Cardano is an open-source proof-of-stake blockchain founded by Ethereum co-founder Charles Hoskinson in 2017 and named after the 16th-century Italian polymath Gerolamo Cardano. Cardano can facilitate peer-to-peer transactions with native cryptocurrency, ADA, which takes its name from the 19th-century mathematician Ada Lovelace.
Cardano’s native cryptocurrency ADA has a maximum supply of 45 billion. 16% of ADA’s total supply went to the founders, 2.5 billion ADA was allotted to Input Output Hong Kong (IOHK), 2.1 billion ADA to Emurgo, and 648 million to the Cardano Foundation.
Cardano aims to be a highly scalable, interoperable, sustainable, and energy-efficient smart contract platform. Cardano uses a Proof-of-Stake (PoS) consensus mechanism called “Ouroboros,” which is less energy-intensive than Bitcoin‘s Proof-of-Work (PoW) consensus mechanism. Ouroboros is the first peer-reviewed blockchain protocol that uses a time-period system to create a new block on the blockchain called “epochs.” There are 21,600 smaller units of time called slots, or one slot every 20 seconds, and each epoch lasts five days.
Cardano’s blockchain is divided into two layers. The two layers allow the ecosystem to implement changes to support faster and more secure transactions while eliminating user metadata.
Cardano Settlement Layer (CSL) is used to facilitate peer-to-peer transactions. The Cardano Settlement Layer (CSL) manages the value movement between the sender and the receiver. The CSL uses Plutus (a smart contract platform of the Cardano blockchain) and Marlowe (domain-specific language (DSL) that allows users to build blockchain applications tailored to financial contracts) to move the value and enhance overlay network protocol support.
Cardano Computing Layer (CCL) is used to execute smart contracts. The Cardano Computation Layer helps Cardano replicate Rootstock, a Bitcoin (BTC) ecosystem smart contract platform, to help scale specialized protocols over the years by adding hardware security modules to the existing stack of protocols.
The Cardano roadmap has five phases. Each phase represents a set of functionalities and upgrades to the Cardano protocol. The five phases or eras of the Cardano roadmap are Byron, Shelley, Goguen, Basho, and Voltaire.
Byron (Foundation): The Byron era saw the delivery of the Daedalus wallet and IOHK’s official desktop wallet Yoroi.
Shelley (Decentralization): The Shelley era introduced a delegation and incentives scheme, a reward system to drive stake pools, and community adoption.
Goguen (Smart Contracts): The Goguen era enables developers to build decentralized applications (DApps) and allows users to create and execute smart contracts.
Basho (Scaling): The Basho is an optimization era that aims to improve interoperability and scalability.
Voltaire (Governance): The Voltaire era will provide the final pieces required for the Cardano network by introducing a voting and treasury system.
Cardano Improvement Proposal (CIP)
Like Ethereum Improvement Proposal (EIP), users can submit improvement proposals for Cardano through Cardano Improvement Proposal (CIP). A CIP (Cardano Improvement Proposal) is a formalized document describing a new feature for the Cardano network.
CIP describes any changes to the network protocol, block or transaction validity rules, or any change that affects the interoperability of applications using Cardano. A CIP begins as an idea about how to improve the network. One or more individuals can collaborate, discuss and propose the concept with the Cardano community. After initial discussion and feedback, the idea is formalized into a CIP.
On September 12, 2020, Cardano released its highly-anticipated Plutus-powered smart contracts as a part of the Alonzo hard fork. Alonzo is named after the American mathematician Alonzo Church aims to introduce “programmability.” The smart contract functionality allows developers to build Cardano native decentralized applications (DApps) and mint non-fungible tokens (NFTs).