Cardano (ADA) — an Alternative to Ethereum

Cardano (ADA) — an Alternative to Ethereum. The finance world runs on payment systems. Many cryptocurrencies have the same goal of becoming a universal payment solution that could be used by anyone and anywhere in the world. While Bitcoin has made some progress in that regard, it’s not the only option.  In this article, you will learn all about one of the alternatives — Ada and its native token ADA.

Cardano Project: The Ecosystem Overview

The Cardano project was founded by Charles Hoskinson in 2015. It was built by Input Output Global and EMURGO software companies. Before the mainnet launch in 2017, Cardano was able to raise around $62 million in token sales. Let’s look closer at what makes Cardano stand out from its competition.

Blockchain and What It Is Capable Of

Cardano is a smart contract blockchain that is powered by the Ouroboros proof-of-stake (PoS) consensus mechanism. There are over 3.3 million Cardano wallets out there. It makes Cardano one of the most adopted cryptocurrencies on the market.

The Cardano blockchain is capable of processing around 250 transactions per second (TPS). This number is a bit on the low side, as even when we compare CRO vs ADA, the former will have a much stronger TPS of 50,000. The average block time is 20 seconds, and the transaction fees are 0.15 ADA. 

ADA is a native cryptocurrency of the Ada platform. It has a market cap of over $18 billion and a daily trading volume of around $500 million. The ADA’s max supply stands at 45 billion coins. The current supply is 33.75 billion ADA.

Ouroboros

Cardano’s network operates on the Ouroboros consensus. It’s the first protocol based on peer-reviewed research. The Ouroboros protocol has an incentive mechanism that rewards network participants for being stake pool operators or delegators. The nodes that can produce blocks are chosen randomly. It ensures the security, sustainability, and scalability of the network. 

According to the Ouroboros protocol, time is divided into epochs. Ouroboros can run multiple epochs in parallel. This mechanism allows for exponential horizontal growth making the system infinitely scalable. 

Mining Process

Cardano has the PoS consensus mechanism meaning ADA tokens aren’t minable. However, you can use wallets like Daedalus Wallet or Exodus to stake ADA coins and earn staking rewards. The Cardano platform rewards users with 5% annual rewards for coins they stake. To start staking, you need to have at least 2 ADA. Over 70% of ADA supply is currently being staked. 

Special Features of Cardano

Cardano is a layer-2 PoS blockchain. The Ada system consists of Cardano Settlement Layer (CSL) and Cardano Computation Layer (CCL). The former hosts the PoS algorithm that confirms transactions and generates new blocks. The latter contains the data on how values are transferred. It enables DAOs and private companies to use tokens that operate by unique rules.

What makes ADA one of the safest and most decentralized blockchains is its 2,300+ staking pools. Every pool acts as a validator node for the blockchain. Cardano ensures that the number of pools continues to grow. It does so by decreasing staking rewards when there is too much stake in a single pool.

ADA Use Cases

ADA token is primarily a utility token used for paying transaction fees and staking. 

Other than that, there are six major Cardano use cases:

  • Education: Verifying credentials through IDs.
  • Retail: Making sure the authenticity of the product and preventing counterfeiting.
  • Agriculture: Supply chain tracking.
  • Government: Providing digital identity services.
  • Finance: Onboarding (AML and KYC).
  • Health care: Preventing counterfeit medicine.

Conclusion

Cardano and its Ouroboros protocol aim to make the crypto transaction system scalable on a global level. Considering how much progress the project has made since the launch of the mainnet, Cardano has all the potential to overtake Ethereum and become a sustainable global payment system. Apart from ADA, you can also take a look at other unique consensus models: a ONE vs FTM comparison is an interesting option to review.

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