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LBank Labs: Will Cardano Advance to the Next Level with Approaching Alonzo upgrade?

Author: Smail

Review: Rachel, Xiangzhang

The Alonzo hard fork will enable users to create and deploy smart contracts on the Cardano blockchain, expanding territory for the much-anticipated native Dapp which is in shortage.

Cardano’s eye-catching rise finally arrived after 6 stagnant years mired in doubt and controversy. It’s ranked third on the list in terms of market value, with the “rags to riches” transformation gripping users’ imagination.

Founded in 2015, it claimed to be more scalable, secure, and efficient than others and aspired to compete with Ethereum and other major decentralized platforms. However, the following 6 years saw no technology breakthrough, no strategic planning, only mounting doubts, and increasing qualms. Even that is not bad enough. The project was also embroiled in drawn-out infighting that saw three factions compete for resources, and differ substantially in decisions regarding project implementation. This internal power struggle has significantly hindered its development.

Cardano’s status quo

March 13, 2020, marked a bleak day for ADA, Cardano’s native token which plunged to $0.019, a record low that indicated the market had “given up” on it without even the slightest ray of hope. Then 2021 sets in with the return of a bullish market which unexpectedly rekindles ADA, bringing a 1,400-time surge in just a few months.

Then the record was smashed again in August this year, reaching a historic new high of $3 after a two-month period of a market downturn, with the number of addresses with non-zero balances increasing nearly 240%. Meanwhile, user activity also surged significantly, with current daily active addresses (DAA) exceeding 110,000, and average DAA over 70,000, an increase of over 600% over last year.

In terms of the ecosystem, most of the current Cardano projects are based on Ethereum, mainly NFT and decentralized exchanges. With the rise of Cardano this year, DeFi, stablecoins, lending and borrowing, oracles, and synthetic assets are predicted to thrive gradually.

In terms of the technical layout, Cardano deployed its native token and upgraded the multi-asset-backed Mary protocol in March this year, aiming to largely eliminate shortcomings like complexity, inefficiency, and high cost of Ethereum and similar blockchains. In April, the team built a private environment to run the end-to-end testing of the ERC-20 Converter which allows users to migrate tokens from Ethereum to Cardano with a precondition that the token is supported.

Then in late August, the team announced the upgrade of Alonzo scheduled on September 13 to incorporate smart contracts through a hard fork. This is dubbed a major upgrade. According to PoolTool, 71.51% of Cardano staking pools are ready for it and have been upgraded to Alonzo node 1.29.0.

Highlights in Alonzo upgrade

The Alonzo hard fork will enrich functions available on Cardano to the full extent and further improve the ecosystem. That’s why it’s called a milestone upgrade in the history of Cardano.

The hard fork will enable users to create and deploy smart contracts on Cardano, expanding territory for the much-anticipated native Dapp which is in shortage. It also marks the end of the Shelley phase and the beginning of Goguen.

The upgrade consists of three stages:

1. Alonzo Blue

2. Alonzo White

3. Alonzo Purple

Alonzo Blue, stage one, takes onboard smart contracts of about 50 participants with tech backgrounds most of whom are stake pool operators (SPO). These SPOs are responsible for detecting and adjusting invalid errors and patching up small loopholes with testing. Detected errors will be fixed by Alonzo via later tests.

Alonzo White is the second stage which seeks to add more functions and attract more participants on the basis of Alonzo Blue. In this stage, the network will be tested by hundreds of new users.

Alonzo Purple, the third stage, is an open testnet able to accommodate thousands of participants. This stage consists of two phases, “light purple” and “dark purple”. The former supports simple smart contracts, while the latter more complex ones.

In addition, there are two smaller stages after Alonzo Purple, “Alonzo Red” and “Alonzo Black”. Both aim to add more users to the testnet and identify bugs that may need to be fixed. The significance of these two final stages is self-evident in terms of assuring the quality, paving the way for the hard fork by freezing code, and determining the final version of Alonzo.

Cardano’s future outlook

As the hard fork approaches, Alonzo upgrade has been put under the spotlight, with the Cardano community and the crypto market discussing the possibility of Cardano overtaking Ethereum to become the leading player.

In fact, Cardano is already the world’s largest PoS blockchain. It has 3000 stake pool operators who are responsible for all of the block’s output. The greater the number of block generators, the safer the network is, and the lower the probability of attacks launched with 51% majority. However, it’s still a long way to go if you compare it with Ethereum which has 250,000 validators. It’s highly likely that the Alonzo upgrade will help it advance further and bring it one step closer to its ambition of playing catch-up to Ethereum.

The market was previously dominated by public chains like BSC, Polkadot, and Polygon, and now welcomes the rise of Solana, Terra, Fantom, and lots of others wishing to make their debut. Amid fierce competition, projects rise and fall while vying for limited market resources. That puts Cardano in a situation where it has to carve out a unique niche for itself with sound strategic planning and thought-through layout, instead of only focusing on overtaking Ethereum.

We’ve learned that LBank Labs has been keeping a close eye on the development and latest progress of Cardano and related projects within its ecosystem, as well as new deployment. A small-scale fund has been set up internally to invest in its primary and secondary market. If virtuous circulation within the ecosystem proves to be working, which may take half a year or so, the true status and consensus influence of Cardano will begin to show.



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