Origin Story
Cardano (2015) was founded by Charles Hoskinson in, who was the co-founder and CEO of Ethereum (2013). Charles left Ethereum over a dispute between himself and Vitalik Buterin about whether Ethereum would be a commercial or non-profit network. Buterin had the final say and the team decided to go with non-profit. This was against the commercial direction Charles had pitched to his fellow co-founders, so he parted ways and created his very own blockchain and token.
What is Cardano
While founded in 2015, Charles Hoskinson and his team took two years developing Cardano until finally launching it for the public in 2017.
Cardano uses a Proof-of-Stake consensus mechanism rather than PoW, which was one of the main reasons it was deemed the “Ethereum killer” as this was expected to be an extensively efficient system. Cardano’s PoS rewards network stakeholders in the native Cardano token (ADA) for work done on the blockchain such as:
-
Validating / confirming transactions.
-
Adding new blocks to the blockchain.
-
Participating in community development.
PoS is considered to be superior to PoW as it significantly reduces energy throughput compared to what is required for PoW.
Cardano is on a mission to create a trustable global system. Cardano claims it is creating a science-based network centered around security, transparency, sustainability, and growth. Whether these buzzwords hold any substance of actual implementation behind them is a separate topic for later.
Cardano is a Twin-Layer blockchain
The Cardano ecosystem is made up of a two layer chain. This is to separate the value of a transaction from its unique data (such as time of validation and block allocation).
[1] Settlement Layer (CSL) – This layer is tasked with sending the transaction value from one address to another. This is end-to-end encrypted through two isolated coding languages: Plutus and Marlowe.
[2] Computation Layer (CCL) – The Computation Layer is a mirrored design of the smart contract platform “Rootstock” and is tasked with scaling (often by leveraging advanced protocols), running security modules, and removing excess data to minimize the processed information and thus speeding up transaction and block validation.
Whitepaper?
Plain and simple: there is none. Somewhat of a red flag, the Cardano project has no determined and authoritative code it abides by. Instead, they have an introduction on their website that cites their overall mission but doesn’t necessarily specify how they ensure the decentralization and unbreakable code of their network. For context, Cardano is also NOT a Decentralized Autonomous Organization – although it does offer staking for the sole purpose of earning more ADA as a reward for completing the validation process. This means there’s no definitive code, and no community to actually govern it.
Roadmap
There is a 5-step roadmap in place for Cardano. The 5 steps are in a sequential order with a different area of focus for each one.
[1 Byron] The foundation – This step has already been completed. The very first phase (which lasted from 2015 to 2017) was the development and launch of both the token ADA and the Cardano blockchain. ADA based wallets such as Daedalus (desktop wallet) and Yoroi (light wallet) were launched too.
[2 Shelley] Decentralization – The 2nd step is mainly about decentralizing the node network created during step 1. Staking principles and reward systems for participants are also a priority.
[3 Goguen] Applications – Step 3 introduces dApps, NFT capabilities, smart contract features, and allows users to create smart contracts without the requirement of any technically related knowledge.
[4 Basho] Scaling – This step is purely performance related and focuses on optimization of the main chain and additional side-chains to improve throughput and operability space.
[5 Voltaire] Governance – The final step sets the developers with the task of creating a self-sustainable governing system that must remain decentralized. Treasury, voting, participation requirements, and pools are the main focus points.
Theory Vs Reality
While a lot of what Cardano says sounds nice on paper, the real world suggests otherwise.
Cardano is the 8th ranked crypto by market cap. However, compared to other projects like Ethereum (which it was created to compete against) or Polygon, or even Optimism, it’s being outperformed severely in L1 and L2 activity.
Ethereum
Rank #2
Market Cap: $224.3 billion
24H Volume: $1.001 billion
24H Active Users: 270K
Cardano *Ethereum Killer
Rank #8
Market Cap: $10.6 billion
24H Volume: $8.67 million
24H Active Users: 57K
Polygon
Rank #12
Market Cap: $6.5 billion
24H Volume: $93.97 million
24H Active Users: 346K
Optimism
Rank #44
Market Cap: $994 million
24H Volume: $64.18 million
24H Active Users: 96K
This basically says that a lot of people will buy ADA – likely on an exchange because of its high ranked market cap – but the majority will never actually use the Cardano network.
DeFi liquidity on Cardano L2s is laughable with only 10 chains that are north of the $1 million dollar total value locked, and only 12 attached chains with a market cap higher than $1 million (the extra two projects being Chainlink and API3). The reason for this lack of activity? Because the majority, if not all of these, are one of the following:
-
A Decentralized Exchange that’s only use is Cardano based tokens.
-
A Lending platform for Cardano based tokens.
The problem here is that there’s nothing useful being built on Cardano to begin with, and there is also next to nobody interested in using any of the above.
IN SUMMARY: Everything is geared towards the overvalued and unusable Cardano token, which feeds into a cycle of useless other side chains. The basic gist of the network in its current state is wasteful and boring.
Other notable issues
Cardano claims it is a developing smart contract platform while barely utilizing smart contracts at all.
Transaction delays are an issue at the moment too, with many taking to twitter to broadcast their complaints. Some say it takes between 40 seconds to occasionally several minutes for a transaction to process.
This entire network, simply put, is a poor attempt at copying Ethereum before Ethereum actually did useful things – and it has failed to evolve or be innovative since. Ethereum successfully converted its network from PoW to PoS last year anyway, proving its uselessness once again.