Cardano is a public blockchain that hosts ADA, a cryptocurrency designed to function as digital cash.
The platform seeks to protect the privacy of users while being regulator-friendly1. Based on peer-reviewed academic research2, this self described “third-generation blockchain”3 claims to be created from ‘scientific philosophy.’4 Unlike most other blockchains, Cardano is written in the Haskell programming language5.
Cardano was founded in 2017 by co-founder and ex-CEO of Ethereum, Charles Hoskinson. He sought to create a platform that was scalable, sustainable and interoperable6. Cardano has two infrastructural layers, the Cardano Settlement Layer (CSL) and the Cardano Computation Layer (CCL).
More specifically, the settlement layer is the ledger on which users transfer ADA between accounts, and where the transactions are recorded. The second layer, the computation layer, contains smart contracts and other information as to why transactions occur7. It utilizes its own proof-of-stake (PoS) consensus algorithm called Ouroboros to secure the network and validate transactions8.
The Cardano platform is maintained by three separate and independent organizations: the Cardano Foundation, Input Output HK (IOHK) and Emurgo. The Cardano Foundation is based in Switzerland and is responsible for supervising and overseeing the development of the Cardano ecosystem9.
IOHK has put forward the team that designed and built Cardano, and importantly integrated Ouroboros, the proof-of-stake algorithm that is unique to Cardano10. Finally, Emurgo is the company that helps organizations adopt Cardano’s decentralized blockchain by investing, advising and developing the integration of the blockchain into the company11.
How Does Cardano Work?
Launch & Issuance
At the time of the project’s launch, approximately 31 billion ADA were released. 25,927,070,538 ADA were sold in a sale and the remaining approximately 5 billion ADA were distributed to IOHK, Emurgo and the Cardano foundation.
The maximum supply of ADA is capped at 45 billion tokens, and the ADA not distributed during the launch, approximately 14 billion ADA, will be distributed via block production12.
Network Design & Security Model
Cardano was built with two infrastructural layers, the Cardano Settlement Layer (CSL) and the Cardano Computation Layer (CCL). More specifically, the settlement layer is the ledger on which users transfer ADA between accounts, and where the transactions are recorded.
The second layer, the computation layer, contains smart contracts and other information as to why transactions occur, i.e. the reasons and the conditions behind moving the tokens13. These two layers are kept separate in order to keep the Proof-of-Stake (PoS) algorithm (dubbed Ouroboros) private.
The maximum supply of ADA is capped at 45 billion coins14. The first 31 billion coins were distributed at the time of the launch, and the remaining 14 billion will be delivered through ‘minting’ – Cardano’s term for block production1516.
These new coins will enter the ecosystem through a consensus algorithm called Ouroboros, a PoS system, through which transactions are also validated17. Ouroboros is Cardano’s version of Proof-of-Stake algorithm18.
In order to transfer ADA, the following equation determines the fees that will be paid:
Transfer fee = 0.155381 + 0.000043946 * size; the size represents the size of the transaction in bytes. For example, if an individual is attempting to transfer ADA that has a 1 byte size, the transfer fee would be = 0.155381 + 0.000043946 * 1= 0.155424946 ADA, which, in 2019, would be roughly equivalent to 0.01 USD.
The platform utilizes Ouroboros PoS to validate the transactions.
Cardano is written in Haskell.
Academic Papers by IOHK
Staking on Cardano (Cardano website)
What is Cardano? (Cardano website)
Authored by John Metais