{"id":37801,"date":"2022-09-26T20:02:00","date_gmt":"2022-09-26T17:02:00","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=37801"},"modified":"2025-08-29T21:45:45","modified_gmt":"2025-08-29T18:45:45","slug":"what-is-cardano-ada","status":"publish","type":"post","link":"https:\/\/forklog.com\/en\/what-is-cardano-ada\/","title":{"rendered":"What is Cardano (ADA)?"},"content":{"rendered":"<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">Key points<\/h2>\n<ul class=\"wp-block-list\">\n<li>Cardano is a proof-of-stake blockchain platform, implemented in <span data-descr=\"a standardized, pure, general-purpose functional programming language\" class=\"old_tooltip\">Haskell<\/span> and designed for building decentralised applications via smart contracts.<\/li>\n<li>Cardano (ADA) is the blockchain\u2019s native cryptocurrency. ADA can be delegated to the network\u2019s staking pools, including through the popular Daedalus and Yoroi wallets.<\/li>\n<li>Cardano implements several distinctive architectural choices, enabled by a large research community. Its members publish a significant number of peer\u2011reviewed academic papers on the project\u2019s development.<\/li>\n<\/ul>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\"><strong>Who built Cardano and when<\/strong><\/h2>\n<p>Cardano has several founders:<\/p>\n<ul class=\"wp-block-list\">\n<li>Charles Hoskinson \u2014 a mathematician and entrepreneur who was involved in BitShares and Ethereum. He is CEO of IOHK and the project\u2019s \u201cspiritual leader\u201d.<\/li>\n<li>Jeremy Wood \u2014 director of strategic development. In late 2013 he served as executive director of the Ethereum Foundation, then acted as a consultant to a number of other crypto projects.<\/li>\n<li>Aggelos Kiayias \u2014 the project\u2019s chief scientist, a cryptographer and a professor at the University of Edinburgh.<\/li>\n<\/ul>\n<p>In June 2014 Hoskinson left Ethereum over disagreements about the project\u2019s direction. He then founded Input Output Hong Kong (IOHK) with Wood; in 2015 the firm began developing Cardano.<\/p>\n<p>On 7 February 2017 IOHK\u2019s developers presented the whitepaper for the Ouroboros blockchain protocol.<\/p>\n<p>The Cardano platform launched officially on 29 September 2017. Token trading began on 1 October 2017.<\/p>\n<p>The blockchain was named after <a href=\"https:\/\/ru.wikipedia.org\/wiki\/%D0%9A%D0%B0%D1%80%D0%B4%D0%B0%D0%BD%D0%BE,_%D0%94%D0%B6%D0%B5%D1%80%D0%BE%D0%BB%D0%B0%D0%BC%D0%BE\" target=\"_blank\" rel=\"noreferrer noopener\">Girolamo Cardano<\/a> (1501\u20131576), an eminent Italian mathematician, physicist, biologist, chemist, astrologer, philosopher, writer and gambler.<\/p>\n<p>Cardano\u2019s creator, mathematician Charles Hoskinson, chose the name to reflect a project aimed at building a flexible, interoperable form of programmable money using scientific methods grounded in mathematical proofs and game theory.<\/p>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">Who develops Cardano<\/h2>\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/cardanofoundation.org\/\" target=\"_blank\" rel=\"noreferrer noopener\">Cardano Foundation<\/a> \u2014 a non-profit registered in Zug, Switzerland, whose main role is to \u201cstandardise, protect and promote the Cardano protocol technology\u201d. It manages relations with financial regulators, government bodies and the public, and forges strategic partnerships with other projects.<\/li>\n<li><a href=\"https:\/\/iohk.io\/en\/products\/\" target=\"_blank\" rel=\"noreferrer noopener\">IOHK<\/a> (short for \u201cInput Output Hong Kong\u201d) \u2014 an engineering and technology company founded by Wood and Hoskinson. IOHK develops the cryptocurrency and conducts research. The company is bound by contract to Cardano Foundation, under which it would remain the platform\u2019s primary developer until 2020.<\/li>\n<li><a href=\"https:\/\/emurgo.io\/\" target=\"_blank\" rel=\"noreferrer noopener\" title=\"\">Emurgo<\/a> \u2014 an investment firm with offices in Singapore, Japan, the US, Indonesia and India. Its mission is to \u201cdevelop and support commercial ventures and help integrate businesses into the Cardano ecosystem\u201d.<\/li>\n<\/ul>\n<p>One of Cardano\u2019s distinguishing features is its extensive research community. Solutions to the project\u2019s challenges are <a href=\"https:\/\/iohk.io\/en\/research\/library\/\" target=\"_blank\" rel=\"noreferrer noopener\">proposed<\/a> in peer\u2011reviewed publications.<\/p>\n<figure class=\"wp-block-image size-large is-resized\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/forklog.com\/wp-content\/uploads\/cardano-research-papers-fl-1-1024x512.png\" alt=\"How Cardano (ADA) works and what makes it different\" class=\"wp-image-185927\" width=\"820\" height=\"410\" srcset=\"https:\/\/forklog.com\/wp-content\/uploads\/cardano-research-papers-fl-1-1024x512.png 1024w, https:\/\/forklog.com\/wp-content\/uploads\/cardano-research-papers-fl-1-300x150.png 300w, https:\/\/forklog.com\/wp-content\/uploads\/cardano-research-papers-fl-1-768x384.png 768w, https:\/\/forklog.com\/wp-content\/uploads\/cardano-research-papers-fl-1-1536x768.png 1536w, https:\/\/forklog.com\/wp-content\/uploads\/cardano-research-papers-fl-1-2048x1024.png 2048w\" sizes=\"auto, (max-width: 820px) 100vw, 820px\" \/><figcaption>Trend in peer\u2011reviewed publications on Cardano\u2019s fundamentals from 2017 to May 2022. Source: IOHK<\/figcaption><\/figure>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">Cardano\u2019s blockchain architecture<\/h2>\n<p>Although Cardano adopted a proof\u2011of\u2011stake mechanism from the outset, it also used the <span data-descr=\"unspent transaction output\" class=\"old_tooltip\">UTXO<\/span> model borrowed from <a href=\"https:\/\/forklog.com\/en\/news\/bitcoin-explained-what-it-is-and-how-it-works\">Bitcoin<\/a>. The Shelley era also allowed an account\u2011based model similar to Ethereum. Addresses of that format are used for distributing rewards. Cardano leverages the strengths of both models.<\/p>\n<p>Inputs and outputs record where funds come from and where they go. Inputs indicate the address from which funds originate; outputs indicate the address to which funds are sent.<\/p>\n<p>To prevent double spending, every node tracks transactions. When a new transaction becomes available (in a block or the mempool), it is checked to see whether it modifies an unspent output associated with any address in the network.<\/p>\n<p>The classic UTXO model cannot optimally support smart\u2011contract functionality. To address this, Cardano introduced its own adaptation called Extended UTXO (<a href=\"https:\/\/iohk.io\/en\/research\/library\/papers\/the-extended-utxo-model\/\" target=\"_blank\" rel=\"noreferrer noopener\">EUTXO<\/a>).<\/p>\n<p>It splits smart\u2011contract execution across multiple transactions. Each transaction output contains a data field with arbitrary information tied to a given smart contract. The EUTXO model was deployed after smart contracts went live on Cardano\u2019s mainnet.<\/p>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">How the Ouroboros algorithm works<\/h2>\n<p>As <a href=\"https:\/\/cardano.org\/ouroboros\/\" target=\"_blank\" rel=\"noreferrer noopener\">claimed<\/a> by Cardano, Ouroboros (a PoS variant) is the first algorithm with mathematically proven resistance to attacks.<\/p>\n<p>Block production in Ouroboros is divided into epochs and slots. An epoch comprises a number of slots during which a given stake distribution applies. It is either pre\u2011programmed or, at a later stage, computed from a snapshot of a block.<\/p>\n<p>At the start of each epoch, leaders are chosen, each empowered to process transactions and sign blocks in particular slots. For every slot, a leader is selected at random from among stakeholders to create the next block, which links to the previous one in the chain.<\/p>\n<p>As transactions are recorded, the stake distribution used to elect leaders evolves. In Cardano, the likelihood that blocks become \u201ccanonical\u201d increases as more blocks are built on top of them (as in <a href=\"https:\/\/forklog.com\/en\/news\/what-is-the-proof-of-work-pow-algorithm\">Proof-of-Work<\/a>).<\/p>\n<p>Leader selection and slot assignment rely on stake distribution and a lottery. But it is not a race to find a winning hash. Instead, the leader for each slot is determined by a number generated from computations performed by stakeholders in the previous epoch. A slot\u2019s chances are proportional to its stake \u2014 the share of coins it controls directly or via delegates.<\/p>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">Cardano (ADA): uses and staking<\/h2>\n<p>The network\u2019s native cryptocurrency trades under the ticker ADA, after Augusta Ada King, Countess of Lovelace (1815\u20131852). The daughter of the poet George Byron, <a href=\"https:\/\/ru.wikipedia.org\/wiki\/%D0%9B%D0%B0%D0%B2%D0%BB%D0%B5%D0%B9%D1%81,_%D0%90%D0%B4%D0%B0\" target=\"_blank\" rel=\"noreferrer noopener\">Ada Lovelace<\/a> was a mathematician who described the first computing machine and wrote what is regarded as the first computer program. The smallest unit (0.000001 ADA) is called a Lovelace.<\/p>\n<p>ADA\u2019s primary function is value transfer on Cardano. According to Messari, in September 2022 the average transaction fee was about 0.33 ADA, or $0.15\u2013$0.17.<\/p>\n<p>ADA supports staking. Holders can delegate their coins to node operators running staking pools that participate in consensus. Delegation is built into the official wallets: <a href=\"https:\/\/daedaluswallet.io\/\" target=\"_blank\" rel=\"noreferrer noopener\">Daedalus<\/a> (by IOHK) and <a href=\"https:\/\/yoroi-wallet.com\/#\/\" target=\"_blank\" rel=\"noreferrer noopener\">Yoroi<\/a> (by Emurgo). Current yields for delegating ADA range from 3.7% to 4.2% per year.<\/p>\n<p>Staking pools take part in the network\u2019s consensus \u2014 there are <a href=\"https:\/\/adapools.org\/\" target=\"_blank\" rel=\"noreferrer noopener\">about 3,200<\/a> of them on Cardano (as of September 2022). Besides the amount staked, pool returns depend on other parameters, including:<\/p>\n<ul class=\"wp-block-list\">\n<li><strong>Saturation<\/strong>. This depends on a pool\u2019s weight versus competitors and the ratio of total pools to a target value computed by the Cardano protocol. The more \u201csaturated\u201d a pool, the lower its yield. This mechanism curbs centralisation and prevents dominant pools from emerging.<\/li>\n<li><strong>Desirability index<\/strong>. Calculated from stake size, pool costs and revenues, saturation and performance history. Daedalus and Yoroi use it to help distribute ADA delegated through these wallets.<\/li>\n<\/ul>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">Scaling the Cardano blockchain<\/h2>\n<p>Cardano currently processes around 250 transactions per second (TPS), well below the throughput of projects such as Solana. As <a href=\"https:\/\/iohk.io\/en\/blog\/posts\/2022\/07\/19\/an-analysis-of-the-research-underpinning-cardanos-scalability\/\" target=\"_blank\" rel=\"noreferrer noopener\">noted<\/a> in an IOHK post, the community is pursuing several approaches to increase speed.<\/p>\n<h3 class=\"wp-block-heading\">Pipelining<\/h3>\n<p>One avenue is adding pipelining to Ouroboros, to accelerate block propagation \u2014 the time it takes nodes to relay a new block across the network. The current goal is to reduce propagation time to five seconds.<\/p>\n<h3 class=\"wp-block-heading\">Input endorsers<\/h3>\n<p>Introducing input endorsers into the protocol also targets faster block propagation. These actors track new transactions and arrange them into pre\u2011assembled blocks. Two sets of blocks are envisaged \u2014 one for transactions and another for achieving consensus.<\/p>\n<h3 class=\"wp-block-heading\">Multi\u2011tier pricing<\/h3>\n<p>Developers also plan to add a multi\u2011tier pricing mechanism. In today\u2019s implementation, transactions execute sequentially with no prioritisation. Under heavy load, this can delay confirmations and open the door to DoS attacks.<\/p>\n<p>Multi\u2011tier pricing aims to make fees more flexible by splitting each block into three tiers: fair, balanced and immediate. Different transaction classes, as set by senders, would be included in each tier.<\/p>\n<h3 class=\"wp-block-heading\">Sidechains<\/h3>\n<p>Another set of solutions involves layer\u2011two protocols that run \u201con top of\u201d the base chain. This includes sidechains, slated for release in upcoming 2022\u20132023 updates. IOHK already has an <a href=\"https:\/\/iohk.io\/en\/blog\/posts\/2022\/07\/06\/introducing-the-cardano-evm-sidechain\/\" target=\"_blank\" rel=\"noreferrer noopener\">alpha version<\/a> of the first sidechain.<\/p>\n<h3 class=\"wp-block-heading\">Hydra<\/h3>\n<p>Hydra channels, named after the multi\u2011headed creature of Greek myth, offer another scaling path. These state channels, akin to Bitcoin\u2019s Lightning Network, let participants transact off\u2011chain while relying on main\u2011chain smart contracts.<\/p>\n<h3 class=\"wp-block-heading\">Mithril<\/h3>\n<p>Proposed in 2021, Mithril aims to make data synchronisation between Cardano applications more efficient. It reduces the time needed to validate messages by aggregating multi\u2011signatures more quickly.<\/p>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">Cardano\u2019s roadmap<\/h2>\n<p>Cardano\u2019s long\u2011term strategy <a href=\"https:\/\/roadmap.cardano.org\/\" target=\"_blank\" rel=\"noreferrer noopener\">comprises five phases (eras).<\/a><\/p>\n<h3 class=\"wp-block-heading\"><a href=\"https:\/\/roadmap.cardano.org\/en\/byron\/\" target=\"_blank\" rel=\"noreferrer noopener\">Byron <\/a><\/h3>\n<p>Named after the poet Lord Byron, Ada Lovelace\u2019s father. This initial stage (launched in September 2017) established the core components and prepared the settlement layer for decentralisation.<\/p>\n<h3 class=\"wp-block-heading\"><a href=\"https:\/\/roadmap.cardano.org\/en\/shelley\/\" target=\"_blank\" rel=\"noreferrer noopener\">Shelley <\/a><\/h3>\n<p>Named after the English poet Percy Bysshe Shelley, a friend of Lord Byron and author of the sonnet \u201cOzymandias\u201d. Another view is that it honours Mary Shelley, author of \u201cFrankenstein; or, The Modern Prometheus\u201d.<\/p>\n<p>During Shelley, thanks to the Ouroboros Genesis consensus, the platform transitioned fully to a decentralised mode. In July 2020 Cardano <a href=\"https:\/\/forklog.com\/en\/news\/cardano-developers-activate-shelley-update-on-mainnet\">added staking<\/a>, enabling the creation of staking pools to which ADA could be delegated.<\/p>\n<h3 class=\"wp-block-heading\"><a href=\"https:\/\/roadmap.cardano.org\/en\/goguen\/\" target=\"_blank\" rel=\"noreferrer noopener\">Goguen<\/a><\/h3>\n<p>The current phase, Goguen, is named after the American mathematician Joseph Goguen (1941\u20132006), a professor at Oxford and the University of California known for work in algebraic semantics and formal verification. Its main goal is to provide the foundation for decentralised applications on Cardano. <\/p>\n<p>Several major upgrades have taken place under Goguen. In autumn 2021 Cardano introduced a native token standard. It also delivered a computation layer for smart\u2011contract execution, including:<\/p>\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/developers.cardano.org\/docs\/smart-contracts\/plutus\/\" target=\"_blank\" rel=\"noreferrer noopener\">Plutus<\/a> \u2014 a platform for smart\u2011contract development and code execution based on the functional language Haskell.<\/li>\n<li><a href=\"https:\/\/docs.cardano.org\/marlowe\/learn-about-marlowe\" target=\"_blank\" rel=\"noreferrer noopener\">Marlowe<\/a> \u2014 a domain\u2011specific language for financial smart contracts. It lets subject\u2011matter experts without deep programming skills create contracts on Cardano. A dedicated portal for Marlowe developers is <a href=\"https:\/\/marlowe-finance.io\/\" target=\"_blank\" rel=\"noreferrer noopener\">available<\/a>.<\/li>\n<\/ul>\n<p>In September 2022 the Vasil upgrade was activated on mainnet. It introduced a second, more efficient version of Plutus scripts and a new cost model, lowering smart\u2011contract execution costs and transaction sizes while improving network speed.<\/p>\n<h3 class=\"wp-block-heading\"><a href=\"https:\/\/roadmap.cardano.org\/en\/basho\/\" target=\"_blank\" rel=\"noreferrer noopener\">Basho<\/a><\/h3>\n<p>The fourth stage is named after the Japanese haiku master Matsuo Bash\u014d. Its chief aim is to boost scalability and interoperability. Baseline performance is expected to increase, enabling high\u2011throughput applications.<\/p>\n<p>A key addition in Basho will be <a href=\"https:\/\/forklog.com\/en\/news\/sidechains-what-they-are-and-how-they-work\">sidechains<\/a> \u2014 autonomous blockchains operationally compatible with Cardano\u2019s mainnet. They can offload traffic from the base chain and serve as suitable testing environments.<\/p>\n<p>Basho will also introduce various account models. While Cardano\u2019s base chain will keep UTXO, it will become possible to move between UTXO and different account\u2011based models, improving interoperability and enabling new use cases.<\/p>\n<h3 class=\"wp-block-heading\"><a href=\"https:\/\/roadmap.cardano.org\/en\/voltaire\/\" target=\"_blank\" rel=\"noreferrer noopener\">Voltaire <\/a><\/h3>\n<p>The fifth and, for now, final era is named after the 18th\u2011century Enlightenment philosopher Voltaire (Fran\u00e7ois\u2011Marie Arouet). It envisages decentralised on\u2011chain governance (direct democracy associated with the Enlightenment and Voltaire) and a treasury system.<\/p>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">Further reading<\/h2>\n<p><a href=\"https:\/\/forklog.com\/en\/news\/filecoin-fil-how-the-decentralised-storage-blockchain-works\">Blockchain and cryptocurrency Filecoin (FIL): what it is and how it works<\/a><\/p>\n<p><a href=\"https:\/\/forklog.com\/en\/news\/what-are-soulbound-tokens-and-how-do-they-differ-from-nfts\">What are soulbound tokens and how do they differ from NFTs?<\/a><\/p>\n<p><a href=\"https:\/\/forklog.com\/en\/news\/what-is-the-near-protocol-blockchain-and-cryptocurrency\">What is the NEAR Protocol blockchain and cryptocurrency?<\/a><\/p>\n<p><a href=\"https:\/\/forklog.com\/en\/news\/what-is-a-layer%e2%80%912-solution-in-blockchain\">What is a layer\u2011two (Layer 2) solution in blockchain?<\/a><\/p>\n<p><a href=\"https:\/\/forklog.com\/en\/news\/what-is-hedera-hashgraph-hbar\">What is Hedera Hashgraph (HBAR)?<\/a><\/p>\n<p><a href=\"https:\/\/forklog.com\/en\/news\/what-is-chia-network-chia\">What is Chia Network (CHIA)?<\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>What are the architectural features of the Cardano blockchain? Where can you delegate its native coin for staking? Which scaling approaches look promising? A quick explainer.<\/p>\n","protected":false},"author":1,"featured_media":37802,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"1","news_style_id":"1","cryptorium_level":"1","_short_excerpt_text":"","creation_source":"","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[2113],"tags":[2117,1401,471,628],"class_list":["post-37801","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptorium","tag-101-altcoins","tag-cardano-ada","tag-charles-hoskinson","tag-iohk"],"aioseo_notices":[],"amp_enabled":true,"views":"155","promo_type":"1","layout_type":"1","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/37801","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/comments?post=37801"}],"version-history":[{"count":1,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/37801\/revisions"}],"predecessor-version":[{"id":37803,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/37801\/revisions\/37803"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media\/37802"}],"wp:attachment":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media?parent=37801"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/categories?post=37801"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/tags?post=37801"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}