[DarpalRating]: Killer chain, arrives, an overview of Cardano
January 8th, 2018; by Darpal Rating team
Translated by XU Guangqian Tyler Grant
These evaluations only represent the author’s personal opinion and are not intended as investment suggestions.
Cardano’s website: cardanohub.org
Cardano （A-investment grade）
Long-term investment
Risk: low
Popularity: high
The Cardano Foundation takes its name from Gerolamo Cardano, one of the most influential mathematicians of the Renaissance. Hailed as a scholar and polymath with encyclopedic knowledge, Cardano made great contributions in the fields of mathematics, physics, and medicine. His book On Gambling Game is regarded as the first book about probability theory.
Though blockchain is still in its infancy, its potential influences could be no less than those the Renaissance once had on culture. Cardano, the blockchain and decentralized platform, is unique in many aspects: its founder, its one year long crowdfunding, and its performance on the secondary market in October, 2017. However, when people try to understand what Cardano really is, they may find its introduction confusing. What is the first blockchain project generated from “scientific philosophy”?
Cardano’s philosophy refers to two principles:
First, this project proceeds according to a strict set of academic principles.
Due to the first principle, the Cardano team consists mostly of individuals with strong academic backgrounds.
There are five academic papers on Cardano’s website that demonstrate their rigorous academic process. However, simply sounding impressive could not have been enough to make Cardano one of the top ten or top five digital currencies in the world. In this article, we will help you understand Cardano in the most straightforward manner possible.
Vision (weight: 30% score: 93)
According to Cardano’s website, Cardano is a completely open source blockchain platform. It is the first blockchain worldwide that is research-driven and whose precision and security, along with the design of its mechanism, can be mathematically proven (through use of a technique called formal verification). Cardano doesn’t aim to establish a protocol like Ethereum, or a smart contract, but a layered blockchain ecological system.
Strategic positioning
Full score: 60 Actual score: 53
Cardano was founded in 2015 with the goal of changing the way cryptocurrencies are designed and developed — to become the synthesis of all past innovations while surpassing them. Cardano holds that various problems exist both on the first and second generation blockchains; with second generation platforms like Ethereum, for example, there are problems related to malicious forks, scalability, cross chains, development, and so on. In order to thoroughly solve these problems, Cardano pursues a different method: starting from research and academics.
Cardano tries to find solutions to existing blockchain problems through a system of extensive research. Scientists conduct peer review via meetings and publish papers. They seek out esteemed universities for further aid. All scientists involved with the project bring joint supervision and further communal discussions and development. Only then, based on these scientifically evaluated contract and design evaluations, do engineers write credible code — meaning every protocol logic in Cardano has passed through the powerful academic community behind it, receiving their strong consensus.
As Cardano is still in the early stages of development, there is neither a complete blueprint nor an authoritative whitepaper guiding the project. Instead, Cardano outlines some design principles based on project development and its own evolving research methods.
Among these design principles, let’s choose some important ones that are strictly observed by Cardano. They are as follows:
- Separated layer
- Strict peer review
- Rapid alternations of design
- Overt learning from all kinds of altcoins by embracing features that make sense
- Standards-driven project process, using dedicated foundation to lock down the final protocol design
It is easy to understand the first principle. A separated layer means the computing layer and the settlement layer are separated. To be more specific, ADA, the token of Cardano, is flowing on the settlement layer and the computing layer is responsible for the development of smart contracts and all other applications running on the Cardano platform.
Here, we will focus on several core principles of Cardano.
1. Research-driven: From the earliest stages of the project it is evident how greatly Cardano has emphasized design and development. As for other elements which make up Cardano’s principles — such as commercial interests, supervision, profit distribution and operation — it is not that they are unimportant for us to analyze, but that the white paper doesn’t give any fixed design on those aspects as of yet. Instead, the paper leaves lots of room open for future improvement. Those who work on Cardano first study cryptology literature and then gradually design a tool box of crypto theories. Only then, based on the paper database and many research findings of IOHK, do they apply what they learn to confirm the final design of the Cardano protocol.
2. Self-adaptative and self-evolving: though Cardano is developed based on protocols, source code, and utilities, it still needs to connect within traditional social contexts. All kinds of past token protocols are rife with examples of failure, making it clear that in order to survive protocols themselves must evolve in relation to changes in the market and technologies. The self-adaptation and self-evolution features of Cardano are reflected in every phase of this project. Cardano can learn from past experience to avoid failed methods and follow more successful ones.
3. Rigorous mathematical logic: Cardano isn’t the result of impulsion, guesswork, or fantasy. It is designed only after countless mistakes and problems are already solved. Cardano takes all that is gathered during this process and then modulizes it for future use, thus forming highly rigorous mathematical logic to back their endeavors.
In summary, after establishing the settlement layer where ADA operates, Cardano builds a separated computing layer to deal with the multi-layered smart contract, such that every layer of this contract can carry out its own duties. As a result, Cardano can eliminate the risk of forks and increase the system scalability both vertically and horizontally.
Cardano, while taking advantage of the best features of Bitcoin and Ethereum, tries to improve on its independency. The most notable feature of Cardano lies in its protocols libraries which support Cardano’s future business and distributed applications. At this stage, Cardano is still evolving. Many of its functions still remain to be developed. The project leaves much room for improvement and there are still many possibilities. Here, we hold that Cardano’s protocols are mid-level, or average, with a score of 53.
Project necessity
Full score: 40 Actual score: 40
Cardano’s blockchain stack has several levels of infrastructure. It separates CSL (Cardano Settlement Layer) from CCL (Cardano Computation Layer) and separates money from computation data. As a result, all layers can connect with each other while performing their own functions, which enable them to conduct money transactions and explore the possibilities of smart contracts. Cardano also adopts a revolutionary proof of stake system — — Ouroboros, which is the most valuable aspect of Cardano.
This is the first POS stack algorithm in the world whose safety can be demonstrated via mathematical proof, a fact that has already been confirmed by leading cryptography institutions. IOHK (Input Output HK), the development company of Cardano, has established an alliance of computer science projects and cryptography projects. The University of Edinburgh, the Tokyo Institute of Technology, and other leading institutions around the world are the members of this alliance.
Cardano is the first blockchain project based on peer reviewed academic research. We hold that besides its profitability, which is generally already known, Cardano also has some potentially profound strategic advantages. If we compare blockchain technologies of today to previous instances of burgeoning revolutionary technology, we will find that for all of these developing inventions — whether mobile internet, internet, or any industrial revolution — as one truly valuable technology appears, develops, faces challenges and setbacks and finally takes off, three aspects will reinforce each other: culture (community), economy (capital), and science (technologies), with the weight of these three elements varying continuously.
Recently, block chain investment is popular in both primary and secondary markets. In fear of missing the opportunity for great profits, big players are rushing into the market instead of exhibiting caution. They are brining traffic, cash, attention, and labor, and making the present capital-driven market more stable. Yet with many earlier projects moving on to further stages of development, some projects can no longer depend on sheer concepts, but need to be justified with results. With incoming competition, some artificial or unrealistic ideas are going to fade out. The capital and community will not be pleased with any such projects after finding out their investment were based on nothing substantial. The next wave of rising pioneers will be those who are practical and technology dependent.
As for Cardano, it is still in its early stages. We cannot determine what Cardano will look like, or the situation it will be in, at its final stage. However, Cardano is backed by a resourceful academic community of researchers that can potentially channel the strength of the academic field into blockchain technologies for further development. As time goes by and this exhaustive research brings results, with an abundance of relating papers being written, more and more people will find the value of blockchain technologies and their unlimited ability. When more and more colleges, scientific researchers, universities and academic institutions engage with the blockchain field, especially when they contribute to the underlying blockchain technologies, there is good reason to believe that they will be the continuous driving force for the technology-driven trend.
Therefore, in this dimension, we hold that Cardano is very necessary with the full score: 40.
Team (weight: 30% score: 89)
According to the website of Cardano, its development team consists of a group of international engineers and scientists. Its core developers contain more than 50 people including engineers, scientists and operating officers. Cardano has three supporting organizations:
First, the Cardano Foundation. Situated in Switzerland, this company is mainly designed to support Cardano users’ community and to cooperate with governments to supervise business affairs.
Second, IOHK, a development company. It has a contract with Cardano and can develop the Cardano platform until 2020.
Third, Emurgo, an investment startup. This company will cooperate with business enterprises to integrate them with the Cardano blockchain.
Technical team
Full score: 40 Actual score: 40
The whole Cardano team is made of experts from all over the world. IOHK is the team leader. Core developer teams come from Well Type, Serokell, Runtime Verification, Predictable Network Solutions and ATIX. Besides, Grimm、RPI Sec and FP Complete also serve as Cardano’s external auditors. In this way, the quality of Cardano can be ensured.
IOHK, the development company of Cardano, was co-founded by Charles Hoskinson and Jeremy Wood, both former core members of the Ethereum team. Charles left Ethereum before Ethereum was made available to the public and soon after took part in developing Bitshare. It can be said that in terms of technological experience, Cardano founders have accumulated experience both from Ethereum and Bitshare.
As for this dimension, here are our evaluations:
Operation Team
Full score:40 Actual Score: 39
From September 2015 to January 2017, we can see from the crowdfunding of Cardano that in its operation team, Cardano Foundation is in charge of supervision and auditing.
Emurgo, a Japanese group, has signed a contract with IOHK until 2020. They will jointly provide sources to establish a Cardano ecology. Emurgo also becomes the intermediary between Cardano ConsenSys and Ethereum.
As Cardano is able to obtain peer review and the recognition of many colleges and academic institutions, we can see that its operation team has rich experience and resources.
In summary, we hold that Cardano’s operation team possesses rich resources. So in this dimension, here are our evaluations:
Investors (and consultants)
Full score: 20 Actual score: 10
Emurgo is the investor. We can see from its background that it is actually bound to Cardano and it will invest more into blockchain capital and the project.
In a word, Emurgo mainly incubates Cardano now. It doesn’t have other successful investment experience. Therefore, here are our evaluations:\
Therefore, our evaluation on the Team dimension:
Implementation (weight: 20% score: 90)
The technical team of Cardano has already released its mainnet and wallet. After Cardano finishes building its settlement layer, its team will gradually shift priority onto its computing layer.
With the help of our evaluation model, we will evaluate the protocol implementation ability of Cardano from two aspects: the implementation of every plan on the whitepaper and the code updating situation.
Implementation of plans on the whitepaper
Full score: 50 Actual score: 42
Cardano updated its development plan in October of last year. According to this plan, Cardano is now at the Byron stage. At present, it will continue to work on the development of its settlement layer. It has already finished building the settlement layer of the multi-layered structure and released its mainnet and wallet.
At the next stage — — Shelley stage, Cardano will focus on designing its computing layer. First, it will gradually develop its VM (virtual machine) and finish the wallet backend expected to go public in 2018. Furthermore, Cardano, written in Haskell, will improve its security with the help of Plutus, Cardano’s own smart contract language. In the future, Cardano will enable its users to use traditional programming language such as Java, C, and Javascript to write distributed applications.
After the Shelley stage, Cardano will continue work on a new set of functions including its side chain plan, metadata solution on its whitepaper, and so on. It is expected that in 2019, Cardano will launch a trusted hardware that allows offchain payment.
At present, the wallet development on Cardano’s settlement layer is stable. The wallet can be downloaded from Cardano’s official website, which just meets the requirement of the corresponding plan on its whitepaper. So in this dimension, here are our evaluations:
Code Committing
Full score: 50 Actual score: 48
Cardano’s main library on Github is: https://github.com/input-output-hk/cardano-sl/
We can see that so far Cardano has been committing code for 3 months, including December, 2017 (more than 280 times in this month). This means Cardano has kept a good pace in upgrading code and has successfully implemented its plan so far. It is evident that Cardano is gradually working on its development. So in this dimension, here are our evaluations:
Market (weight: 20% score: 89)
As for projects that are already in their growth period, most of their tokens have already entered the secondary market. Therefore, these tokens offer a very objective and effective method to evaluate their market performance based on their popularity and performance on the secondary market.
Exchange Listing
Full score: 50 Actual score: 39
Based on the information we have gathered, binanca and bittrex, two top exchanges, have chosen to support Cardano. According to our evaluation model, Cardano has gained a great amount of support. However, there are still not many exchanges that include Cardano. So we give a score of 39 to Cardano in this dimension.
Volatility of Market Value
Full score: 50 Actual score:
From this figure, we can see that ADA has continued developing stably after being listed, and that there are no large fluctuations in value. Therefore, we think that in the past three months the value of ADA has kept improving without significant volatility.
So here are our evaluations in this dimension:
Independent dimension: risk
Whether considering Cardano’s positioning, team, protocol-implementing ability or market performance, we believe that Cardano is an above average investment in blockchain technology. Moreover, Cardano’s roadmap is still in its early stages. Owing to the fact that Cardano is developing stably, we can still look forward to its further development. If Cardano is able to follow its whitepaper, it will be a powerful competitor among 3rd generation cryptocurrencies. Cardano protocols, which have passed scientific peer review and gained recognition, will be Cardano’s most powerful advantage.
Overall, our evaluation for the Risk dimension is: High
Independent dimension: popularity
When evaluating Cardano’s popularity, we mainly look at its official social media, such as the activity of its telegram group and slack group. At the same time, we also consider the number of followers it has on Twitter and Facebook.
In its community, Cardano has 58,800 followers on twitter and more than 16,000 followers on Facebook. There are plenty of true posts every day and the Cardano community is pretty active.
So in this dimension, we hold that Cardano is: Very Popular
Final evaluation
Taking all of the information above into consideration, we give our evaluations on Cardano:
Final Score: 90.4 A-
Darpal Comment: Taking all of these evaluations into consideration, we give a high score to Cardano in every dimension. It is reasonable that Cardano has gained such widespread recognition from the market, because it has a team with three organizations and its positioning and protocol design are revolutionary and logically rigorous. Most importantly, Cardano is practical and effective as it develops code and implements protocols. Although the value of Cardano has already increased several hundred times, it is also important to realize that it is still in its early stages of development. As Cardano tries to “surpass all past protocols and keep evolving,” and as the blockchain industry itself develops, Cardano still needs to be tested by time, academic evaluations, and the market moving forward.
Notes:
Our evaluations in all dimensions are being upgraded. We will try our best to ensure that our information resources are objective, reliable, and can be quantified. Due to the fact that details relating to Dfinity’s public financing are undetermined, we give it a default score in the first two aspects of community governance. After we get the detailed information, we will upgrade the information and change the score accordingly.
Price may change around value, especially under human intervention. However, in the long run, price will match value. We aim to evaluate project investability for their long-term value. Therefore, our opinions are referential only for long-term token holders and those who do short-term trading can learn nothing from our words (we strongly oppose short-term speculations on tokens).
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