Cardano
Denominations
SymbolADA, ₳
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 release8.1.2 / 26 July 2023 (2023-07-26)[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
Ledger
Timestamping schemeProof of stake
Block time20 seconds
Block explorerAdatools.io

Pooltool.io

Cardanoscan.io
Circulating supply36.365 billion ₳ (as of Nov. 2023)
Supply limit45 billion ₳[3]
Valuation
Exchange rateFloating
Demographics
Official user(s)~3264 stake pools globally (as of Nov. 2023)[4]
Website
Websitecardano.org

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.[5]

Cardano's development began in 2015, led by Ethereum co-founder Charles Hoskinson. The project is overseen and supervised by the Cardano Foundation based in Zug, Switzerland.[6][7] 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.[8]

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

History

After leaving Ethereum in 2014 Charles Hoskinson and Jeremy Wood set out their plans for Cardano in 2015.[9][10][11] 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. Woods and Hoskinson co-founded the business IOHK to develop blockchains for use by corporations, governments, and education institutions.[11]

Cardano was initially released to the public in 2017.[3] That year, IOHK partnered with the University of Edinburgh to launch the Blockchain Technology Laboratory.[12][13] 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 the Ouroboros protocol.[14]

Cardano reached a market cap of $77 billion in May 2021, which was the fourth highest for a cryptocurrency at that time.[15][16]

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".[17]

Design

Cardano technical overview. (2019)

Governance

Cardano is controlled by three entities:

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

As of 2021, Frederik Gregaard is known to be the CEO of the Cardano Foundation.[18]

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.[19] Cardano differentiates itself from many other cryptocurrencies by focusing on scientific research and working together with universities.[3][20]

Technical 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.[21] 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.[22] Like Bitcoin, Cardano uses a UTXO ledger model, though it is an extended version (EUTXO)[23][24] to facilitate smart contracts and scripting languages.[25]

Cardano uses a proof-of-stake (PoS) protocol named Ouroboros;[26] this is in contrast to Bitcoin and Ethereum, which use proof-of-work protocols (though the latter switched over in 2022).[27] Proof-of-stake blockchains use far less energy than proof-of-work chains.[27] This is achieved by eliminating the computing resources that a proof of work algorithm requires.[28] 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.[29][30][3]

Figure 1: Epoch schedule for the Cardano blockchain. In Ouroboros time is divided into slots of roughly 20 seconds, with epochs (aggregations of slots) lasting approximately 5 days. (2021) [31][32][33]

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 and is designed to be similar to Ethereum, enabling smart contracts and applications to run on the platform.[22]

The cryptocurrency Ada (ADA) can be stored on Cardano's native digital wallet named "Daedalus".[3] The wallet downloads a full copy of the entire Cardano blockchain transaction history. Users face the risk of losing access to funds if the wallet's seed phrase is lost or stolen. The review in Investopedia highlighted the wallet's security and noted the lack of: mobile support, support for other tokens, and "onramp" to purchase assets with money.[34]

Development phases of Cardano, or "eras", are named after notable figures in poetry and computer science: Byron, Shelley, Goguen, Basho and Voltaire. The first three stages implemented a basic blockchain, and then implemented decentralisation and smart contracts. The Basho era focuses on scaling the blockchain.[35] Voltaire, the final era, adds voting and treasury management functionality to the blockchain.[36]

Once Voltaire is complete IOHK has said it plans to release the development of the network entirely to the community.[28] The "Cardano improvement proposal" CIP-1694 is the first step towards "on-chain" governance. It intends to allow ADA token holders to create proposals that may be voted upon by the community and, if successful, implemented. [37]

As with other proof-of-stake cryptocurrencies, Cardano offers "staking", which allows token holders to set-aside (delegate) tokens to potentially "validate" transactions on the same blockchain (see Figure 1). The quantity of tokens staked corresponds with the likelihood of being chosen to validate a transaction, and thus be rewarded by the algorithm with more of the same token.[38][39] Cardano's Daedalus wallet allows for staking.[34] For Cardano, users participate in "staking pools" with other token-holders.[28]

Applications

Cardano enthusiasts gather for Consensus conference, 2022.

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.[40] The partnership with the Ethiopian government also investigate other ways to deploy Cardano in the country.[41]
  • 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.[42]
  • In 2019, New Balance announced a pilot program on the Cardano blockchain so buyers could track the authenticity of OMN1S Kawhi Leonard basketball shoes.[43]
  • 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.[44]
  • In 2021, Hoskinson began working with electronic dance music DJ Paul Oakenfold to release an album, Zombie Lobster, on the Cardano blockchain.[45]
  • In 2021, IOHK and Dish Network announced a collaboration to investigate the use of distributed ledger technology.[46]
  • The Cardano blockchain was cited in Quartz as having the potential to help citizens in Zanzibar, Ethiopia and Burundi get digital IDs.[47]
  • World Mobile Token (WMT), a project built on Cardano, offers remote mobile network access in Africa with approximately 150 nodes in East Africa (2022). Mark Cuban is cited as being skeptical about the project and Cardano adoption.[48]
  • In 2023 a Ghanaian startup named "Mazzuma" received funding from the Adaverse, a Cardano ecosystem accelerator. Massuma(GPT) aims to use AI in its smart contract creation platform.[49]

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).[50] Also included is Plutus, a smart contract language written in Haskell, and Marlowe, a domain-specific language designed by Simon Thompson for non-programmers in the financial sector.[25][51][52]

Partner chains

In November 2023 Cardano began introducing sidechains, referred to by the project as "partner chains". Sidechains are intended to perform off-chain computations, known as smart contracts, while using the Cardano network for settlement. The first example of such a chain, named "Midnight", will make use of the Polkadot (cryptocurrency) framework in combination with Cardano.[53]

Non-fungible tokens (NFTs)

Cardano also enables creating non-fungible tokens (NFTs). Snoop Dogg released several thousand NFTs in a project named "Baked Nation" for the Cardano chain in April 2022.[54] In 2023 a digital artist from the UK sold 7,200 individual works of humanoid deer for almost £500,000 on Cardano.[55][56]

In 2023, the Securities and Exchange Commission (SEC), a US regulator, issued a complaint against the cryptocurrency exchange Kraken for offering unregistered securities (in violation of the Securities Act) and promising returns on investment for staking in multiple proof-of-stake cryptocurrencies, including Cardano.[39] Without any admission of wrongdoing, Kraken agreed to pay a fine of $30 million and halt its staking program in response.[57][39]

In June 2023, the SEC sued Binance. Among the allegations was that Cardano was a security and so the cryptocurrency exchange was trading illegally in the US.[58] IOG made a statement in response claiming that the filing was inaccurate and asserting that Ada was not a security.[59] The Ada price fell from $0.38 to $0.26 in a day on the FT Wilshire index. Both the Wall Street Journal and The Times linked a fall in the price of Cardano – 19 per cent in June – and a slide for other major coins to the SEC's actions.[60][61]

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. 1 2 3 4 5 6 "Cryptocurrencies and blockchain" (PDF). European Parliament. July 2018. Retrieved 29 October 2020.
  4. ↑ "Cardano Blockchain Explorer".
  5. ↑ "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.
  6. ↑ "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
  7. ↑ "ZUG: Ex-Tezos-Mann geht zu Cardano". luzernerzeitung.ch (in German). Luzerner Zeitung. 20 February 2018. Retrieved 7 July 2020.
  8. ↑ "What is Cardano? The 'green' crypto that hopes to surpass the tech giants". The Independent. 18 May 2021. Retrieved 22 August 2021.
  9. ↑ "Ethereum Cofounder Says Blockchain Presents 'Governance Crisis'". Fortune. Archived from the original on 9 April 2019. Retrieved 1 April 2020.
  10. ↑ "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
  11. 1 2 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.
  12. ↑ "Beyond Bitcoin - IOHK and University of Edinburgh establish Blockchain Technology Laboratory". The University of Edinburgh (Press release). Retrieved 31 March 2020.
  13. ↑ "The University of Edinburgh is launching a blockchain research lab with one of the cofounders of Ethereum". www.insider.com. Retrieved 25 October 2020.
  14. ↑ "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 – via IOHK.io.
  15. ↑ "What is Cardano? The 'green' crypto that hopes to surpass the tech giants". The Independent. 18 May 2021. Retrieved 6 June 2021.
  16. ↑ "Cryptocurrency goes green: Could 'proof of stake' offer a solution to energy concerns?". NBC News. June 2021. Retrieved 6 June 2021.
  17. ↑ "Crypto brands perform surprisingly well in brand intimacy report". Ad Age. 17 August 2022. Retrieved 23 November 2022.
  18. ↑ "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.
  19. ↑ "What is Ada?". Retrieved 23 October 2020.
  20. ↑ "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.
  21. ↑ "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.
  22. 1 2 "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
  23. ↑ Chakravarty, Manuel M. T.; Chapman, James; MacKenzie, Kenneth; Melkonian, Orestis; Peyton Jones, Michael; Wadler, Philip (2020). Bernhard, Matthew; Bracciali, Andrea; Camp, L. Jean; Matsuo, Shin'ichiro; Maurushat, Alana; Rønne, Peter B.; Sala, Massimiliano (eds.). "The Extended UTXO Model". Financial Cryptography and Data Security. Lecture Notes in Computer Science. Cham: Springer International Publishing: 525–539. doi:10.1007/978-3-030-54455-3_37. ISBN 978-3-030-54455-3.
  24. ↑ Brünjes, Lars; Gabbay, Murdoch J. (2020). Margaria, Tiziana; Steffen, Bernhard (eds.). "UTxO- vs Account-Based Smart Contract Blockchain Programming Paradigms". Leveraging Applications of Formal Methods, Verification and Validation: Applications. Lecture Notes in Computer Science. Cham: Springer International Publishing: 73–88. arXiv:2003.14271. doi:10.1007/978-3-030-61467-6_6. ISBN 978-3-030-61467-6.
  25. 1 2 Lamela Seijas, Pablo; Nemish, Alexander; Smith, David; Thompson, Simon (2020). Bernhard, Matthew; Bracciali, Andrea; Camp, L. Jean; Matsuo, Shin'ichiro; Maurushat, Alana; Rønne, Peter B.; Sala, Massimiliano (eds.). "Marlowe: Implementing and Analysing Financial Contracts on Blockchain". Financial Cryptography and Data Security. Lecture Notes in Computer Science. Cham: Springer International Publishing: 496–511. doi:10.1007/978-3-030-54455-3_35. ISBN 978-3-030-54455-3.
  26. ↑ Badertscher, Christian; Gaži, Peter; Kiayias, Aggelos; Russell, Alexander; Zikas, Vassilis (15 January 2018). "Ouroboros Genesis". Proceedings of the 2018 ACM SIGSAC Conference on Computer and Communications Security (PDF). CCS '18. Toronto, Canada: Association for Computing Machinery. pp. 913–930. doi:10.1145/3243734.3243848. hdl:20.500.11820/7f97233f-23d4-4568-87bc-254875f7a34c. ISBN 978-1-4503-5693-0. S2CID 44109228.
  27. 1 2 Volpicelli, Gian M. "A blockchain tweak could fix crypto's colossal energy problem". Wired UK. ISSN 1357-0978. Retrieved 13 May 2021.
  28. 1 2 3 "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.
  29. ↑ "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
  30. ↑ Ponciano, Jonathan. "Cardano Surges During $300 Billion Crypto Crash As Musk Eyes Sustainable Bitcoin Alternatives". Forbes. Retrieved 13 May 2021.
  31. ↑ Mellentin, Florian (2 January 2021). The Cardano Proof of Stake Protocol "Ouroboros" (Thesis). Retrieved 19 February 2023.
  32. ↑ Kuçi, Arbër (1 March 2021). Proof-of-stake blockchain: Ouroboros Analysis of epoch duration and transaction confirmation time (PDF) (MSc.). University of Bern. Retrieved 19 February 2023.
  33. ↑ Kiayias, Aggelos; Russell, Alexander; David, Bernardo; Oliynykov, Roman (27 July 2017). "Ouroboros: A Provably Secure Proof-of-Stake Blockchain Protocol". In Katz, J.; Shacham, H. (eds.). Advances in Cryptology – CRYPTO 2017. Lecture Notes in Computer Science. Vol. 10401. Cham: Springer. pp. 357–388. doi:10.1007/978-3-319-63688-7_12. ISBN 978-3-319-63688-7.
  34. 1 2 "Daedalus Cryptocurrency Wallet Review". Investopedia. 20 December 2020. Retrieved 14 February 2023. Daedalus Wallet is a single-asset, desktop-based wallet
  35. ↑ Kiayias, Aggelos (15 April 2020). "Digital Banking Trends Of 2020". Retrieved 20 April 2023.
  36. ↑ "A Treasury System for Cryptocurrencies: Enabling Better Collaborative Intelligence". NDSS Symposium. Retrieved 20 April 2023.
  37. ↑ "Cardano Ballot event to mark blockchain's move into its 'age of Voltaire'". City A.M. Retrieved 26 November 2023 – via uk.finance.yahoo.com.
  38. ↑ Macheel, Tanaya. "What investors need to know about 'staking,' the passive income opportunity at the center of crypto's latest regulation scare". CNBC. No. 11 February 2023. Retrieved 17 February 2023.
  39. 1 2 3 "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
  40. ↑ "Startups push blockchain beyond cryptocurrency". Nikkei Asia. 2 July 2018. Retrieved 31 January 2023.
  41. ↑ Phillips, Ruari (11 June 2018). "Ethiopian government-Cardano Technology team up on blockchain". East African Business Week. Retrieved 27 March 2020.
  42. ↑ "Ministry of Education signs deal with Cardano Atala". Forbes Georgia. 17 June 2019. Retrieved 27 March 2020.
  43. ↑ "Sneakers meet the blockchain in New Balance shoe authenticity pilot". SiliconANGLE. 17 October 2019. Retrieved 28 March 2020.
  44. ↑ 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.
  45. ↑ Sunkel, Cameron (28 September 2021). "There's a New Paul Oakenfold Album Arriving on the Cardano Blockchain". EDM.com. Retrieved 2 October 2021.
  46. ↑ Vaughan-Nichols, Steven (26 October 2021). "Dish partners with FreedomFi to deliver 5G hotspots". ZDNET. Retrieved 4 September 2023.
  47. ↑ Ngila, Faustine (28 September 2022). "Blockchain startups are helping Africa solve its most pressing hurdles". Quartz. Retrieved 4 September 2023.
  48. ↑ Parkin, Darren (14 August 2022). "Mark Cuban goes head-to-head with World Mobile CEO over Cardano". CityAM. Retrieved 4 September 2023.
  49. ↑ "Adaverse backs Ghana Web3 startup Mazzuma to unveil AI-based smart contract generator". techloy.com. Retrieved 26 November 2023.
  50. ↑ 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.
  51. ↑ "Say Hello to IOHK's New Cardano Blockchain Tools, Plutus and Marlowe". Crowdfund Insider. 11 December 2018. Retrieved 18 February 2019.
  52. ↑ Thompson, Simon (2019). Marlowe: financial contracts on Blockchain. Code Sync (Report). Retrieved 22 December 2023.
  53. ↑ "IOG announces Midnight – a new blockchain to protect data and safeguard technology freedoms". cityam.com. Retrieved 27 November 2023.
  54. ↑ "5 crypto and NFT projects that Snoop Dogg has been involved with". CNBCTV18.com. Retrieved 5 December 2023.
  55. ↑ "Cryptocurrency: Digital artist nets hundreds of thousands in NFT sale". bbc.com. Retrieved 29 November 2023.
  56. ↑ "Cardano Outperforms Crypto Rivals Amid Scaling, Fee Momentum". bloomberg.com. Retrieved 29 November 2023.
  57. ↑ "Crypto Exchange Kraken Ends Staking Program in $30 Million SEC Settlement". Bloomberg.com. 9 February 2023. Retrieved 11 February 2023.
  58. ↑ Michaels, Dave; Ostroff, Caitlin; Kowsmann, Patricia (5 June 2023). "SEC Says Binance Misused Customer Funds, Ran Illegal Crypto Exchange in U.S." Wall Street Journal. ISSN 0099-9660. Retrieved 4 July 2023.
  59. ↑ Anon (7 June 2023). "IOG response to the recent SEC filings". iohk.io. Retrieved 4 July 2023.
  60. ↑ "Crypto Prices Slide After SEC Sues Binance". WSJ. Retrieved 6 November 2023.
  61. ↑ Russell-Jones, Lily (6 November 2023). "Everything you need to know about crypto". ISSN 0140-0460. Retrieved 6 November 2023.
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