself works like a smart contract, giving some of the raised funds to developers, as a wallet that cannot be controlled by anyone. The treasury is used to develop the Cardano platform, and the community decides whether or not to use funds by voting on the developers' ideas. The Treasury gives the required amount to the project that receives the most votes. Thus, the development of Cardano will always continue.
The ADA Team & Company
Cardano was founded by Charles Hoskinson, one of the founders of the Ethereum network. Hoskinson is also the CEO of IOHK, which created Cardano’s blockchain. Hoskinson said his first professional involvement in the industry was in 2013 when he created a course on Bitcoin that was taken by 80,000 students. Hoskinson is a mathematician as well as a technology entrepreneur. In 2020, Hoskinson's technology company donated $500,000 worth of ADA to the University of Wyoming's Blockchain Research and Development Lab. There are three partners who play a key role in keeping Cardano moving forward:
- The Cardano Foundation: It is an independent entity that oversees the progress of Cardano and the Cardano ecosystem. As the legal responsible for the protocol and owner of the Cardano brand, the Cardano Foundation works to foster adoption and partnerships, grow the Cardano community globally, and shape legislation and business standards.
- IOHK: It is a technology and engineering company that issues cryptocurrencies and builds blockchains for academic institutions, organizations, and government agencies.
- EMURGO: It is a founding entity of the Cardano protocol. It creates and supports business opportunities and helps businesses integrate into the blockchain system. Essentially Cardano's for-profit arm, EMURGO strives to advance the platform and encourage adoption through business ventures. With offices and live projects in Singapore, Japan, the US, India, and Indonesia, EMURGO has extensive expertise in blockchain R&D, and a global network of relevant blockchain and industry partners.
ADA’s Digital Asset Economy
There is a maximum supply of 45B ADA. However, at the time of this writing (January 27, 2021) there is a circulation supply of about 31B. Between September 2015 and January 2017, five rounds of public sale of Cardano tokens were carried out. After the launch of the network, approximately 2.5B ADA was allocated to IOHK and 2.1B ADA was allocated to Emurgo, a global blockchain technology firm that is also the co-founder of the Cardano protocol. 648M ADA was given to the Cardano Foundation, a non-profit organization that aims to promote the platform and increase its adoption.
The founders of the project hold about 16% of the total supply of ADA, and the remaining 84% is shared among investors.
IBM Research: In a video, Charles Hoskinson revealed that Cardano was working on a software distribution project with IBM Research, which is the research division of the American multinational tech company IBM. Focusing on pioneering advanced technologies, including artificial intelligence, blockchain and the future of quantum computing, IBM Research is the world's largest industrial research organization.
PwC: Charles Hoskinson said during a live stream that Cardano will cooperate with professional business services provider PricewaterhouseCoopers (PwC) to create a new commercial strategy. Hoskinson said PwC will combine information from research conducted by Cardano. PwC is a multinational professional services network of companies operating under the PwC brand. The global network of companies provides businesses with world-class assurance, tax, and advisory services.
New Balance: Cardano and New Balance have a strategic collaboration that results in the first commercial deployment of the blockchain. Retail customers can register their new New Balance shoes on the Cardano blockchain. Thus, all products sold by New Balance can now be digitally authenticated. New Balance, an American brand sneaker and sportswear company founded in 1906, sells shoes all over the world, and the company's collaboration with Cardano is the first to incorporate Blockchain Technology.
Evaluation of ADA
Features that set Cardano apart include the advanced Proof of Stake (PoS) protocol Ouroboros, a layered foundation that allows Cardano to function as both a blockchain platform and cryptocurrency, and a separate management and treasury system, being the first peer-reviewed blockchain platform in the world, which is based on the philosophy of science and academic research. As Hoskinson says, Cardano proves to be a third generation blockchain platform by solving the blockchain's three main problems and with the team of academics and scientists behind it.