Cardano positions itself as a third-generation blockchain, aiming to address the limitations of earlier networks like Bitcoin and Ethereum. Named after the 16th-century Italian polymath Gerolamo Cardano, it focuses on creating a sustainable and secure decentralized ecosystem through scientific research and peer-reviewed development.
What Is Cardano (ADA)?
Cardano is a proof-of-stake (PoS) blockchain platform designed to be more scalable, energy-efficient, and interoperable than its predecessors. Its native cryptocurrency, ADA, serves as both a settlement currency and a key component in its consensus mechanism. ADA is named after Ada Lovelace, a 19th-century mathematician often regarded as the world’s first computer programmer.
At the core of Cardano is Ouroboros, an energy-efficient proof-of-stake protocol. Participants can stake their ADA to help validate transactions and secure the network. In return, they earn rewards proportional to their stake. This design allows Cardano to operate with significantly lower energy consumption compared to proof-of-work blockchains like Bitcoin.
Beyond energy efficiency, Cardano tackles scalability and decentralization challenges. It currently supports around 250 transactions per second (TPS), a notable improvement over Ethereum and Bitcoin. This capability, combined with its robust infrastructure, makes it an attractive platform for building decentralized applications (DApps).
ADA is used to pay for transaction fees, participate in staking, and will eventually enable holders to engage in on-chain governance. This multifaceted utility has helped ADA remain among the top cryptocurrencies by market capitalization.
Key Technological Upgrades
The Alonzo Upgrade
The Alonzo hard fork, implemented in September 2021, introduced smart contract functionality to the Cardano blockchain. This upgrade was a critical step toward making Cardano competitive with other smart contract platforms. It enabled developers to create decentralized applications, tokens, and non-fungible tokens (NFTs) directly on Cardano.
The Vasil Upgrade
Named in honor of Vasil Dabov, a late mathematician and Cardano contributor, the Vasil upgrade went live in September 2022. It significantly improved the performance and usability of the Plutus programming language, allowing developers to build more efficient and powerful DApps.
The upgrade also introduced diffusion pipelining, a technique that accelerates block propagation across the network. This enhances overall transaction throughput and user experience, reinforcing Cardano’s scalability.
👉 Explore real-time network upgrades
ADA Tokenomics and Distribution
ADA has a fixed maximum supply of 45 billion tokens. As of late 2022, approximately 34.18 billion ADA were in circulation.
The initial distribution occurred through a series of public sales, raising around $79.2 million. About 25.9 billion ADA were sold during these events. An additional 5.18 billion ADA (20% of the initial supply) were allocated to three entities responsible for Cardano’s development:
- IOHK (Input Output Hong Kong): 2.46 billion ADA
- Emurgo: 2.07 billion ADA
- The Cardano Foundation: 640 million ADA
The remaining tokens are held in a reserve and are being gradually released through staking rewards. This incentive mechanism encourages user participation in network security and governance. New ADA will continue to be issued until the maximum supply of 45 billion is reached.
Founders and Development Philosophy
Cardano was founded in 2017 by Charles Hoskinson, who was also a co-founder of Ethereum. Hoskinson left Ethereum due to disagreements over its governance and funding model. He later partnered with Jeremy Wood to establish IOHK, an engineering company dedicated to building Cardano and promoting blockchain adoption.
A key differentiator of Cardano is its commitment to academic rigor. All protocol changes and upgrades undergo extensive peer review and formal verification. This evidence-based approach ensures security and reliability but often results in a slower development pace compared to other projects.
Frequently Asked Questions
What is Cardano used for?
Cardano is a blockchain platform that supports smart contracts, DApps, and digital assets. Its native token, ADA, is used for payments, staking, and governance.
How does Cardano’s staking work?
Users can delegate their ADA to a stake pool or run their own. Stake pools validate transactions and produce new blocks. Participants earn rewards based on the amount of ADA they stake and the pool’s performance.
Is Cardano environmentally friendly?
Yes. Cardano uses the Ouroboros proof-of-stake protocol, which consumes significantly less energy than proof-of-work systems like Bitcoin.
What was the Vasil upgrade?
The Vasil hard fork was a major upgrade to improve Cardano’s scalability and scripting capabilities. It enhanced transaction speed and reduced costs for developers.
How can I participate in Cardano governance?
While full on-chain governance is still in development, ADA holders will eventually be able to vote on proposals that shape the future of the protocol.
Where can I learn more about staking ADA?
👉 Get advanced staking methods