The Opportunity in Cardano (ADA)
Cardano (ADA), which started being developed in 2015 and launched in 2017 by Ethereum co-founder ?????????????? ??????????????????, is a proof-of-stake blockchain platform that runs smart contracts and the first to be built through peer-reviewed research, to be secure, scalable and robust.
There is currently almost 32 billion ADA in circulation and a maximum supply of 45 billion, deflationary by nature, giving a guarantee that existing shareholders don’t get diluted. The altcoin is up by more than 500% year-to-date and has a market cap of $36 billion and ranks in the 7th position of all existent cryptocurrencies.
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Charles Hoskinson wants to take blockchain technology to a next level and so he took the positive elements from the first two generations of blockchain and added some elements of his own to create the third generation.
The three elements that Cardano wants to solve are:
??. ??????????????????????. Cardano uses a proof-of-stake approach called Ouroboros, to validate transactions, which in theory, can reach up to 1 million transactions per second (compared to ETH 2.0 of 100.000 TPS). Unlike the proof-of-work approach, Ouroboros doesn’t require miners to solve block by block, instead, it elects stake pools based on their stake in the network, improving energy efficiency and reducing hardware requirements.
??. ????????????????????????????????. For the massive adoption of crypto to become a reality, cryptos must connect to other cryptos, without a single cryptocurrency to rule them all. To become the “Internet of blockchains”, Cardano will allow, through side-chains, metadata (transaction details, purpose of transaction, etc) to end-party that need it (financial institutions) and avoid providing sensitive information for certain applications where such details are not essential.
Similarly, in the traditional Banks which use SWIFT to communicate with each other, that doesn’t happen within the crypto world. Bitcoin blockchain can’t communicate with Ethereum blockchain for example. So, Cardano wants to address this problem by providing an ecosystem where each individual blockchain can communicate with another blockchain and with external legacy financial systems.
??. ????????????????????????????. In order to fund the project and ensure continuous development of the network with proper incentives, Cardano created a treasury that will take a small fee from all the transaction fees and isn't controlled by anyone, being programmed to release funds to teams/developers who want to implement a new feature and get enough approvals/votes from the community to proceed.
With a fair voting system and incentives for developers in place, Cardano ensures that there are no conflicts of interest and everyone is working to continuously develop and improve the network.
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There are three organizations that work full time to develop and take care of Cardano, which are: The Cardano Foundation, IOHK and Emurgo.
Cardano has around 250 full-time researchers/developers working and an entire community that makes contributions to the open-source project. With the peer-reviewed research approach, all the research goes through filters and peer-reviews from the community that must review and validate all the decisions to make it proceed.
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Ethereum and Cardano are direct competitors with very similar ideas, but the fact is that Ethereum has great credibility and a developed working platform, while Cardano has still to release “Goguen”, the smart contracts integration for the network that will add the ability to build decentralized applications (DApps) on Cardano's solid foundation.
While Ethereum has a bigger valuation and less risk involved, Cardano has an ambitious roadmap and a high risk/reward potential for the long-term horizon.
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Thanks for reading. Let me know what's your opinion in the comments down below. All the best, Paulo Sá