This blog post is aimed at those who want to quickly get up to speed on Cardano. I’m going to distill it down to only the essentials.
About the chain
- Famous for being the slow moving tortoise, Cardano has taken a research first approach to blockchain development, arguing that it was necessary given the complex and immutable nature of blockchains and the vast amount of ordinary people’s money being drawn to it.
- It’s developed by Input Output (IO) formerly IOHK
- The focus has been first on getting the security of the Proof-of-Stake protocol established (“Byron” phase, 2017), then decentralize the Proof-of-Stake (“Shelley” phase, 2020), followed by adding on smart-contract capabilities (“Goguen” phase, 2021).
- The project is now in the “Basho” phase which about taking what has been built and making it far more scalable, before moving onto the final “Voltaire” phase which is about handing over control over the future direction of the blockchain to the Cardano community through implementing on-chain voting, fully-open sourced code, and a self-sustaining funding model
- Cardano can be best described as “take Bitcoin, extend it for smart contracts, move it onto Proof-of-Stake to make it energy efficient, then add on-chain voting and built-in funding to make it self-sustaining“. It’s consensus mechanism, the “Longest chain rule” is the same as Bitcoin’s and it’s accounting model is even called “Extended UTXO” (UTXO is what Bitcoin uses)
- It’s built out it’s own virtual machine (Plutus) as an alternative to the Ethereum Virtual Machine (EVM) that a lot of the crypto industry runs on. It did this to improve upon design decisions in the EVM model that is hampering it’s long-term development (most notably global state). However the choice of programming language, Haskell, has divided opinion. It’s known as a “functional programming” language. These are better for building sturdy code with less bugs (as things are a lot more predictable) but is harder for people to learn that the more widely used imperative languages that Solidity was built around
- However Cardano does have a multi-language strategy in place. Right now you can build using Solidity if you so wish and deploy through EVM side chains such as Milkomeda and IO’s own EVM side chain. But the longer term goal is to support more mainstream languages such as C#, Java, or Python. That way devs can choose their language based on what their requirements are.
Why the love?
- Cardano has built up a massive following and is especially popular with retail investors. In the smart-contract space Cardano is only behind Ethereum in terms of following (I discount anything related to Binance due to a lot of dubiousness around it)
- Up till recently this had a lot of to do with the articulate and informative YouTube videos posted by the founder Charles Hoskinson. However while this has been good for building up a following, it’s also mean that a lot of the good content was locked up in often long videos that a lot of neutral people did not have time to watch. This led to an ignorant view that Cardano was a cult.
- More recently there’s been a push to get out a lot of content through the IO Blog and others in the Cardano space have also taken on the mantle of thought-leader (e.g. @SebastienGllmt + many StakePool operators and DApp builders. This decentralization of the thought leadership is definitely helping Cardano shake off negative outsider opinion
- However I would still recommend watching Charles Hoskinson’s YouTube vids as there’s just a lot of good knowledge there about the crypto space that it hard to come by. Would be great to have more crypto leaders do something similar (Emin Gun Sirer’s vid’s for the Avalanche blockchain are also good though a little more partisan).
Why the hate?
- Cardano is like the Marmite of the crypto-community with strong views in favor of loving it or loathing it. Some of this is to do with a perception in crypto that it’s better to move fast and break things, where as Cardano has always run counter to that. However the prevalance of hacks in the crypto space and recent events around Tera-Lana, has seen people increasingly come to appreciate Cardano’s “move cautiously, break nothing” attitude (the chain has had 0 unplanned outages)
- Beyond that, the crypto ladder is a competitive space, with those above you doing their best to kick you down, and those below you doing their best to drag you down. Charles Hoksinson has been on the of the few people to constantly berate this attitude and talk about working together (not my #1 example but I didn’t want to trawl through hours of video looking for other examples) to help develop the crypto space
- There’s definitely frustration in the Cardano community at how Cardano seems to get seemingly overlooked from a lot of thought leaders. There is definitely some truth to that. However I also think this is partly to do with a lot of people getting their “facts” from data gathering sites that have been built with EVM in mind, and are yet to upgrade and include Cardano.
- Another source of frustration in the Cardano community is the amount of uninformed criticism of Cardano there is out there. Sadly the crypto space runs on short Twitter-bites, memes, and what people see in terms of TVL rankings (which I would argue is rife with abuse). Not to mention the amount paid shills that operate in the space, that aren’t incentivized to do any research.
Ok, ok, but what’s so special about Cardano anyway , other than the research-based approach?
- The Cardano project has shunned glitzy marketing such as sponsoring Formula 1 race-cars or football stadiums. It’s also been lukewarm on the money-go-round nature of DeFi where money is locked up in increasingly elaborate ways. Instead the focus has been repeatedly stated by Charles as being on real world utility and “banking the unbanked”. RealFi is one its campaigns to re-invent traditional finance.
- Decentralized Identity has been another flagship goal for IO with a closely related Atala Prism project.
- IO is currently working with Dish Network and the Ministry of Education on blockchain projects built on Cardano
- Meanwhile DApp builders like @maladex and @GeniusyieldO, are promising to have fixed the problem of impermanent loss that plagues current DeFi trading. This is made possible due to Cardano’s EUTXO model which allows for traditional order-book style of DEXEs to be implemented with stop and limit orders.
- With Cardano you can stake without locking up your Ada. This will also be translated into the ability to provide liquidity to DeFi protocols without having over custody.
- Tokens other than Ada are treated as a native asset, just like Ada by the chain. This is why you can have NFTs on Cardano without the need for a smart contract and why the NFT space has been booming
- The EUTXO model makes it easier to bring in scalability improvements with future upgrades (i.e. Input Endorsers) expected to take Cardano into the very high TPS range (think Solana levels of TPS)
- Cardano is hugely more energy-efficient compared to Bitcoin
- Cardano has a community controlled fund known as Project Catalyst in which the community votes on initiatives to invest in
So what’s the current status of the chain?
- While technically the chain does have smart contract capability and a thriving eco-system, the more heavier-hitting DApps have largely been waiting for the Vasil upgrade to happen which should significantly improve the scalability of the chain. This is currently on testnet and expected to hit mainnet this month (July 2022)
- That being said there are already some popular Dexes that have launched plus a good selection of wallets to choose from (Nami, and CCVault are two popular ones, though the upcoming Lace sounds interesting too).
- The upgrade will be done using the “hard-fork combinator”, a method for upgrading blockchains that IO created that has meant all upgrades done with it have gone extremely smoothly
- Existing DApps will continue to run fine, but DApps will start being able to take advantage of new features to speed up their applications
Cardano has had to deal with a lot of criticism in the past. While some of it has been informed and valid (yes progress has been slow, yes the current chain does slow down to unacceptable levels at times of peak demand) others have been ignorant to the point of absurdity.
The best way for Cardano to deal with the fud is to get to the point where there is no “Coming soon…” with regards to something that is on-part with other chains.
The Vasil upgrade coming this month really should be that moment. It will be bring in lots of good improvements that should allow more heavyweight DApps to launch in the months post-Vasil.
What’s more exciting for me as someone that has been in the ecosystem a while is how the pace of innovation seems to be speeding up and proliferating. Cardano used to be a blockchain project largely revolving around IO. Now there’s stake pool operators, DApp developers, project Catalyst representatives, and active discussion in from the general community, all helping to shape the future direction of Cardano.
What to read next:
- For official sources: The IO Blog is the best place for keeping abreast of the latest developments – highly recommend scrolling down and reading past articles. You should also definitely follow the IO YouTube channel which publish monthly and mid-monthly updates, as well as the Twitter account @InputOutputHK
- For community viewpoints: The best source without a doubt used to be @CardanoWhale but he’s stepped away from this role leaving a big gaping hole. @MeshnetCapital and @AllenWu29331265 are decent follows that I’d recommend, and I’d like to think I am too though I’m not as active!
- For outsider viewpoints: This tweet stream from @DefiSafety is a good outsider viewpoint as is this analysis from @alex_valaitis