What is Cardano?
Cardano is a third-generation blockchain platform named after Ada Lovelace, the 19th-century mathematician recognized as the first computer programmer. It was launched in September 2017 by IOHK (Input Output Hong Kong), a technology company founded by Charles Hoskinson and Jeremy Wood.
Cardano seeks to offer a more balanced and sustainable ecosystem for complex deal settlement, DApp development, and interoperability with other systems seeking integration. The native coin ADA powers the Cardano blockchain and serves as a means of payment for transaction fees and as a medium of exchange. Ouroboros is the energy efficient Proof of Stake (PoS) consensus algorithm used by Cardano.
Transaction fees on Cardano are determined based on a formula that includes two protocol parameters: a and b. The parameter a reflects the dependence of the transaction cost on the size of the transaction, while the value of b is a payable fee that is intended to prevent DDoS attacks. Fees are not paid directly to block producers but are instead pooled and distributed to all pools that created blocks during an epoch.
Cardano organizes its blockchain into epochs and slots. An epoch consists of a fixed number of slots, with each slot lasting one second. Currently, an epoch in Cardano consists of 432,000 slots, which is equivalent to five days. In each slot, zero or more block-producing nodes may be nominated to be the slot leader, with an average of one node being nominated every 20 seconds. This means that there can be a total of 21,600 slot leaders per epoch. When a slot leader produces a block, it is cryptographically signed and linked to the previous block in the chain. The consensus protocol decides which block should be added to the blockchain, and the other candidate blocks are discarded. By using epochs and slots, Cardano enables multiple nodes to participate in the process of producing blocks and adding them to the blockchain in a way that is secure, transparent, and efficient. To participate in the consensus and earn rewards, ADA holders can delegate their stake to a preferred pool and let an operator maintain their stake on their behalf. Protocol parameters can be altered by Cardano's update system to adapt to changes in transaction volume, hardware prices, and ADA valuation.
Cardano focuses on scalability, interoperability, and sustainability by implementing techniques such as data compression and introducing Hydra for side chain functionality. Cardano's design is based on the UTXO model, which provides increased security and scalability compared to account-based systems like Ethereum. To deploy a scalable DApp on Cardano, developers must split up their on-chain state across many UTXOs to increase the concurrency in their application, allowing for higher throughput.
Cardano is also committed to sustainability and has partnered with PricewaterhouseCoopers (PwC) to develop a framework for assessing the carbon footprint of blockchain projects, to encourage the adoption of sustainable practices in the blockchain industry. Cardano's EVM sidechain testnet is compatible with most Ethereum software to develop and deploy smart contracts, such as Remix, Hardhat, and Truffle.