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What is Cardano: Smart Contract

7 mins read

Cardano is one of the few open source projects boasting a platform developed based on peer-reviewed scientific research, as block chain adoption becomes more active both inside and outside the encrypted world.

Bitcoin has pioneered block chain technology. However, Cardano will ultimately bring a whole new ledger aimed at improving block chain scalability, performance, security and energy efficiency through a PoS (Proof of Stake) consensus protocol called Ouroboros. In summary, a consensus protocol is a set of rules that manage behavior within a network. Because the public block chain operates without the intervention of an intermediary, the consensus protocol allows network users to agree on the mechanisms and processes of recording data in their digital ledger.

Cardano is a fully operational open source block chain project that handles the native cryptocurrency ADA, developed in 2015 by the block chain developer IOHK (Input Output Hong Kong).

Like Ethereum, this project aims to be an advanced smart contract network for developing distributed applications. Cardano’s block chain technology is attracting a great deal of attention as it is said to solve the performance and scalability problems of conventional PoW (Proof of Work) using the energy-efficient and extensible PoS protocol.

 

How does Cardano work?

The Settlement Layer is already used for ADA transactions, but the Computation Layer, a smart contract platform, is currently under development.

Cardano can achieve high flexibility by separating the smart contract platform from the transaction settlement layer. This allows users on both layers to work with different parameters. In fact, Cardano is developing a new programming language for developing smart contracts. This allows CCL users to create smart contracts based on rules that differ from CSL operations.

Cardano’s Settlement Layer uses technical and philosophical strategies to develop scalable and energy efficient block chains. The central philosophical view is based on the idea that “honest majority” can counter violators.

On the technical side, the Cardano block chain is developed using a functional programming language called Haskell. On this flexible programming language, Ouroboros, Cardano’s PoS protocol, is designed to ensure network security while maintaining high scalability.

Ouroboros PoS Protocol

Ouroboros is a PoS protocol that solves the biggest problem in block chain, which requires enormous energy to mine blocks and protect networks. According to Cardano, Ouroboros is the first PoS protocol developed on the basis of peer-reviewed scientific research.

Ouroboros is at the core of Cardano’s security. PoW protocol miners are rewarded for their data processing power, while Cardano’s PoS system selects participants (in this case, the stake pool) to validate blocks and manages them within the pool. We have a mechanism to give ADA according to the amount of stake.

Ouroboros uses a mathematically validated system to prevent hackers from breaking into the network. Hackers and malicious users cannot double-pay as long as honest participants hold 51% of ADA.

To encourage honest behavior on the network, Ouroboros maintains fairness in stakepool selection through a random and unbiased selection process, and works for participants who have completed delegation and staking tasks. Give more ADA depending on. Random selection processes prevent the formation and misuse of predictable patterns.

 

 

What is ADA? What is its function?

Many people confuse Cardano with ADA, where Cardano refers to the entire block chain project, while ADA refers to the native cryptocurrency of the network. With 31 billion coins in circulation and a cap of 45 billion, ADA is currently in the top 10 in terms of cryptocurrency market capitalization.

Cardano has multiple stake pools made up of owners and delegators, or stakeholders. Slot leaders are randomly selected from these pools to form new blocks. The more ADA you have, the more likely you are to be selected. Slot leaders will be rewarded with ADA when they form new blocks.

Slot readers earn ADA during the validation of new transactions. This period is called an epoch. Therefore, at each epoch, transaction fees are collected and distributed within the stake pool according to the amount of stakes managed by the slot leader.

Anyone interested in developing Cardano’s open source platform can apply for a grant through this Treasury system and receive an ADA with the consent of network stakeholders. The Treasury system is funded by a portion of the block rewards for each transaction. The Treasury system is also designed for continuous development after IOHK finishes the project.

 

What are the challenges Cardano solves?

With many block chain projects in use today, scalability is an important factor in assessing their performance and success. For example, transaction fees are skyrocketing on the Ethereum network, and the larger they grow, the greater the problem of scalability.

Early PoW block chain required all miners to keep a copy of the ledger to verify the process. However, as the network grew and the number of transactions increased, the mining nodes that had to see new transactions and record all transactions were under pressure.

Eventually, transaction delays will increase and micro transactions will not be efficient. Cardano solves this problem by managing transaction data separately from ledger records. For example, Cardano’s transaction validator manages only transaction-related data, as opposed to the general block chain.

In contrast to the PoW block chain, whose energy consumption is compared to that of the whole nation, the Cardano block chain is very energy efficient. As mentioned above, this is because network security is based on staking rather than data processing power.

 

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