- Cardano (ADA) is an open-source Proof-of-Stake (PoS) blockchain network with its inception dating back to 2015. It utilizes a modified version of UTXO (EUTXO) to accommodate support for smart contracts, which is currently under development.
- It is supported by three main organizations: the Cardano Foundation, IOHK, and Emurgo. all of them add conjunction to support development, promotion, and commercial adoption efforts.
- Cardano’s progress of development is split into 5 phases, which are concomitantly unrolled through a process that relies heavily on academic research and engineering best practices.
- Cardano is predicted to implement full support for smart contracts by the top of 2020 with the ultimate Goguen update.
Cardano (ADA) is an open-source Proof-of-Stake (PoS) blockchain network, supported a good array of design components that include a dApp development platform, multi-asset supported ledger and verifiable smart contracts.
Cardano’s inception and continued development are supported an in depth body of educational research, chiefly among them Ouroboros: A Provably Secure Proof of Stake Blockchain Protocol; this fact is usually wont to distinguish the project from other competing blockchain protocols.
The transaction ledger utilizes a modified version of UTXO to accommodate support for smart contracts, which is currently under development.
While Cardano was ranked because the most actively developed cryptocurrency project in 2019 consistent with Santiment’s 2019 Market Report, full mainnet support for smart contracts remains absent, preventing the expansion of decentralized applications and other tokens on its network.
2. Key features of Cardano
2.1 The Cardano platform: a two-layer approach
Cardano consists of two separate layers that utilize proof-of-stake consensus throughout the system. Division of the network into a Settlement Layer (SL) and Computation Layer (CL) is supposed to permit for developers to optimize all independent of the opposite , thereby increasing the efficiency, scalability, and adaptability of the network.
1. Settlement layer: the first purpose of this layer is to account for the worth of transactions e.g., this is often the currency layer. The Settlement Layer in its completed form will feature:
- Support for 2 sets of scripting languages; one to maneuver value and another to reinforce overlay protocol support.
- Provide support for KMZ sidechains; a non-interactive means to securely transfer funds to the Computation layer or other supported blockchain protocols.
- Support multiple sorts of signatures, including quantum resistant signatures for optimum security.
- Support for varied user issued assets.
- Achieve “true scalability”: as more users join, the capabilities of the system increase.
2. Computation layer: a sensible contract computing layer are going to be built to handle smart contracts. it’s comprised of the subsequent elements:
- Plutus, a purpose-built smart contract development language and execution platform supported the functional programing language Haskell
- Marlowe, allowing financial and business experts with no previous technical knowledge to make smart contracts. Marlowe may be a high-level, domain-specific language (DSL) for financial contracts which is made on Plutus.
- Marlowe Playground, an easy-to-use application-building platform that non-programmers can use to create financial smart contracts. Together, Marlowe and therefore the Marlowe Playground simplify the method of making smart contracts for financial applications, allowing material experts to directly contribute without requiring deep programming skills.
2.2 Global state on the Cardano blockchain
Cardano currently maintains the state of the blockchain through the UTXO (unspent transaction output) model pioneered by Bitcoin. Inputs and outputs carry information regarding changes in value: inputs inform from which address a worth originates from, and outputs inform which address the worth is transacted from. to stop double spending, every node on the network keeps a record of transactions. When a replacement transaction becomes available (either by appearing during a block or within the mempool), it’s analyzed to ascertain if it modifies unspent outputs related to each address on the network.
However, the UTXO model isn’t optimal for the support of smart contract functionality. to deal with this issue, Cardano plans to release its adapted version of UTXO, called Extended UTXO (EUTXO). EUTXO introduces mechanisms that split the execution of a sensible contract into multiple transactions.
To accomplish this, each transaction output also contains a knowledge field populated with arbitrary information connected to a specific smart contract. EUTXO is predicted to be fully implemented during the Goguen phase of the roadmap.
The Cardano blockchain functions through the utilization of two differing types of blocks: main and genesis. the most block consists of a header and a body; with the header carrying meta-information about the block and therefore the body containing transaction data. Like main blocks, genesis blocks even have a header and a body, but only generated once per epoch to function an index for the most blocks with which it’s associated.
2.3 The Ouroborous Proof-of-Stake algorithm
The Ouroboros protocol may be a chain-based PoS protocol designed to maximise the extent of decentralization on the Cardano blockchain.
Block creation is segmented into epochs and slots. To affect a changing stake distribution, Ouroboros defines the notion of an epoch as some number of slots during which the stake distribution is fixed. it’s either hardcoded (in the initial bootstrapping stage) or in later stages of development, computed from a snapshot of the blockchain at a sufficiently deep block.
At the start of every epoch, a group of leaders is chosen and every is assigned the proper to supply a block during a specific slot. for every slot, a pacesetter is randomly chosen from a pool of stakeholders and produces subsequent block, which links to the previous one within the chain. As transactions are recorded in blocks, the stake distribution (i.e., the set of stakeholders and their respective stakes) is employed for leader selection changes. Unlike BFT-style PoS algorithms, where validators finalize (i.e., permanently agree on) blocks as they’re produced, blocks become “canonical” with increasing probability as more blocks are built on top of them (like in Proof of labor schemes).
Leader selection and slot assignments are assigned supported stake distribution and a lottery . rather than this lottery being implicit, i.e., whoever gets a right hash first wins, the lottery is explicit: a generated random number (generated by a multi-party computation among stakeholders within the previous epoch) determines a slot leader for every slot, and therefore the chances of winning for any given slot are proportional to the dimensions of their stake i.e., the share of all coins they control, either by direct ownership or via delegation.
2.4 An iterative development process: the phases of Cardano
A proper grasp of Cardano requires an understanding of the core philosophy underpinning the event of the project. Both its design and development follow a “get it right the primary time” approach, relying heavily on academic research and engineering best practices to slowly perfect each update.
The development progress of Cardano is weakened into five eras (or phases). While each era represents a sequential milestone for network development, work on the varied components of every era occurs in parallel.
- Byron – this is often the initial stage after the network launch when improvements target core components and therefore the SL layer is being prepared for decentralization.
- Shelley – this stage focuses on decentralization and can feature staking pools.
- Goguen – this stage will feature smart contracts.
- Basho – this stage focuses on performance security and scalability.
- Voltaire – this stage will feature the treasury system and governance.
To keep track of the disparate steps toward moving Cardano forward, a report is published on a weekly basis, additionally to a high-level roadmap.
3. Economics and provide distribution
The economics of Cardano are supported three major eras:
- Testnet Era: the Testnet era refers to the start stages of unveiling the Cardano network when early supporters were invited to participate in beta testing. During this era , between September 2015 and January 2017, a pre-launch sale of ADA was administered in five tranches. In total, 108,844.5 BTC were raised with the same value of $62,993,614. the entire ADA available at launch was 31,112,484,64. the entire supply is capped at 45,000,000,000 ADA and can never exceed this number. The remaining 13,887,515,354 ADA are going to be issued after the ultimate stage mainnet launch, with some allocated toward a treasury and staking rewards. However, the amounts which will attend the treasury and block rewards are yet to be determined.
- Bootstrap Era: the Bootstrap era begins with all consensus nodes under the control of IOHK and partners and no smart contract support. During this point , the network is totally centralized and no rewards are issued. rather than transitioning on to a decentralized mainnet, Cardano simultaneously utilizes a sandbox testnet. December 13th, 2019 marked the launch of the Shelley Incentivized Testnet, amid around 500 staking pools. The testnet launch may be a real-world experiment to measure the incentivization mechanism of the network while rewarding ADA holders for his or her participation through delegating a stake or running a stakepool. Approximately 3.8 million ADA are awarded per epoch. However, these won’t be “spendable” until the live mainnet is launched.
- Reward Era: the ultimate mainnet launch and “normal” operation mode of Cardano SL as a PoS-cryptocurrency. Rewards are distributed per epoch, proportional to the dimensions of stake and therefore the number of slots to which the stakeholder contributes. ADA holders can either run a stake pool or delegate their stake to existing pools. Rewards come from both transaction fees and from the ADA treasury reserve, with reserve rewards lessening over time. the precise amount of rewards from the ADA reserve is yet to be determined.
4. Organizations performing on the event of Cardano
There are three separate bodies actively promoting and contributing to the Cardano project.
At the middle is that the Cardano Foundation, an independent body based in Zug, Switzerland. The Cardano Foundation primarily is liable for overseeing and supervising the event of Cardano.
Input Output HK (IOHK) is contracted to style and build Cardano while EMURGO, may be a for-profit arm that aims to grow the Cardano ecosystem through commercial ventures. The three entities are separate in governance, ownership, and leadership.