What is Cardano Crypto? Cardano ADA Explained

What is Cardano Crypto? Cardano ADA Explained
3 min read
06 February 2023

Cardano, a blockchain technology launched in 2015, was created with the aim to address the challenges of scalability and energy efficiency imposed by Bitcoin and Ethereum. Launched two years later in 2017, it has since become one of the most prominent layer 1 players in the industry.

ADA Token & Cardano's 2 Layers

Native to the Cardano chain is ADA, a digital token named after Ada Lovelace, the first computer programmer and 19th century mathematician. There is a total supply of 45 billion tokens, of which 35 billion are currently in circulation.

Cardano is divided into two layers - the settlement layer and the computation layer. The settlement layer keeps track of account balances and the number of ADA tokens held by each. This is essentially the decentralized ledger of Cardano. The computation layer, on the other hand, is where all the calculations and calculations behind transfers take place, and this is also where smart contracts run on the network.

Smart Contracts & Plutus language

The network's recent upgrades, such as the Alonzo hard fork which brought smart contract functionality to Cardano in September 2021, are made possible due to Cardano's two layer system. This allows people to continue transferring tokens and settling payments even as the computation layer is being upgraded.

Smart contracts on Cardano are written in a functional programming language called Plutus. This means that it is based on functions that remain constant and produce the same outputs given the same inputs. This makes it easier to test as it is not subject to change in state, thus reducing bugs and potential loopholes in the code.

Ouroboros & PoS rules on Cardano

Cardano achieves consensus with its own proof-of-stake consensus mechanism called Ouroboros. It allows users to earn rewards by running their own stake pool or by delegating their stake to an existing pool. Unlike other proof-of-stake chains, Cardano has no lock out period, meaning users are free to transact with their tokens without being locked in. There is also no risk of slashing, as Cardano uses game theory and math-based models to ensure honest actors are rewarded while dishonest ones get nothing.

Cardano's Future & Growth

Since the addition of smart contract support, a thriving ecosystem of NFT projects, DEXs, lending protocols, and other DeFi applications has started to develop on the Cardano chain. The future of Cardano is mainly focused on two things: governance and scaling. The team is working on making the chain self-sustaining with a decentralized voting and treasury system, putting control of the

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Den W. 3K
I'm a passionate tech enthusiast who loves diving into the world of software, programming, and tech reviews.
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