In continuing with our tradition of highlighting interesting, high quality cryptocurrencies, this post is about Cardano, a Cryptocurrency / Smart contract platform with a lot of promise.
What is Cardano?
Cardano is a Cryptocurrency launched in 2017 by the Cardano Foundation. Cardano was conceptualized by Charles Hoskinson, who also happens to be one of the co-founders of Ethereum.
It is an open smart contract platform, and prides itself on being a 3rd generation Cryptocurrency with a layered architecture and a scientific philosophy driven by peer-reviewed academic research. We’ll use the rest of the post to break down what some of this means.
Organization
There are 3 main entities that drive the development of Cardano
The Cardano Foundation — The Cardano Foundation is a not-for-profit regulated entity that is the custodial organization of Cardano. Their main function is to “standardize, protect, and promote the Cardano Protocol technology”.
IOHK- In 2015, along with Jeremy Wood, Hoskinson found IOHK (Input Output Hong Kong). IOHK is a “research and development company committed to using the peer-to-peer innovations of blockchain to build accessible financial services for all.” They have been contracted to build, design, and maintain Cardano until 2020.
Emurgo — Emurgo is a Japanese company that “develops, supports, and incubates commercial ventures who want to revolutionize their industries using blockchain technology.” Much of IOHK’s funding comes from Emurgo.
3rd Generation Cryptocurrency?
Cardano dubs itself a 3rd generation Cryptocurrency. What exactly does this mean? According to Charles Hoskinson:
Generation 1 — Bitcoin: Gen 1 Cryptocurrencies focused on solving the problem of money transfer and the double spending problem without a middleman. Bitcoin which was born out of Satoshi Nakamoto’s Whitepaper in 2009 is one such Cryptocurrency. Although additional functionality such as escrows and conditional money transfers could be coded into Bitcoin’s Script language, the potential functionality that could be built on top of the Base Bitcoin protocol layer was very limited (for good reason, as you do not want Base money to have a large attack surface, which is what it gets exposed to, the more functionality it is capable of).
Generation 2 — Smart contract platforms i.e. Ethereum: Gen 2 Cryptocurrencies took the notion of Crypto as a money transfer mechanism and extended it into building Smart contract platforms. The most popular of these is easily Ethereum, created by Vitalik Buterin. Ethereum exposes a fully functional Turing complete programming language, Solidity, that can be used to build Smart contracts on the platform.
Generation 3 — Generation 3 Cryptocurrency platforms take positives from both the 1st and 2nd generation and focus on solving 3 key issues: Scalability, Interoperability and Sustainability. Let’s take a look at these one-by-one
Scalability
Scalability is a problem with both 1st Gen and 2nd Gen Cryptocurrencies alike. Transaction throughput remains limited in the single digit or low 2 digit range per second. Cardano attempts to solve this with
- It’s Proof-of-stake consensus mechanism called Ouroboros (more on Proof of stake here ),
- Network bandwidth management via experimentation with a new technology being developed called Recursive Inter Network architecture (RINA)
- Data scaling (driven by “Not everyone needs all the data” as a guiding principle) via Pruning, Mathematical proofs of correctness and Data compression.
Interoperability
Cardano’s vision is to create an “internet of blockchains”, using sidechains to achieve inter-blockchain communication / operation, compressed blockchains and inter-operation with the real world i.e. Financial and Government regulators via well defined approaches to Metadata (the characteristics of a transaction), Attribution (being able to tie transactions to identities) and Compliance (being able to comply with KYC / AML regulations).
Sustainability
Most 1st and 2nd gen Cryptocurrencies do not have a well defined mechanism on how further development will be sustained. Cardano aims to solve this problem in a way similar to Decred and Dash: By creating what it calls an incentivized Treasury model funded by partial rewards coming from Block generation.
Anyone wishing to add or build on top of the Cardano protocol, may submit a ballot to the Treasure to ask for grants. The stakeholders of the Cardano ecosystem then vote and decide if the ballot should be granted or not. If they do, the ballot submitter gets the grant for development. Additionally ADA holders will be incentivized to participate in the Voting process.
Functional programming
Cardano was built in Haskell, while Plutus is their smart contract language. Both of them are functional programming languages, which for the purposes of this article mean that they are more secure and amenable to mathematical proof or formal verification.
This gives Cardano and its Smart contracts a High Assurance i.e. that the code works as intended or as advertised.
Cardano Roadmap
Cardano’s plan of execution is quite exciting. Below is the roadmap they intend to follow:
- Byron: Enables users to trade and transfer Ada. The Cardano mainnet was also launched. This phase has been completed.
- Shelley: Ensures that the tech is in place for it to become a fully decentralized and autonomous system. We are in this phase currently.
- Goguen: Will see the integration of smart contracts.
- Basho: Centered around performance improvements.
- Voltaire: IOHK will add a treasury system and governance.
Quite candidly, they are quite a bit behind schedule as per the roadmap calendar on their website, but hopefully this just means a more solid bug free and thoroughly tested / vetted delivery of new developments.
Yieldwallet.io Shelley Incentivized Testnet Staking pool (YIELD)
YieldWallet is participating in the Shelley incentivized Testnet phase, which involves running and maintaining a Cardano staking pool on Testnet (ticker: YIELD).
Note: It’s come to our attention that there may be some misunderstanding around our name. To clarify: We are a staking pool. We are not currently a Cardano wallet and we have no downloadable software or browser plugins. Stake to us through Daedalus or Yoroi. Anyone claiming to offer ‘YieldWallet’ software is a scammer. Be safe out there people!
As a firm believer in supporting high quality projects early on, we think it behooves us to do what we can to support the ecosystem. More information on our effort and how you can participate / help forthcoming.
Cardano Stakepool Bootstrap initiative
Yieldwallet is also a part of the Cardano Stakepool Bootstrap initiative. It’s quite difficult for smaller staking pools (including ourselves) to have enough staked to guarantee Block creation rights every Epoch.(9 Million ADA required as of this writing). A few good Samaritans of the Cardano community created this group as a way for several small pools to focus on delegating all their stake to One pool for a period of 2 epochs, in rotation.
That way every pool in turn gets a chance to make some blocks, which of course is the most gratifying thing to see for someone running a pool on testnet. More info on this can be found here: https://www.adafrog.io/bootstrap.php
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