Overview

Cardano is a public decentralized blockchain platform which uses the cryptocurrency, ADA, to facilitate transactions.

Cardano's development began in 2015. When launched in 2017, it was the largest cryptocurrency to use a proof of stake blockchain. A number of independent entities collaborate on the project, including the Cardano Foundation based in Zug, Switzerland, and led by its chief executive officer Frederik Gregaard.

History

After leaving Ethereum in 2014, Charles Hoskinson and Jeremy Wood set out their plans for establishing Cardano in 2015. Hoskinson had left Ethereum after a dispute with another co-founder, Vitalik Buterin; Hoskinson wanted to accept venture capital and create a company, while Buterin wanted to keep it as a nonprofit organization. Wood and Hoskinson co-founded the business IOHK to develop blockchains for use by corporations, governments, and education institutions.

Cardano was initially released to the public in 2017. That year, IOHK partnered with the University of Edinburgh to launch the Blockchain Technology Laboratory. The lab had six post-doctoral and professorial positions with up to 35 jobs created in total, and was led by Aggelos Kiayias, developer of the Ouroboros protocol.

Cardano reached a market cap of $77 billion in May 2021, which was the fourth highest for a cryptocurrency at that time.

Technical design

Atypically, Cardano does not have a foundational white paper. Instead, it uses design principles intended to overcome issues—such as scalability, interoperability, and a lack of regulatory compliance—faced by earlier cryptocurrencies. Cardano claims that it overcomes problems found in other cryptocurrencies, mainly that Bitcoin is too slow and inflexible and that Ethereum is not safe or scalable. Like Bitcoin, Cardano uses a UTXO ledger model, though it is an extended version (EUTXO) to facilitate smart contracts and scripting languages.

Cardano uses a proof-of-stake (PoS) protocol named Ouroboros; this was in contrast to Bitcoin and Ethereum, which used proof-of-work protocols (though the latter switched over in 2022). Proof-of-stake blockchains use far less energy than proof-of-work chains. This is achieved by eliminating the computing resources that a proof-of-work algorithm requires. In February 2021, Hoskinson estimated the Cardano network used 6 GWh annually, less than 0.01% of the 110.53 TWh used by the Bitcoin network as calculated by researchers at the University of Cambridge.

Within the Cardano platform, the settlement layer keeps track of transactions. The second layer is the computation layer and is designed to be similar to Ethereum, enabling smart contracts and applications to run on the platform. Like other cryptocurrencies, Ada (ADA) can be stored on a digital wallet. Cardano's native digital wallet is named "Daedalus". The Daedalus wallet downloads a full copy of the entire transaction history of the Cardano blockchain. Wallet users face the risk of losing access to funds if the wallet's seed phrase is lost or stolen.

Decentralized finance

Cardano implemented decentralized finance (DeFi) services on September 12, 2021, including an upgrade to enable smart contracts and the ability to build decentralized applications (DApps). Also included is Plutus, a smart contract language written in Haskell, and Marlowe, a domain-specific language designed by Simon Thompson for non-programmers in the financial sector.^([better source needed])

Partner chains

In November 2023 Cardano began introducing sidechains, referred to by the project as "partner chains". Sidechains are intended to perform off-chain computations, known as smart contracts, while using the Cardano network for settlement. The first example of such a chain, named "Midnight", will make use of the Polkadot framework in combination with Cardano.^([better source needed])