6 min readCardano: Optimisation backed by expertise
Built by a team of academics frustrated by previous experiences with blockchain technology, Cardano seeks to improve performance by splitting its blockchain architecture into two parts. It also differentiates itself from rival protocols by allowing metadata- data unrelated to the transaction that provides extra functionality- to be embedded in transactions.
Launch date: September 2017
Total transactions: >85m (as of Thursday, 22nd February)
Cardano at a Glance
Optimisation
To optimise performance, Cardano separates the computational layer of the blockchain, which executes smart contracts, from the settlement layer, which processes and records transactions
Expertise
Cardano was built by a team of academics with deep expertise in cryptography who have published over a hundred research papers
Consensus
To avoid the kind of forks which led to Bitcoin Cash and Ethereum Classic, Cardano encourages social consensus to create a vision for the future of the protocol
Key Figures
Protocol Mechanism
Cardano’s development consists of five eras (four named after literary icons):
The Byron era established the foundation for the protocol. It focused on security, the speed of network syncing (ensuring all nodes have the latest information), adoption of the Daedalus and Yorio wallets and improvements designed to boost trading activity.
The Shelley era addressed decentralisation. Shelley introduced incentives to encourage participation in Ouroboros, Cardano’s proof of stake (PoS) consensus mechanism, and upgraded its security and efficiency. Shelley also enhanced the user experience to promote adoption.
The Goguen era revolved around smart contract development, introducing a purpose-built programming language called Plutus and the Marlowe Playground to simplify the process of developing smart contracts for finance dapps.
The Basho era concentrates on scaling the protocol. One of the main ways Cardano seeks to scale is by introducing side chains, separate blockchains which are compatible with the main chain and can improve capacity by delegating transaction processing.
The Voltaire era focuses on governance. The planned updates include the introduction of a voting and treasury system and Cardano Improvement Proposals (CIP) which allow the community to propose and implement upgrades.
History
While Voltaire is due next year on Mainnet in 2024, the eras have run in parallel rather than sequentially. For example, smart contracts were part of the Goguen era, but they’re constantly upgraded.
Key milestones
September 2017- Mainnet launched
October 2017- Raised $63 million and launched the Byron era
February 2018- Announced the Shelley era
April 2018- Announced a major upgrade to its Ouroboros consensus mechanism
June 2018- Announced the Goguen era
October 2018- Launched the Daedalus wallet
May 2019- Announced the Basho era
July 2020- Allowed staking for holders of ADA, Cardano’s native token
September 2021- Enabled smart contracts
April 2023- Announced the Voltaire era
H2 2024 - Voltaire to be enacted on Mainnet
What's next
CIP 1694, which lays the groundwork for the Voltaire era, is expected to launch by the middle of 2024.
CoinShares’ Analysis
Cardano’s use of metadata presents opportunities to establish itself as a leader in digital identities, particularly in emerging countries, although this use case hasn’t yet been proven. However, its lack of differentiation may hamper efforts to secure overall market share.
Strengths
Cardano allows developers to embed metadata, such as information about the sender and receiver’s identities (backed by official documents), directly into transactions
The Cardano community is famously tight-nit, led by Charles Hoskinson, a co-founder of the Ethereum network
Weaknesses
Cardano isn’t sufficiently differentiated from other blockchains in terms of its architecture or focusing on a niche, which may cost it market share
Opportunities
Cardano could leverage its use of metadata to meet demand for digital identities in emerging markets
Threats
Despite launching smart contracts in 2021, developers have been slow to build and deploy dapps on Cardano
Adoption of other decentralised digital identifiers and mediums of exchange may threaten Cardano’s market share, use cases and narrative
