Cardano (ADA) is a third generation Proof of Stake blockchain, focusing on scalability, interoperability and governance.
Cardano’s network originally launched in September 2017 as a federated, permissioned blockchain where block production was controlled by a few central entities. These entities were founded as the core pillars supporting the growth and adoption of the Cardano ecosystem.
Input Output Global (IOG) is responsible for engineering the Cardano blockchain itself, EMURGO is the venture and commercial arm of the ecosystem and the Cardano Foundation looks after community management and the future strength of the network itself.
The Cardano project’s development is one with five distinct phases before full completion.
- Byron: The phase of Cardano’s mainnet launch in a federated and permissioned state. The launch of the ADA cryptocurrency.
- Shelley: The era of decentralization and a transition to Proof of Stake, where Cardano moved from being static and federated to dynamic and decentralized.
- Goguen: The introduction of smart contracts into the network.
- Basho: Bringing scalability and thousands of transactions per second (TPS) to the network.
- Voltaire: The roll-out of on-chain governance to the decentralized network.
Proof of Stake Transition
In 2020 Cardano successfully transitioned to a decentralized network powered by Proof of Stake where block production was managed by Cardano community validators.
Initially, only a percentage of the blocks were produced by the community, with the original entities still responsible for some block production. However, Cardano is now fully decentralized.
Cardano’s Proof of Stake is underpinned by the Ouroboros Praos consensus mechanism, a peer-reviewed Proof of Stake blockchain protocol. This paper guarantees a similar level of security as Bitcoin, without the energy needed to secure the network.
Cardano’s accounting structure is based on the Unspent Transaction Output (UTxO) model. This is the same accounting model as Bitcoin.
To accommodate the use of smart contract scripts, Cardano employs a unique Extended Unspent Transaction Output (eUTxO) model. This enhances Bitcoin’s original design and facilitates highly secure smart contracts.