Cardano

Cardano is a smart contracts platform built with a proof of stake consensus algorithm. The company was built with a focus on security and scalability. The hope is that Cardano will become the basis for individuals dealing with banks and other large institutions via blockchain. The company was founded by Charles Hoskinson (a big player in the early bitcoin community).

Consensus on Cardano is not reached through powerful mining hardware. Members staking their coins via the Cardano wallet get to verify the network. Re governance, Cardano allows voting for updates to governance protocols based on the amount of ADA a party holds. This is quite unlike EOS that relies on representatives or Ethereum which relies on influential members in the community.

No smart contract platforms have scaled yet. In the process of attempting to do so, many platforms have demonstrated the limitations of certain features at different stages of scaling. Recognizing how complex this process is, Cardano decided to build tools that create as much flexibility as possible through the scaling process. The system is even more flexible than Tezos. For example, building the project, they embraced:

  • Separation of accounting and computation into different layers
  • Implementation of core components in highly modular functional code
  • Small groups of academics and developers competing with peer reviewed research
  • Heavy use of interdisciplinary teams including early use of InfoSec experts
  • Fast iteration between white papers, implementation and new research required to correct issues discovered during review
  • Building in the ability to upgrade post-deployed systems without destroying the network
  • Development of a decentralized funding mechanism for future work
  • A long-term view on improving the design of cryptocurrencies so they can work on mobile devices with a reasonable and secure user experience
  • Bringing stakeholders closer to the operations and maintenance of their cryptocurrency
  • Acknowledging the need to account for multiple assets in the same ledger
  • Abstracting transactions to include optional metadata in order to better conform to the needs of legacy systems
  • Learning from the nearly 1,000 altcoins by embracing features that make sense
  • Adopting a standards-driven process inspired by the Internet Engineering Task Force using a dedicated foundation to lock down the final protocol design
  • Exploring the social elements of commerce
  • Finding a healthy middle ground for regulators to interact with commerce without compromising some core principles inherited from Bitcoin

Cardano’s blockchain is called Ourboros. Their consensus algorithm is a proof of stake system that has peer reviewed mathematically proven randomness in choosing the stakers. This is another layer of security to ensure validators do not become malicious. Moreover, they can run their choice of validators in parallel. This allows for scalability as the network increases.

Another advantage of Ourboros advantage of this system is its modularity. This modularity allows for features such as delegation, side chains, better data structures for light clients, different forms of random number generation and even different synchronization assumptions (how all the nodes in the network decide to broadcast one block). As a network develops from having thousands to millions and even billions of users, the requirements of its consensus algorithm will also change. Thus, the team found it vital to have enough flexibility to accommodate these changes and thereby future-proof the heart of a cryptocurrency.

There is a lot more to this blockchain that can’t be understood or explained without a deep technical background. However, it is important to understand the dual layer concept. From the white paper:

“The aggregation of our principled exploration of the cryptocurrency space is two collections of protocols. Respectively, a provably secure proof of stake [1][2] based cryptocurrency called the Cardano Settlement Layer (CSL) and a set of protocols called the Cardano Computation Layer (CCL).

Our design emphasis is to accommodate the social aspects of cryptocurrencies, build in layers by separating the accounting of value from complex computation and address the needs of regulators within the scope of several immutable principles. Furthermore, where it is sensible, we attempt to vet proposed protocols through peer review and check code against formal specifications.”

This project deals with many of the problems in the industry in a really thoughtful way. The main questions are the same that plague most blockchain projects (implementation risks around interoperability, security, ongoing support, scalability, and emergent threats). Either way, it is one of the most de-risked platforms in the industry. 


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s