Key Takeaways:
- Cardano (ADA) is a blockchain platform that aims to provide a more scalable, sustainable, and interoperable solution than its predecessors.
- Founded by Charles Hoskinson and his team, Cardano has gained significant attention for its research-driven approach.
- Cardano employs a layered architecture that separates the settlement layer from the computation layer, enhancing flexibility and scalability.
- ADA is the native cryptocurrency of the Cardano platform and used for various purposes, including transactions and staking.
- Cardano’s commitment to sustainability and energy efficiency has earned it the reputation of being a ‘green crypto’, setting it apart from other, more energy-intensive blockchain networks.
Introduction
The realm of blockchain and cryptocurrencies is ever-evolving, with each innovation striving to address the shortcomings of its predecessors. Cardano, often referred to as ADA, emerges as a standout player in this arena.
Developed by a team led by Charles Hoskinson, one of Ethereum‘s co-founders, Cardano distinguishes itself with a research-driven approach, layered architecture, and commitment to sustainability. In this article, we delve into the world of Cardano to understand its purpose, mechanics, native token (ADA), tokenomics, and the ‘green crypto’ label given to it by some.
What Is Cardano?
Cardano sees itself as a third-generation blockchain platform designed to overcome the limitations of earlier blockchains like Bitcoin and Ethereum. Launched in 2017, Cardano seeks to offer a more scalable, sustainable, and interoperable solution for blockchain. Unlike some projects focusing solely on code development, Cardano emphasises fact-finding and analysis, aiming to create a robust foundation through scientific scrutiny and peer-reviewed academic research.
What Is the ADA Token?
At the heart of the Cardano ecosystem is its native cryptocurrency, ADA. Named after Ada Lovelace, a pioneering mathematician and writer, ADA serves various functions within the ecosystem. It acts as a means of exchange, facilitating transactions between users, and is used for paying transaction fees and distributing rewards.
Additionally, ADA plays a crucial role in the platform’s staking mechanism, which helps secure the network and achieve consensus through the Proof of Stake (PoS) protocol.
How Does Cardano Work?
Cardano’s architecture is based on a layered approach, consisting of two primary layers: the settlement layer and the computation layer. The settlement layer handles the accounting and value transfer aspects, ensuring secure transactions and serving as the ledger’s backbone.
The computation layer is responsible for executing smart contracts and enabling decentralised applications (dapps). This separation of layers grants Cardano enhanced flexibility and scalability, allowing upgrades or changes to one layer without affecting the other.
Why Is Cardano Known as a ‘Green Crypto’?
One of Cardano’s attributes is its dedication to environmental sustainability. Unlike Proof of Work (PoW) blockchains like Bitcoin, which consume substantial energy for mining, Cardano was one of the first cryptocurrencies to employ a Proof of Stake (PoS) consensus mechanism, which significantly reduces energy consumption by eliminating the need for resource-intensive mining computations like with PoW.
Nowadays, a large number of other blockchains also rely on PoS or other environmentally friendly consensus mechanisms, but the green image has stuck to Cardano as a pioneer.
What Is Cardano Used For?
Cardano serves various purposes within its blockchain ecosystem. It was designed to be a multi-functional platform that goes beyond just serving as a cryptocurrency. Below are some key uses of Cardano (ADA):
Digital Currency: Just like many other cryptocurrencies, ADA is used as a digital currency for making transactions and payments. Users can quickly send and receive ADA tokens across the Cardano blockchain with low transaction fees.
Staking: ADA holders may participate in the Cardano network’s staking mechanism, which involves holding a certain amount of ADA in a wallet and staking it to support the network’s operations. In return for staking, participants receive rewards in the form of additional ADA tokens. Staking helps secure the network and maintain its decentralised nature.
Decentralised Applications (Dapps): Developers can build and deploy decentralised applications (dapps) on the Cardano platform. These dapps cover a wide range of use cases, from finance and gaming to supply-chain management and identity verification. Cardano’s smart contract capabilities enable the creation of complex and innovative dapps.
Smart Contracts: Cardano aims to provide a platform for creating and executing smart contracts, which are self-executing agreements with the terms of the contract directly written into code. These contracts automate and verify the execution of agreements without the need for intermediaries. ADA is used to pay for the computational resources required to run these smart contracts.
Tokenisation: Cardano allows for the creation of custom tokens on its platform. This feature is used for a variety of purposes, such as creating loyalty tokens, representing assets like real estate or commodities, or even launching initial coin offerings (ICOs).
Governance: ADA holders may participate in the governance of the Cardano network. Through a process called ‘Project Catalyst’, ADA holders may propose and vote on various protocol upgrades, improvements, and changes to the ecosystem. This gives the community a say in the platform’s evolution and development.
Cross-Chain Interoperability: Cardano has plans to implement mechanisms for interoperability with other blockchains. This means that, in the future, ADA might be used to facilitate transactions or interactions between different blockchain networks, enhancing overall blockchain connectivity.
ADA Tokenomics
Supply: The max supply of ADA tokens is set at 45 billion ADA. The current circulating supply is 35.05 billion.
Distribution: The distribution of ADA tokens was managed through various phases, including presales, public sales, and subsequent allocations. Below is a general breakdown of the distribution:
- Presale and Initial Coin Offering (ICO): Cardano’s development was funded through a series of funding rounds and initial coin offerings. The majority of ADA tokens were initially distributed to investors during these rounds.
- Treasury and Development: A portion of the initial supply was reserved for development, research, and other strategic initiatives. These funds are held in a treasury and used to support ongoing development, partnerships, and ecosystem growth.
- Staking Rewards: ADA holders who participate in the staking process earn rewards for securing the network. These rewards are paid out in additional ADA tokens. Staking rewards serve as an incentive for users to actively participate in securing and validating transactions on the blockchain.
- Ecosystem Growth: ADA tokens are used to support the growth of the Cardano ecosystem. This includes funding projects through the Project Catalyst initiative, which allows the community to propose and vote on projects that contribute to the ecosystem’s development.
How to Trade ADA
Cardano (ADA) is listed in the Crypto.com App, amongst the growing list of 250-plus supported cryptocurrencies and stablecoins, including Bitcoin (BTC), Ethereum (ETH), Polkadot (DOT), USD Coin (USDC), and Cronos (CRO).
Crypto.com App users can now purchase Cardano (ADA) with USD, EUR, GBP, and 20-plus other fiat currencies and spend it at over 80 million merchants globally using the Crypto.com Visa Card. Alternatively, users can also trade ADA on the Crypto.com Exchange.
Download the Crypto.com App to start trading ADA today.
Conclusion
Founded on research and built with a layered architecture, Cardano is driven by sustainability, offering a promising alternative to earlier blockchain platforms. With ADA as its native token, Cardano not only facilitates transactions, but also empowers its community through staking and governance. As the crypto space continues to evolve, Cardano aims to maintain its commitment to scalability, sustainability, and innovation to keep it at the forefront of the industry.
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