{"id":78367,"date":"2023-06-20T11:50:42","date_gmt":"2023-06-20T11:50:42","guid":{"rendered":"https:\/\/www.techopedia.com\/?post_type=definition&p=78367"},"modified":"2023-12-14T09:08:32","modified_gmt":"2023-12-14T09:08:32","slug":"cardano-ada","status":"publish","type":"definition","link":"https:\/\/www.techopedia.com\/definition\/cardano-ada","title":{"rendered":"Cardano (ADA)"},"content":{"rendered":"

What Is Cardano?<\/span><\/h2>\n

Cardano ($ADA) is a proof-of-stake<\/a> (PoS) blockchain<\/a>\u00a0designed to be an alternative to the Ethereum blockchain as a platform for Web3<\/a> applications.<\/p>\n

While Bitcoin<\/a> and Ethereum<\/a> launched using a proof-of-work<\/a> (PoW) consensus protocol<\/a> to validate transactions, Cardano uses the more energy-efficient PoS mechanism. Newer blockchains tend to use a version of PoS, and Ethereum made the transition from PoW to PoS in 2022. However, Cardano was one of the first and largest PoS-based blockchains.<\/p>\n

Cardano developed the Ouroboros protocol, which is based on peer-reviewed research and evidence-based methods from a team of computer scientists and cryptographers at the University of Edinburgh, Tokyo University, and other institutions. The protocol allows the Cardano blockchain to scale sustainably without compromising security or energy efficiency.<\/p>\n

History of Cardano<\/span><\/h2>\n

While most cryptocurrency<\/a> projects develop quickly, Cardano takes a slower approach with the aim of eliminating potential bugs<\/a> and threats. However, this means its development process takes longer than its competitors.<\/p>\n

The Cardano blockchain introduced support for smart contracts<\/a> in 2021, four years after its launch. This has led observers to note that the project has been overtaken by newer blockchain projects that have developed faster.<\/p>\n

\n\n\n\n\n\n\n\n\n\n
2015<\/strong><\/td>\nThe Cardano project is initiated.<\/span><\/td>\n<\/tr>\n
September 2017<\/strong><\/td>\nCardano is launched after two years of research.<\/span><\/td>\n<\/tr>\n
July 2018<\/strong><\/td>\nThe blockchain makes the transition from a centralized federated system to a distributed network, enabling stakeholders to participate in the consensus mechanism.<\/span><\/td>\n<\/tr>\n
March 2021<\/strong><\/td>\nWith the Mary hard fork<\/a>, Cardano adds native token support, allowing users to create custom tokens directly on the network.<\/span><\/td>\n<\/tr>\n
September 2021<\/strong><\/td>\nThe Alonzo hard fork introduces smart contract functionality with Plutus, a programming language purpose-built for creating secure and reliable smart contracts. The upgrade expands Cardano’s potential use cases in decentralized finance<\/a> (DeFi) applications, non-fungible token<\/a> (NFT) marketplaces, wallets<\/a>, and stablecoins<\/a>.<\/span><\/td>\n<\/tr>\n
September 2022<\/strong><\/td>\nThe Vasil hard fork is introduced to increase Cardano\u2019s scalability, transaction processing capacity, and decentralized app<\/a> (dApp) development capacity.<\/span><\/td>\n<\/tr>\n
TBA<\/strong><\/td>\nThe final upgrade in the series of hard forks, Voltaire, focuses on implementing on-chain governance policies to support full decentralization so that Cardano will be run by its community of stake pool operators (SPOs), developers, academics, and organizations.<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n

Who Created Cardano?<\/h3>\n

Cardano was created by Charles Hoskinson, who left the Ethereum project following a dispute with co-founder Vitalik Buterin over commercializing the organization. Hoskinson co-founded the engineering company Input Output Hong Kong (IOHK) with Jeremy Wood to develop blockchains for corporations, governments, and educational institutions.<\/p>\n

IOHK focuses on developing the blockchain. Singapore-based Emurgo is the project\u2019s commercial arm. Cardano Foundation aims to promote the blockchain ecosystem to encourage standardization and adoption among developers.<\/div><\/div>\n

What Is $ADA?<\/span><\/h2>\n

ADA is the blockchain\u2019s native cryptocurrency coin. It facilitates transactions on the Cardano platform like the ETH token enables transactions on Ethereum.<\/p>\n

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The Cardano blockchain is named after Italian mathematician Gerolamo Cardano, while the native ADA coin is named after Ada Lovelace, a 19th-century English mathematician who is often referred to as the \u201cworld\u2019s first computer programmer\u201d. $ADA is the symbol used for the coin on cryptocurrency exchanges.<\/div><\/div>\n

$ADA\u2019s coin price history reflects the volatility of the cryptocurrency markets, climbing from a launch price of $0.02 to $0.997 in the 2018 crypto rally, dropping back to $0.02 in the subsequent crash, and then soaring to an all-time high of $3.10 during the 2021 market rally.<\/p>\n

What Is ADA Coin Used For?<\/h3>\n

As the native Cardano cryptocurrency, ADA is used to pay the fees for each transaction on the blockchain. Holders can also stake their ADA coins to become validators (or delegate their stake to validators) to process transactions and help maintain the network\u2019s security in exchange for earning more coins as rewards.<\/p>\n

With the adoption of decentralized governance, holders will also be able to use ADA to vote on changes and upgrades to the blockchain.<\/p>\n

How Does Cardano Work?<\/span><\/h2>\n

Cardano\u2019s Ouroboros PoS consensus mechanism uses a network of validators who stake their ADA coins rather than a system of miners that compete to solve a cryptographic problem in the way that PoW mechanisms operate.<\/p>\n

The Ouroboros protocol chooses a winner based on the number of ADA coins each validator has staked in the pool and how long they have staked the coins. The winner validates the latest block of transactions, and other validators confirm that the block is accurate. The new block is then added to the chain once a certain number of attestations is reached.<\/p>\n

All participating validators receive ADA as a reward in proportion to their stake. ADA holders that want to stake their coins but do not want to become validators can delegate their coins to a staking pool.<\/p>\n

The Cardano blockchain has two layers:<\/p>\n