What is Cardano (ADA)?
|— Cardano is a Layer 1 blockchain that offers improved transaction speed and scalability – as well as its own ecosystem of dApps|
— The blockchain is capable of around 250 transactions per second, is extremely energy efficient, and can complete transactions for a fraction of the gas fees paid on rival networks
— Its native token ADA – also a governance token enabling the network to become decentralized – has just been integrated within Ledger Live
— This means you can send, receive and manage your ADA seamlessly within Ledger’s interface, while securing your private keys offline, even as you interact
Cardano is one of the most popular layer-one networks, hosting a range of top projects and powering whole ecosystems. So, what makes users so attracted to Cardano? And what’s the difference between Cardano, Ethereum and Bitcoin? Like every blockchain, Cardano has its strengths and weaknesses. So in this article, we’ll take a deep dive into the world of Cardano and its native coin ADA, so that you know exactly what this ecosystem is all about.
But before we get there, let’s get a bit of background on the network itself.
What Is Cardano (ADA)?
Cardano is the layer 1 blockchain with its own NFTs and DeFi platforms, promising a cheaper, faster and more efficient crypto ecosystem to rival the current slow giants of crypto.
Who Created Cardano and Why?
Cardano’s founders Charles Hoskinson and Jerry Wood are no strangers to the crypto scene: they were also on the original Ethereum team. But, understanding the limitations of a proof-of-work blockchain in terms of scalability, speed, cost and ultimately utility, they set out to create an alternative that solved these problems. Thus, the Cardano blockchain was born.
Proof of work networks, such as Bitcoin, are energy-intensive and slow to process transactions, especially when they are congested. To give an idea of scale, the Visa network – a fully adopted technology catering to a global audience – can manage 1700 transactions every second. The Bitcoin network, on the other hand, can handle just 7 transactions per second.
In an immediate sense, this means high transaction fees for users. Proof-of-work blockchains are not designed to handle large amounts of data.
This is where Cardano aims to bridge the gap – as well as offering a host of other features.
The Cardano Blockchain’s Unique Features
Fast Transactions, for a Scalable Future
Thanks to its Proof-of-Stake protocol, the Cardano network can handle up to 250 transactions per second, lending itself to many more applications than slower blockchains – and clearing a path for potential mainstream utility.
Efficiency and Sustainability
Beyond having a recognized level of security, Ouroboros is also a highly efficient mechanism. In fact, the energy consumed by Cardano is 99% less than the majority of other blockchains, making it a good option for long-term sustainability.
Low Gas Fees
A loyal user base is one of the defining factors for the success of any blockchain, making gas fees a key issue. Gas fees are known to be prohibitive for crypto users, but you can forget that on Cardano: the average transaction fee here is less than a dollar over a four-year period.
And there is more to this than just cost: when the gas fee is no longer an entry barrier, a blockchain becomes the go-to platform for developers to innovate, and of course for users to transact on.
So how does it achieve this exactly?
How Does The Cardano Blockchain Work?
Cardano uses a unique proof-of-stake consensus protocol called Ouroboros to secure its network, special because it’s the first provably secure, academically-reviewed consensus protocol. Using this consensus mechanism gives Cardano a number of advantages over other blockchains.
As a layer 1 blockchain, Cardano functions completely autonomously, meaning it can securely settle all transactions on-chain. It does this via its Cardano Settlement Layer, which is responsible for tracking the state of the blockchain.
But there’s more to Cardano than just settling transactions; this is where the network’s Computational Layer comes into play. Similar to the application layer on Ethereum, this layer enables Cardano to deploy its own smart contracts, which means its blockchain can be used to power a whole ecosystem of specific applications.
DeFi and NFTs on Cardano
There are already dozens of blockchain apps and dApps growing in different market segments, from exchanges and wallets to NFTs and marketplaces. There are several popular NFT collections on Cardano today, after the network launched smart contract capability in 2021.
Cardano’s DeFi ecosystem is also rapidly expanding, bringing the vast options of decentralized finance to new audiences, thanks to its minimal gas fees. Cardano’s community believes it will be the go-to blockchain for DeFi in the future, and maybe they have good reason.
What is ADA?
And finally, let’s talk about Cardano’s native token, ADA. This coin was affectionately named after Ada Lovelace, the 19th-century pioneer of computer programming.
ADA is the fuel that powers the Cardano universe, securing the network and enabling users to interact with the various dApps and DeFi platforms running on top of it. ADA has a fixed supply of 45 Billion, making it resistant to inflation over time.
How to Buy ADA
Ledger now supports Cardano’s native token ADA, meaning you can not only secure your private keys offline as you interact, but also check Cardano coin price, manage, send and receive your tokens seamlessly on your Ledger Live interface. ADA tokens can also be purchased directly via Ledger’s partner, MoonPay, and transferred straight to your Ledger Nano. Ledger’s ecosystem offers a combination of convenience and security to buy Cardano with ease.
Cardano’s staking operators (validators) and delegators are rewarded in ADA tokens, and this whole mechanism keeps the network secure. Incidentally, it’s also pretty convenient to stake on Cardano because there’s no lock-up period, and you can manage your assets directly through your own Ledger Cardano wallet. Now, you can also manage and stake ADA directly in Ledger Live with a “Ledger by Figment” validator too!
What Does Cardano’s Future Look Like?
Decentralization, scalability, and interoperability are the hallmarks of third-generation blockchains, and all three are baked into Cardano’s roadmap.
As well as powering the blockchain, ADA is a governance token, enabling holders vote on-chain on the future of the network, and decentralizing control of the blockchain. A key future initiative is incorporating an innovation fund called Project Catalyst; this will enable the Cardano community to select and fund worthy ideas to advance the network.
Attaining genuine interoperability is key for any blockchain, since this will enable it to operate in conjunction with other networks, and maintain a decentralized blockchain ecosystem where users can truly own their assets. Cardano is currently working toward this with interoperable solutions like cross-chain bridges and sidechains, the foresight that suggests the blockchain is here to stay.
Cardano also plans to significantly improve its transaction speed to more than 1 million TPS with the upcoming Hydra scaling solution, further increasing its potential real-world utility.
In short, Cardano is leaving no stone unturned to establish itself as THE democratic, energy-efficient, and accessible blockchain in the crypto space, not to mention skirting the possibilities of mainstream adoption.
Ledger: Constantly Expanding, Constantly Secure
At Ledger, we are constantly expanding our ecosystem – both integrated apps and supported coins – to bring you a secure gateway to crypto and Web3. No matter which community you’re part of, an offline key is the only key! So grab your Nano, and enjoy exploring Web3 with peace of mind. We’ve got this.
Knowledge is Power.
Blockchain is constantly on a mission for self-improvement – and layer 2’s are a perfect example of how this is pushing the limits of scalability. Sound technical? Don’t worry, School of Block has you covered!