Cardano: Slow and Steady Wins the Race?
Cardano is a decentralized public blockchain platform that aims to address the scalability, sustainability, and interoperability issues of earlier blockchains such as Ethereum. It was founded by Charles Hoskinson, one of the co-founders of Ethereum, and is based on a peer-reviewed research process. Cardano’s native token is ADA, which is named after Ada Lovelace, the world’s first computer programmer.
Cardano’s Technology
Cardano’s development began in 2015, and the platform was launched in 2017. It is built on a proof-of-stake (PoS) consensus mechanism called Ouroboros. PoS is a more energy-efficient alternative to proof-of-work (PoW), which is used by Bitcoin and Ethereum.
In PoS, validators are selected based on their stake in the network, rather than the amount of computational work they perform. This makes PoS more scalable and sustainable than PoW.
Cardano also uses a unique programming language called Plutus to develop smart contracts. Plutus is based on Haskell, a functional programming language that is known for its safety and security.
Cardano’s Use Cases
Cardano’s utility is currently in the area of financial services, specifically in the development of decentralized financial applications (DeFi), such as lending platforms, exchanges, and stablecoins. Its ecosystems allows other developers to create tokens, decentralized applications (dApps), or other use cases for scalable blockchain network.
What’s Special About Cardano?
Cardano’s claim to be “based on a peer-reviewed research process” is a key differentiator from many other blockchain platforms. It signifies a commitment to scientific rigor and evidence-based development, setting it apart from projects that may prioritize rapid development or community consensus over thorough evaluation.
In the context of blockchain technology, peer review involves subjecting proposed protocols, algorithms, and code to scrutiny by experts in the field. This process helps to identify potential flaws, inconsistencies, or security vulnerabilities before they are integrated into the live network. It also promotes transparency and encourages collaboration among researchers and developers.
Cardano’s peer-reviewed research process is exemplified in several aspects of its development:
1. Formal specifications: Cardano’s core protocols, such as its consensus
mechanism Ouroboros, are formally specified using mathematical notation and
rigorous proof techniques. This allows for a precise and unambiguous understanding of the protocol’s behavior and potential limitations.
2. Academic papers: Cardano’s development team actively publishes academic papers in peer-reviewed conferences and journals. These papers present the theoretical underpinnings of Cardano’s protocols and undergo rigorous review by experts in the field of cryptography and distributed systems.
3. Internal peer review: Cardano’s development process includes multiple stages of internal peer review, where engineers and researchers within Input Output Hong Kong (IOHK), the company behind Cardano, scrutinize each other’s work. This internal review process complements the external peer review from academia.
In contrast, many other blockchain platforms rely on a less formal development process, driven by community consensus and rapid prototyping. While this approach can lead to faster development cycles, it may also increase the risk of introducing bugs or security vulnerabilities.
Criticisms Against Cardano
Its strength, however, has also been its weakness. Cardano’s meticulous approach to development has drawn criticism for its perceived slowness (both in terms of throughput as well as pace of development) compared to other blockchain platforms. While this cautious approach aims to ensure the platform’s stability and security, it has led to concerns about its ability to keep up with the rapidly evolving blockchain landscape.
This has somewhat contributed to its relatively low number of daily active users and total value locked, compared to other blockchains.
Latest Developments
Cardano can be considered one of the most decentralized blockchains within the Web3 space. Developed using specialized programming languages such as Haskell and Plutus, this open-source network boasts notable security, having experienced no noteworthy network hacks or downtime. However, Cardano still faces challenges in terms of scalability.
Earlier in 2023, Cardano launched Hydra, its new Layer 2 scaling solution, expected to “maximize throughput while minimizing latency, incurring low to no costs, and greatly reducing storage requirements,” as stated on its official website.
On the back of this upgrade, Cardano achieved a year-long high of $175 million worth of tokens locked on its blockchain according to DefiLlama. Although this is still about 50% below an all-time high of $340 million back in 2022, Cardano rose up in TVL ranking from 34th to 21st across all chains as development (and developer interest) on Hydra continues.
Time will tell if Cardano achieves its full potential.
Cardano’s Competitors
Cardano, alongside other third-generation blockchains such as Solana, Polkadot, Tezos and Algorand, have been branded as “Ethereum killers” based on their potential to overtake Ethereum, but it’s not so easy. After all, the second-largest crypto boasts both early mover advantage and a strong network effect of crypto projects and developers.
Cardano’s Future
Cardano is still very much under development, and yes, it is still pretty slow-moving, but it has the potential to be a major player in the blockchain industry. The project has a strong team of developers and a large and active community. Cardano is also well-funded, with over $2 billion in funding.
If Cardano can successfully achieve its goals, it could have a significant impact on the blockchain industry. For example, Cardano-based DeFi applications could make financial services more accessible to people who are currently unbanked or underbanked — and we all know how big this market is, especially in emerging countries which are leading in terms of a growing young population.
