- Token: ADA
- Launch Date: 2017
- Consensus Mechanism: Ouroboros Praos – Proof of Stake (PPoS)
- Pros: Strong Development Team, Academic Backing, Multilayered for scalability and transactions, Open Source
- Cons: Smaller Ecosystem, Immature, Second-Mover Advantage vs. Ethereum, High Staking Participation, High Risk
Cardano: is a public blockchain platform. It is open-source and decentralized, with consensus achieved using proof of stake. It can facilitate peer-to-peer transactions with its internal cryptocurrency, ADA. Cardano was founded in 2015 by Ethereum co-founder Charles Hoskinson. The goal of the project is advancing to become a smart contract platform.
Pure proof-of-stake: Ouroboros is Cardano’s consensus mechanism. The website for Cardano states that “Ouroboros is the first provably secure proof-of-stake protocol, and the first blockchain protocol to be based on peer-reviewed research. Ouroboros combines unique technology and mathematically-verified mechanisms – which, in turn, combine behavioral psychology and economic philosophy – to ensure the security and sustainability of the blockchains that depend upon it. The result is a protocol with proven security guarantees able to facilitate the propagation of global, permissionless networks with minimal energy requirements – of which Cardano is the first.”
Uncirculated coins are distributed over time at a specific percentage rate. As the reserve decreases in size, the amount distributed each epoch (5 days) will decrease. At the current percentage rate the reserve will halve approximately every 4-5 years. ADA fixes its supply at 45 billion coins. 30 billion coins were issues during the ICO rounds. The remaining 15 billion coins are in a operating network reserve. Every 5 days the transaction fees and a percentage of the reserve is added to a ‘pot.’ We can break Cardano’s monetary policy into two key areas, transaction fees and monetary expansion.
Transaction Fees – fees from every transaction from all blocks produced during every epoch go into a virtual ‘pot’. A fixed percentage (ρ) of the remaining ada reserves is added to that pot.
Monetary Expansion – Monetary expansion – a certain percentage (τ) of the pot is sent to the treasury, and the rest is used as epoch rewards.
Cardano is planning to launch smart contracts in September 2021. Cardano’s ‘Alonzo’ upgrade release will include its own programming language Plutus. Smart contracts will allow Cardano to build DeFi applications, Non-fungible tokens, and gaming applications. By implementing smart contracts Cardano will transition its blockchain to a programmable platform that will run other applications. This is key for any blockchain or cryptocurrency to unlock its full potential.
A good starting point is to compare ADA with similar tokens. When we compare the market cap of Ethereum to Cardano for example; we arrive at a $11 price target for Cardano. As of 8/24/21, Cardano is sitting at $2.78 which implies a 400% increase in price if Cardano reaches widespread adoption like Ethereum.
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