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Although Cardano has officially entered the era of smart contracts, and ecological applications seem to be “full bloom”, in fact, there is no application that can carry the entire Cardano banner.
Original Title: “The First Experience of Cardano Ecosystem: It used to be a lot of ups and downs, but the road to the future is not difficult to follow”
Written by: Bai Ze Research Institute
With the revival of the DeFi project, public chains have sprung up in the past two months. Concepts such as GameFi, NFTFi, and SocialFi have gradually emerged. Blockchain seems to usher in another “Summer”, except for the most frequently mentioned ones. In addition to Ethereum and Binance Smart Chain (hereinafter referred to as BSC), some emerging public chains such as Polygon, Terra, Avalanche, and Fantom have gradually attracted people’s attention.
Cardano, which was once considered by the crypto community to be the most powerful competitor of Ethereum, was also complained about the slow progress of smart contract development. Cardano finally accelerated its development this year and officially completed Alonzo on September 13th, Beijing time. With the hard fork upgrade, Cardano has officially entered the “smart contract era”, ecological projects and users can finally implement and run smart contracts on Cardano.
According to data, the total pledge amount on the Cardano network currently exceeds 23 billion ADA, accounting for 70.8% of the total ADA circulation. Ranked according to the value of the total pledged tokens, Cardano currently ranks second with a pledge value of US$55.4 billion, surpassing popular public chains such as Polkadot, Ethereum 2.0, and AVAX. Solana is ranked first. The total pledge value is currently US$63.6 billion.
The past and present of Cardano smart contracts
In the entire Cardano roadmap, there are 5 major steps, namely Byron, Shelley, Goguen, Basho and Voltaire, which represent The public chain technology foundation, pledge incentives, smart contracts, optimized performance and on-chain governance, and what we are currently in is the Goguen that represents the era of smart contracts.
How does the Cardano blockchain work?
Cardano’s white paper is the first blockchain paper published and has been peer reviewed by many academic experts and scholars in the field of blockchain and cryptography from many top universities. It ensures that detailed plans are made to prevent future problems in advance. Therefore, Cardano stands out with its innovative features.
Proof of equity
Ouroboros is a cryptocurrency permission-free consensus mechanism based on Proof of Stake (PoS). It is implemented on the Cardano blockchain and comes with a cryptocurrency called ADA. Verifiers in PoS do not use a miner network like BTC’s PoW, but use their ADA shares to participate in verification and verification transactions.
All validators who make contributions will receive ADA rewards, and those who entrust their ADA tokens to the equity pool will also receive rewards related to their equity. ADA holders can participate in voting for future features, such as Project Catalyst voting.
Hydra is Cardano’s game-changing scalability solution, which means up to 1 million transactions per second (TPS). It uses UTxO technology to make Cardano a stable global system.
Cardano quantum proof uses the Sha-256 cryptographic hash function, which allows an input of any length to become a fixed-length output. In addition, the input is impossible to derive from the output hash.
In particular, in order to provide the best solution to the speed and expansion problems on other blockchains, the Cardano blockchain is divided into two main layers:
- Settlement layer: This layer works like a ledger that contains all historical transactions verified by the Cardano PoS protocol.
- Computing layer: DApp layer running on Cardano, implementing smart contracts.
Understand Cardano’s public chain model
To understand Cardano’s model, we first need to understand the Bitcoin and Ethereum models.
Ethereum is one of the first primary account-based cryptocurrencies created in the blockchain field, and it takes a very different approach to Bitcoin’s unspent transaction output (UTXO) model. In the Ethereum account model, the world state of the blockchain is not stored in the mined block. Instead, it is stored on the local node and then agreed by comparing the “StateRoot” or the overall state of the system.
The Ethereum Virtual Machine (EVM) interprets transactions as events, and determines the state transition results of these events according to the previous state. This makes it easier for developers to understand and facilitates the construction of many DApps, such as Uniswap, AAVE, Curve, etc.
With Bitcoin’s unspent transaction output (UTXO) model, the best way to understand this is to treat Bitcoin transactions as cash transactions. Using cash, suppose I have a $10.00 bill and I want to buy a piece of candy at a price of $2.00. In this case, I own the original UTXO of $10.00, and then send it to the cashier and pay $2.00. The cashier receives two UTXOs of $1.00, as change I will receive $5.00 and three $1.00 UTXO. The cashier has a total of 2.00 US dollars, I have 8.00 US dollars, but I have multiple different UTXO, when they are added together to form my “account balance”. My original $10.00 bill has been “consumed”. Instead, I now have a set of 1, 5 and a candy bar, while the cashier has a set of 1s and a missing candy.
And Cardano’s model returns to the root of the industry by creating an extended UTXO model (eUTXO). It is essentially a UTXO, but has two additional functions-the ability to maintain the state of the contract and the ability to execute the same contract code for the entire transaction sequence. eUTXO adds custom data and values to transactions, which allows arbitrary logic to interact with these transactions and open the door to smart contracts.
There are a lot of bumpy detours, but the road is not difficult to walk.
The biggest question ADA has received since its release has been the criticism of the total number of tokens issued. With 45 billion issuance and 57.61% of the circulation, ADA has been questioned by the transparency and liquidity of the currency price.
But this does not mean that its advantages are obscured:
Cardano’s multi-layer protocol performs advanced functions and has a settlement layer based on it, which is perfectly linked with the control layer. The control layer runs smart contracts, only for identity supervision, while the settlement layer will have an account unit to perform anonymous transfers of users. The agreement will seek to embrace a philosophical balance between regulation and decentralization, balance these requirements in a subtle and effective way, and create a cryptocurrency approach.
Advanced consensus mechanism
ADA is developed based on the proof-of-stake algorithm Ouroboros. Ouroboros security system can ensure the mathematical accuracy of Cardano functions. Unlike the consensus form of Bitcoin Proof of Work (PoW), Cardano SL uses the Proof of Stake method (DPoS) to reach consensus.
Academic research field
IOHK, the development company of the Cardano project, was founded by two heavyweights: Charles Hoskinson and Jeremy Wood, both former core members of Ethereum. IOHK cooperates with the world’s leading basic research scholars, most of which have been evaluated by academic peers. All major components and functional areas of work start from such research, with practical goals and the best way to achieve them. Engineers make full use of rigorous mathematical techniques to embed the strict standards that are usually only applied in high-risk fields such as aerospace and large-capacity banking software to the blockchain industry for the development of the Cardano project.
Cardano will not have high gas caused by Ethereum concurrency problems
Concurrency is essentially the action of participants in the system simultaneously accessing, contributing or interacting with the same object.
Ethereum can handle concurrency in a relatively reliable way, except for gas costs, because the platform is structured in such a way that the entire EVM is a huge global state. Participants can access the smart contract at the same time. Both Alice and Bob can exchange ETH -> USDC on Uniswap by interacting with the same smart contract, but when a large number of participants start to try to access the same thing, it will be greatly affected at the same time. For example, if you look at minting NFT on Ethereum, users may end up spending hundreds of dollars on gas just to mint NFT.
And Cardano uses the eUTXO model to insert the state into each UTXO on the Cardano blockchain. This is not a global state where Ethereum is blocked. Therefore, when interacting on Cardano, from the user’s perspective From a point of view, it reduces significant inflation (expenses). The price of this is that when interacting with the Plutus smart contract, the agent must “consume” the contract, and the consumption of the contract will cause problems because other agents cannot interact with the contract at that time. This is related to the certainty of Cardano-when you interact with its smart contract, you know exactly what you will get at the output. Each block can execute hundreds of transactions, but in order to allow multiple agents to interact with the same contract.
The newcomers come first? The Cardano ecosystem is ready to go
According to the ecological project display chart listed by @Cardians, in just three months from May to August 2021, the Cardano ecosystem has increased by as many as 130+ projects, including 6 loan products and 5 IDO startup platform, 2 synthetic asset platforms, 2 stablecoin projects, 1 derivatives market, 1 decentralized insurance product, 5 oracle products, 4 charts/checkers, 17 decentralized transactions All (DEX, 15 wallets, 8 payment products, 52 NFT/chain game projects, and 24 uncategorized projects.
First experience of ecological project
Mainnet launch time: the fourth quarter of 2021
Introduction: On September 1, 2021, the Cardno testnet first conducted the Alonzo hard fork. Soon after, a budding decentralized exchange “Minswap” launched their testnet on September 3, becoming the first Dapp to be deployed on Cardano.
Introduction: Exchange, earn and build next-generation DEX on the Cardano blockchain. Trade, build bridges and become a liquidity provider in financial markets that are open and accessible to everyone.
Mainnet launch time: the fourth quarter of 2021
Introduction: Cardax is a decentralized exchange that allows users to trade any native tokens on the Cardano chain with ADA.
Cross-chain bridge test network: https://yayswap.io/bridge/
Mainnet launch time: the fourth quarter of 2021
Introduction: The first high-performance decentralized trading platform on the Cardano blockchain.
Introduction: ErgoDEX is a non-custodial, decentralized exchange that allows quick, easy and secure transfer of liquidity between the Ergo and Cardano networks.
Introduction: ADAX is an automated liquidity protocol that facilitates transactions within the Cardano ecosystem in a fully decentralized and non-custodial manner.
Mainnet launch time: the third quarter of 2021
Introduction: A native, scalable decentralized exchange on the Cardano blockchain
Release time: Expected in the third quarter of 2021
Introduction: MELD is the first decentralized, non-custodial protocol for borrowing and lending fiat and cryptocurrencies on Cardano
Introduction: Aada is an encrypted asset lending platform on Cardano. Smart contracts allow to deposit assets and collect interest or borrow assets and perform financial operations.
Introduction: An interest rate curve algorithm and non-custodial liquidity agreement based on the supply of liquidity providers and the demand of borrowers.
Synthetic asset platform
Live time: October 2021
Introduction: Indigo is a Cardano-based algorithm and an autonomous synthesis protocol for on-chain price exposure of real-world assets.
Introduction: It is a decentralized multi-chain perpetual contract platform deployed on Polkadot, Cardano, Polygon.
Introduction: No more progress.
NFT/ Chain Tour
Introduction: Bondly will power the next generation of digital collectibles through encrypted projects, brands and artists.
Launch time: expected at the end of the third quarter
Introduction: ADAZOO is one of the first NFT-based games running on the Cardano blockchain.
Introduction: It is the NFT trading market on Cardano.
Launch time: Expected in the fall of 2021
Introduction: It is one of the first NFT-based games running on the Cardano blockchain.
Introduction: It is a global community-driven NFT market on the Cardano blockchain.
Summary: Can Cardano win this turnaround?
Although the Cardano network has completed the upgrade of smart contracts, and a variety of ecological applications are ready to be launched, it seems to be “full bloom”, but in fact, there is no application that can carry the entire Cardano banner.
Although the “technical foundation” of the Cardano development team is quite high, and more than 100 academic papers on the underlying technology of the blockchain have been published, can the Cardano network itself withstand the influx of transactions by a large number of users at the same time? It is still unknown.
As the marketing director of Cardano said: Let’s make it clear. There will be bumps on the road. The early user experience may not be perfect. Some early DApps have problems. We will see some good development teams and some bad development teams. This is a permissionless decentralized blockchain, so this is inevitable. Some DApps may not be safe. Cardano’s secure layer 1 platform provides robustness and high assurance-and Plutus is designed to minimize the possibility of exploits. But bad coding practices always bring risks to DApp users. It is also inevitable that we can expect bad actors to hope to take advantage of it through hacking, exploiting vulnerabilities, etc.
The current public chain market structure has completely changed. Before, there were ETH, BSC, Polygon, and then Solana, Terra, Fantom and other rookie blockchains. Their performance in the market is obvious to all. Looking at the entire public chain market, Cardano’s opponent is not just Ethereum, it needs to start an effective strategic layout to get out of its own independent market.
Waiting for the rise of the ecology and the big waves, whether Cardano can win the turnaround, and whether the ecological development can be worthy of the market value of the third place in the encrypted market, we will wait and see.