Cardano is a decentralized public blockchain which aims to build a third-generation smart contract platform. It was built with the vision to eliminate the flaws in the previous projects and create a layered and distributed computing platform with an emphasis on security and engineering excellence. Cardano aims to provide banking services to the underbanked and unbanked who don’t have access to traditional financial services (payment services, property rights, identity, credit and risk protection, etc). This counts to around 1.7 billion people as per the latest data.
The Cardano project started in 2015 but was officially launched in September 2017. It was led by Ethereum and BitShares co-founder- Charles Hoskinson and the technology was developed by a blockchain firm called Input Output Hong Kong (IOHK). The level of technological scrutiny, high assurance of software standards and their research-driven approach helps Cardano achieve an indisputable position in the crypto space.
As compared to its competitors, which are built on a single layer for computation, accounting and settlement, Cardano is structured using a two-layered blockchain which makes an architectural distinction between settlement and computing layer. This multi-layer feature gives an edge to Cardano over its predecessors as the main chain doesn’t need to go through any structural change because the second layer is added as an extra layer, thus high throughput can be achieved without sacrificing network security
ADA is the native currency of the Cardano blockchain that can be used to send value and serves as a medium to run applications on the Cardano computational layer. ADA is presently traded on all major exchanges including Bittrex, UpBit, HitBTC, Binance and Huobi.
Problems faced by other chains-
It consists of 3 separate elements-
● Transactions per second/ Throughput-
Worldwide consumer payment exceeds $50 trillion annually and is mostly carried out by electronic payment methods. Thus, cryptocurrency presents themselves as a viable alternative to the traditional banking system but they need to scale as Bitcoin can handle only 6-7 transactions per second and Ethereum can handle 15-20 transactions per second as compared to Visa’s 65000 TPS.
Network here corresponds to the bandwidth. Transaction confirmation time on the Bitcoin network is very slow and it varies significantly. As the transactions occurring on bitcoin has increased, it has faced network congestion issues causing higher transaction fees and slower settlement time. Bitcoin network needs to be confirmed six times before the transaction is validated and this process takes between 30 minutes to 16 hours on an average. In the last bull run, the estimated transaction value in USD on the blockchain was approximately $5 billion and it is expected that in the next bull run, transaction value will be doubled.
● Data Scaling-
As blockchain stores each and every piece of data (relevant or not) on the blockchain and with the scaling up of the transactions, it will make normal users with a normal computer incapable to act as nodes.
The graph above depicts the meteoric rise in the size of the Bitcoin blockchain since Q3 of 2012. Thus, it would be impractical on the side of the operating nodes to store all the information present on the blockchain.
Interoperability means that the crypto space will not be dominated or governed by only one blockchain. Instead, there will exist several simultaneously running decentralized networks such as Bitcoin, Ethereum etc. Thus, the communication lag between multiple blockchain networks poses a major challenge to interoperability as blockchain incorporates different parameters like consensus models, smart contract functionality and transaction schemes making communication difficult among them.
Solutions by Cardano –
● Transactions per sec/ Throughput-
Cardano has found out a way to solve the scalability issue by adopting a layer-2 scaling solution for its blockchain- Ouroboros Hydra, an off-chain protocol, which will vastly increase scalability for the Cardano blockchain. It will sit on top of the Cardano Protocol and increase its working speed. It adopts the stake pool model and implements state channels that enable the rapid processing of payments and smart contracts beyond the blockchain (off-chain). Results have shown that each “Hydra head” can currently process about 1,000 transactions per second (TPS). With 1,000 stake pools, each processing 1,000 TPS, Cardano thus aims to achieve a throughput of up to one million transactions per second. However, Cardano can handle 250 transactions per second as per the speed claimed by the developers so far
To deal with network congestion issues that will pose a potential problem with its growth in future, Cardano recently adopted a new type of technology called RINA (Recursive Internetwork Architecture), an alternative of the TCP/IP and OSI model. It is adopted to structure networks using policies and ingenious engineering principles which enables a heterogeneous network.
RINA’s goal is to create a network which provides :
● Data Scaling-
Cardano aims to provide a solution to this problem by implementing a simple philosophy, “Not everyone needs all the data”. Thus, they are working on the concept of Partitioning that is, instead of storing information present on the whole blockchain, a user can simply utilise a part of the blockchain and can reduce the amount of data they need to store with the help of sidechains. Cardano’s aim here is to compress the data so that the users need to consume less space without compromising on their security or the assurances that their transactions have gone through properly.
Cardano’s vision is to create the “Internet of Blockchain”. Cardano aims to act as a bridge that wraps any blockchain transaction with the assurance that it is fully compliant with all traditional banking standards. Cardano will integrate KMZ sidechain protocol to safely move values in different side chains. ADA allows cross-chain transfers by utilizing side chains without the help of any trusted third party. This means that ADA will be able to monitor cryptocurrency transactions on other blockchains as well.
Atala Prism is an ID and credentials solution built on the Cardano blockchain. Atala PRISM secures academic certifications within an immutable and tamper-proof ecosystem, empowering students to own and share their achievements, and institutions to instantly verify those credentials thus providing a seamless way for students and job seekers to prove who they are and what they have achieved.
Current credentials issuance and verification systems create a strong dependency on third-party agencies to verify the document’s authenticity. This process is carried out manually, making it a costly and time-consuming process. Atala Prism by utilizing blockchain technology enables users to have full control over their credentials, which they can share and instantly verify anytime, anywhere.
Counterfeit luxury products account for about $3 Tn globally while 10% of all drugs in circulation are counterfeit, accounting for a trading volume worth around $200 billion annually. Atala Scan aims to provide a solution to the problem of product counterfeiting by means of blockchain technology. It seeks to establish a tamper-proof system so as to establish product provenance and ensure that every product sold is original.
Blockchain technology has emerged as a viable method to support all the stakeholders along the supply chain in agriculture. Farmers, hauliers and retailers can make use of blockchain technology for product certification and traceability, from farm to table. Thus, Atala Trace and EMURGO’s proprietary traceability solution provides for transparency in the supply chain.
The global blockchain market size is expected to grow from USD 3.0 billion in 2020 to USD 39.7 billion by 2025. Cardano is planning to introduce a number of decentralized applications, DeFi, a voting system and an identity solution by next year more secure and scalable than Ethereum. Atala PRISM can avail opportunities for lending, payments, insurance, banking which presents $400B opportunities in Africa alone. It has the potential to provide 1.7 billion unbanked people with an economic identity, and track global goods from source to sale.
Cardano is processing seven times more transactions on a daily basis now than a year earlier which proves their dedication and commitment to regularly grow the Cardano ecosystem.
IOHK has developed the “ERC20 token converter”, which will enable companies to migrate from Ethereum to Cardano as Cardano’s multi-asset standard is designed in such a way that it offers huge advantages when it comes to “layer 2 infrastructure, optimizations and cost reductions”, providing projects better incentives to switch to Cardano.
The global e-commerce market size is expected to reach USD 10,361.0 billion in 2020, thus Cardano’s partnership with Bidali which offers an online gift platform represents a huge opportunity. Read about the more partnerships down the report.
IOHK and the United Nations are coming together for Project Catalyst to support start-ups in the microfinance field in developing countries. Projects can help Cardano receive up to $10,000 and will continue to receive support in future.
Daedalus wallet provides a desktop, full-node hierarchical deterministic (HD) wallet for ADA cryptocurrency. It stores the entire history of Cardano blockchain and validates all blocks and transactions. HD wallets use a variant of the standard 12-word master seed key and it automatically derive an unlimited number of new addresses by extending the seed by a counter value at the end, thus it eliminates the need for the user to constantly generate and wait for the secure keys to be generated.
Daedalus wallet can operate on Windows, Mac, and Linux operating systems.
Key Features –
- Easy installation with one-click setup
- Encrypted private keys
- Validates full transaction history of the blockchain
- Support for staking
- Complete autonomy without reliance on third-party servers and services
- Paper wallet generator for offline storage of funds
Yoroi is a lite hierarchical deterministic (HD) wallet for ADA cryptocurrency, operating as a Chrome or Firefox extension. It is connected to a full Cardano node hosted by Emurgo. Yoroi can operate on Windows, Mac, and Linux, iOS and Android.
Key Features –
- Locally stored wallets and encrypted private keys
- No blockchain synchronization needed for quick and easy operation
- Wallet backup and restoration using mnemonics phrases
- Paper wallet generator for offline storage of funds
Emurgo in partnership with Ergo has launched the new product “Oracle Core” for dApps and DeFi applications, the first oracle solution for the upcoming Goguen era of Cardano. Oracle Core relies on oracle pools which generate accumulated oracle data with built-in theoretical incentives by encouraging good behaviour and penalizing bad behaviour. The idea is that the key players in the DeFi ecosystem will donate funds to the oracle pools that they consider useful and the data providers will be compensated with the pool’s funds.
Cardano has capped the supply of ADA at 45 billion. The current ADA supply is 31.11 billion, which leaves a remaining 14 billion for network incentives. Initial Supply was 31.11 million out of which 2.46 billion ADA were allocated to IOHK, 2.07 billion ADA were allocated to Emurgo and 0.648 billion ADA were allocated to the Cardano Foundation.
Token allocation will build trust among the Cardano community and will foster Cardano to achieve its goal of making Cardano a self-sustainable system. 31% of the total supply is allocated for network incentives that will be distributed to the validators as rewards. However, around 10% of the tokens are with the foundation team.
Currently, retail investors accounts for 69.3% of the total ADA supply, Thus, the majority of the supply is held by retail investors indicating the value that small investors foresees in the project and it also prohibits chances of any attack on the Cardano network.
|Consensus Mechanism||Ouroboros Proof of Stake||Proof of Work||Proof of Work||Proof-of-Staked Authority (PoSA) consensus||Delegated Proof of Stake (DPoS) consensus||Proof of Stake||Pure Proof of Stake (PPoS) consensus.|
|Time to Finality||~ 1 min||~ 15 min||~ 6 min||~ 1 sec||~ 1 min||~ 3 min||~ 5 Sec|
|Transactions per Second (TPS)||200-250||3-7||15-25||1.4 M||~ 2000||~50,000||~ 1000|
|Smart Contract Language||Plutus||–||Solidity||GO Language||Solidity||C++||Transaction Execution Approval Language (TEAL)|
|88.4 K||1.7 M||484 K||72.4 K||75.2 K||72.8 K||1.3 K|
|168.4 K||1.1 M||491.3 K||1.2 M||534 K||191.2 K||27.5 K|
|28.5 K||40.8 K||143 K||10.2 K||50.7 K||17.5K||677|
|Telegram||21.5 K||45.2 K||1.5 K||131 K||97.1 K||18.8 K||9.1 K|
|Price ( as on 26/10/2020)||$0.106||
|Market Cap (as on 26/10/2020)||$3.28 Bil||$ 241 Bil||$45.5 Bil||$4.43 Bil||$1.93 Bil||$2.52 Bil||$311 Mil|
|Market Cap Dominance Percent||0.857 %||61.77%||11.59%||1.14 %||0.478 %||0.646%||0.083 %|
- Cardano utilises Ouroboros Proof of Stake, the first proof of stake protocol that has been proven mathematically to be secure and is energy efficient set side by side to Bitcoin and Ethereum.
- Plutus intends to support a higher level of assurance as it is coded using Haskell programming language making it safer and more reliable than any other smart contract language.
- Cardano can currently handle 250 transactions per second, making it more scalable than Bitcoin and Ethereum. However, Cardano aims to implement a layer-2 solution “Hydra” which will provide Cardano network scalability of over one million transactions per second.
- Community Engagement: Cardano when compared to its peers lacks in terms of community engagement however with the era of DeFi and dApps coming up, if Cardano plans and execute its community outreach activities effectively, then these numbers will surge.
Byron (September 2017)
Launch of the Daedalus wallet, the official desktop wallet for ADA, as well as Yoroi, a light wallet designed for quick transactions and day-to-day use.
Shelley (July 2020)
- The transition from Byron to Shelley ushered a new era for Cardano Ecosystem and with it the delivery of full network decentralization, the launch of stake pools, and the beginning of delegation.
- Cardano enthusiasts can now register themselves as stake pool operators and ADA holders may delegate their stake to pools and earn rewards for participating in the consensus.
- With the increase in the number of registered stake pools, the Cardano blockchain will become progressively more decentralized. Once the Cardano mainnet reaches 1,000 pools, Cardano will become one of the most decentralized, scalable and secure blockchains. Shelley brings the Cardano blockchain one-step closer to smart contract capabilities and the deployment of decentralized applications (DApps).
Goguen (Smart Contracts)
- Goguen will enable developers and dApp builders to use the custom programming languages, Plutus and Marlowe, to create smart contracts without requiring extensive knowledge of blockchain development.
- It will also allow the development of decentralized applications (dApps) and the creation of new assets on the Cardano blockchain. It is scheduled to be launched in mainnet by the end of the 4th quarter of 2020.
The Basho era will be an era of optimization, improving the scalability and interoperability of the network, it will be about improving the underlying performance of the Cardano network to better support growth and adoption for applications with high transaction volume. One of the core developments planned is the introduction of sidechains: new blockchains, interoperable with the main Cardano chain, with immense potential to extend the capabilities of the network.
Voltaire (On-Chain governance and Treasury)
- The Voltaire era of Cardano will be the final step to make the Cardano network a self-sustaining system with the introduction of a voting and treasury system. Network participants will be able to use their stake and voting rights to influence the future development of the network.
Cardano was ranked as the most actively developed cryptocurrency project in 2019, according to Santiment’s 2019 market report. The team has been successful in implementing the Shelley era, however, they have utilised approximate 3 years to build the infrastructure required for executing future plans. Now, they need to scale up and the team also needs to work on sharing their roadmap with tentative dates so that investors can envision the growth potential of the project.
The Cardano Foundation
The Cardano Foundation is an independent standard body responsible for advancements going on in Cardano and its ecosystem. As it is the legal custodian of the protocol and the owner of the Cardano brand, the Foundation is responsible to drive adoption and partnerships, ensure the global expansion of community, shape legislation, commercial standards and ensure stakeholder accountability at every level.
The Foundation’s most crucial responsibility is driving the platform’s adoption and supporting the diverse Cardano community, engaging with and implementing ideas on the Cardano platform. However, the Foundation is equally committed to working with other key industries within the blockchain realm, contributing to the advancement of the technology and driving adoption with other compatible systems.
As a founding member of the Cardano protocol, EMURGO develops, incubates commercial opportunities and helps businesses to integrate the blockchain system. EMURGO wants to advance the platform and drive adoption through commercial ventures. EMURGO has extensive expertise in blockchain R&D and enjoys a global network of related blockchain and industry partners.
IOHK builds cryptocurrencies and provides blockchain solutions to academic institutions, enterprises, and government entities. IOHK’s work is to design, build and maintain the Cardano platform.
IOHK is a leader in building distributed computing systems and decentralized technology solutions. IOHK is committed to open-source principles, ethical purpose-driven business and creating technology that benefits the many. Just like the Cardano Foundation and EMURGO, driving blockchain education is core to IOHK’s philosophy.
Emurgo, part of the Cardano ecosystem, has entered into a strategic partnership with the Canadian payment processor Bidali. The partnership will enable ADA holders to purchase goods from more than 1,200 major retail brands including Nike, Amazon, Airbnb, Starbucks and many others directly through Bidali’s online gift card platform thus making ADA equivalent to fiat value.
The online travel site Travala.com engaged in a partnership with Cardano enabling ADA owners to book 2 million hotels and apartments in thousands of destinations around the world. The partnership will bring ADA at par with the fiat value, making a step forward to encourage global adoption.
The Cardano Foundation has partnered on several initiatives with Lykke Corp- a Switzerland-based fintech firm, financial services provider and blockchain exchange. Lykke Corp is in the process of applying for the Swiss Financial Market Supervisory Authority (FINMA) authorization, which if granted will greatly increase its operational reach and range of financial products. The Cardano Foundation’s partnership seeks to tap in the Lykke Corp’s several far-reaching initiatives within the blockchain industry, including Lykke blockchain business services, the LyCI digital asset index and the Open Initiative — a thinktank and fundraiser for blockchain-based solutions.
The collaboration is aimed at collaborating the Cardano Foundation’s deep blockchain technology experience with Lykke Corp’s financial expertise.
To further develop the Cardano ecosystem and to support the adoption of ADA, Cardano had engaged in a strategic partnership with Zurich-based GenTwo AG. For ADA integration, the developers of the Cardano are working on prioritizing network stability for the complete ecosystem. The main objective is to create a financial product in the security domain, completely developed on Cardano’s infrastructure.
The Cardano foundation had entered into a collaboration with Dust Identity (an American-based organization). Dust identity uses Nanodiamonds to develop a wafer-thin identity layer on the products containing information that is very difficult to manipulate or to destroy. The co-operation mainly consists of Cardano blockchain providing support to verify the originality of products.
Cardano had associated itself with the Georgian government as its new partner, which made it the first European country to use blockchain in the public services. Georgian government will make use of Cardano backed blockchain technology to store, track, and verify educational credentials such as degree certificates, removing the need for time-consuming and expensive manual verification.
IOHK is planning to compete with IBM’s fabric with ‘Gerolamo’, which will provide permissioned and permissionless infrastructure to Cardano as government agencies and corporate customers initially prefer a permissioned system when planning to use a Distributed Ledger. Thus, IOHK has developed Atala, which hosts a permissioned system for this purpose. Atala and Cardano are interoperable with each other, making it favourable for the companies to shift to Cardano’s permissionless infrastructure.
Technical Analysis of ADAUSD
As per Weekly TF, the major bullish trend remains intact as it is currently trading above its 50-WEMA. It has gained more than 200% from its all-time lows and a further bullish momentum is most likely to continue in the coming weeks. Also, from the last 5-6 weeks, it has created a strong accumulation zone in the range of 0.087 to 0.110, which also suggests that reversal is on the cards. Weekly MACD is in the positive territory indicating the same.
As per Daily TF, it is forming higher highs and higher lows kind of formation indicating the overall strength of the positive trend. Currently, it is trading below its short term DEMA(25,50) but it has some strong buying pressure in the range of 0.086-0.089 as its 200-DEMA is also present there. Below this support, the next major support level is placed at 0.075 as this is 0.618 Fibonacci retracement level. On the higher side, the immediate hurdle is placed at 0.10 but if it manages to break this level on a closing basis, we can expect the first target of 0.125, followed by the retesting of its 2020 high which is present at 0.155. Momentum indicators on the daily scale are also positive biased, signaling an upper breakout in the coming sessions. Hence, TradeDog recommends taking long positions from the suggested levels.
Portfolio diversification is a well proven investment strategy for value investors. It is very important for investors to diversify their portfolio to reduce unsystematic risk. Cardano has a moderate positive correlation with other chains except EOS so investment in ADA might not be the best tool for diversification. However, considering the market price of ADA, it seems to have a higher potential upside.
Project Catalyst on Google Play Store
Normally, Apple and Google do not allow apps to be listed from the crypto ecosystem, however, Project Catalyst which offers voting rights to the ADA owners, is live on the Google Play Store and will encourage ADA adoption.
Cross Chain Communication with Litecoin
Cardano and Litecoin are exploring a new cooperation to establish cross-chain communication, smart contracts compatibility and increased scalability. This could be made possible by a ‘velvet fork’. Velvet fork is similar to the protocol upgrade in which new code can be added to the base with no requirement for a majority consensus. All miners on the network can continue to work as before, regardless of whether they have implemented the upgrade or not.
Partnership with Runtime Verification
IOHK has signed the contract with Runtime Verification Inc for Yella, a virtual machine (also called IELE) that will make Ethereum‘s virtual machine (VM) “look like a toy”. The idea behind the virtual machine is that it will enable developers to write dapps in one of the popular programming languages, and then convert them using IELE (Yella) so that they can be executed. It also aims to support Ethereum’s Solidity programming language, making porting dApps from Ethereum to Cardano extremely easy.
Introduction of Domain Specific Language “Marlowe”
A Domain Specific Language (DSL), Marlowe will be introduced in the Goguen era. It is a programming language for writing “financial contracts” in particular. The implementation of Marlowe will be completed with Goguen enabling users and organizations to execute self-written or pre-built DeFi contracts and transfer crypto assets.
CEO of Input Output Hong Kong, Director of The Bitcoin Education Project, Ex-CEO of Ethereum, Bachelor’s degree from the University of Colorado Boulder.
Co-founder and Chief Strategy Officer at Input Output Hong Kong, Executive Assistant at Ethereum
The first CEO of Cardano Foundation, led PwC’s Digital Accelerator, Bachelor’s degree from Copenhagen Business School.
Founder and CEO of Emurgo, Founder of CGG Limited, Holds a bachelor’s degree in the Department of Business from St. Andrew’s University.
Head of Technical Operations at the Cardano Foundation, prior experience in administration, compliance, regulatory matters and IT.
Overall a well-experienced and competent team with strong academic history. The team consist of members carrying expertise of working at eminent positions in Ethereum, the second-largest cryptocurrency platform by market capitalization. The CEO, Charles Hoskinson has prior experience of providing his services as the CEO of Ethereum while Jeremy Woods, the CSO has gained the opportunity to serve as the Executive Assistant at Ethereum.
Cardano positions itself as a technological platform for the future due to their scientific philosophy and a research-first driven approach. It offers a swarm of solutions to real world problems by leveraging blockchain technology and aims to provide the unbanked population with an economic identity. To shield its network from potential attacks, Cardano has implemented Ouroboros Proof of Stake, which has mathematically been proved to be more secure, fast and efficient as compared to its counterparts. The technology presents itself as one of the most promising blockchain ecosystems in the industry. It’s an attempt to perfect the PoS mechanism embedded into many blockchains.
The digital ledger market for blockchain products and services is expected to reach $60.7 billion in 2024, up from $708 million in 2017. The planned future prospects that Cardano aims to provide if implemented, can let Cardano grab the lion’s share of the available opportunity. As worldwide spending on blockchain solutions is expected to grow from 1.5 billion in 2018 to an estimated 15.9 billion by 2023, Cardano through its layer-2 solution “Hydra” can revolutionise the whole crypto ecosystem and magnetise the crypto community towards its adoption as it can handle one million transactions per second.
Total non-zero balance addresses were 15.68k in Q3 of 2017, witnessed an exponential increase to 543.2k in Q3 of 2020 ( 3400% increase in just 3 years). The current pace of growth in addresses with balance signifies the popularity of the project amongst the investor community and the underlying potential that the project holds to make the current price reach new heights.
Cardano witnessed the highest developer activity among all the blockchains by average daily development activity on the Github in September – October 2020.The rising developer activity , highlights the commitment towards the project and indicates signs of continuous delivery of development.
Cardano has huge potential but, like its counterparts, still has a long way to go before that potential might be truly realised. There’s a lot to like about its science-based approach, the proven mettle of the development team and the architecture underpinning its system. The wide- scale community adoption, huge target industry along with the team carrying prior experience in the blockchain domain affirms Tradedog’s BUY rating.