A Peer-Reviewed Protocol: Explaining the Cardano Blockchain 

There’s no denying the strength of Ethereum’s (ETH) network effect. As the first and largest smart contract blockchain, Ethereum continues to attract attention from users and developers interested in building innovative decentralized applications (dApps) in fields like finance, gaming, and virtual collectibles. However, Ethereum’s “first mover” success also means it has unique challenges. Despite multiple upgrades, secondary protocols, and proposals, users still complain about Ethereum’s slow speeds and high fees, especially during times of increased activity. 

While many developers are still working on native Ethereum scalability solutions, a few left the Ethereum team to pursue new blockchain models. For example, Cardano (ADA) is a separate smart contract project designed to offer Ethereum’s services without scalability concerns. Not surprisingly, this distinction has many crypto traders closely monitoring Cardano’s price.  

Cardano’s history

The idea for Cardano emerged following Ethereum’s launch in 2015 when two members of ETH’s development team—Charles Hoskinson and Jeremy Wood—left to create a separate blockchain. This duo of developers first founded the company Input-Output Hong Kong (IOHK) to begin building the Cardano blockchain. Hoskinson later released a white paper outlining the goals and technical specifications for the Cardano blockchain. After an initial coin offering (ICO) for Cardano’s ADA cryptocurrency in 2016, Hoskinson and Wood raised $62 million from accredited crypto traders for further development. 

Although the Cardano mainnet launched in 2017, this blockchain remains under development in its five-stage roadmap. During the preliminary “Byron Era,” the Cardano team focused on laying “foundational” features for its blockchain, including the Proof-of-Stake (PoS) consensus mechanism. Next, the Shelly Era introduced greater network decentralization and staking features to welcome validators on the network. 

The third Cardano era—“Goguen”—took place after an upgrade called the “Allegra hard fork” in April 2020 and culminated in 2021’s “Alonzo hard fork.” Both updates brought smart contract functionality to the Cardano blockchain, allowing third-party developers to build dApps in Cardano’s ecosystem. 

IOHK and the nonprofit Cardano Foundation continue to work toward the final two stages of Cardano’s roadmap: the Basho Era and the Voltaire Era. Basho emphasizes bringing greater scalability to the Cardano blockchain, while Voltaire is most focused on building a decentralized governance protocol to hand over control to the web3 community.

How does Cardano work?

Cardano uses a modified version of the PoS consensus protocol it calls “Ouroboros.” Similar to other PoS blockchains, computers (aka nodes) on Cardano lock (or “stake”) the native ADA cryptocurrency onchain to get a chance to participate in network validation and receive crypto rewards. 

A unique feature in the Ouroboros protocol is its use of timed units called “epochs” (five days) and “slots” (one second) to organize transaction data and governance proposals. During each slot, Cardano’s algorithm randomly selects a “slot leader” from a pool of stakers to propose a new block of transactions for validation. Epochs represent intervals when network participants are free to propose and vote on changes to the Cardano protocol, which ensures constant adaptability and reduces the odds of creating a separate blockchain. 

Using a dual-layer architecture, Cardano also separates the PoS consensus protocol from the user-facing application platform. The Cardano Settlement Layer (CSL) focuses on transaction verification, while the Cardano Computation Layer (CCL) offers smart contract functionality for developers. The separation between the CLS and CCL helps remove congestion from the base layer and provides Cardano with consistently high throughput.  

Cardano FAQs

What is the ADA coin? 

ADA is Cardano’s native cryptocurrency and is central to securing the blockchain through staking. Following the Voltaire Era, crypto traders with ADA will use their coins to vote on proposals within Cardano’s decentralized governance portal. Crypto traders use real-time Cardano price charts on reputable crypto exchanges and price aggregators to monitor the market price per Cardano coin.  

What makes the Cardano blockchain different? 

Since its inception, Cardano has emphasized running every proposed upgrade through multiple peer-reviewed studies and taking a slow, methodical approach to software development. Thanks to Cardano’s partnerships with institutions like the University of Zurich and Stanford University, it has become known as one of the most academic and researched blockchain projects.      

Can anyone stake on Cardano?  

Cardano lets anyone delegate ADA to a staking pool through a Cardano-compatible crypto wallet if they want to earn passive rewards and participate in transaction validation. Traders with the technical expertise to manage a private server also have the option of operating an ADA stake pool on the Cardano blockchain. 

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