What is Cardano?

Published in

The Poloniex blog

5 min readApr 12, 2022

TL;DR

Cardano is a blockchain platform founded by Ethereum co-founder Charles Hoskinson. It utilizes a Proof-of-Stake consensus mechanism called Ouroboros, and its development is informed by peer-reviewed research. Being that it uses PoS to secure its blockchain, token holders can stake its native token, ADA, in order to help secure it, receiving cryptocurrency rewards in return.

The Beginnings

Cardano was founded in 2015 by Ethereum co-founder Charles Hoskinson, officially launching in 2017. Interestingly, Cardano did not and does not have a white paper, instead opting for its development and mission to be in part dictated by peer-reviewed research into blockchain technology and use cases. IOHK, the company responsible for the research and development of Cardano’s technology and use cases, is also founded by Hoskinson.

How does Cardano work?

The Ouroboros Consensus Protocol

The Ouroboros Consensus protocol is Cardano’s Proof-of-Stake consensus mechanism securing the Cardano blockchain. Like other PoS protocols, Ouroboros distributes responsibility for securing the blockchain across a network of node operators. Here, node operators act as staking pools, where users who want to stake their ADA can do so to help secure the blockchain. Because Cardano’s vision is to be completely decentralized and community run, its consensus mechanism is designed to be secured by the community as well.

Staking ADA

As previously mentioned, one can stake Cardano’s native cryptocurrency, ADA, in order to secure the Cardano blockchain. ADA holders can either delegate their stake to a stake pool, or run their own, provided they have the infrastructure, and thus reliable connection that is necessary to run one.

The easiest way for an ADA holder to earn rewards is by utilizing the two crypto wallets developed by Cardano, Daedalus and Yoroi.

Wallets

Daedelus is an open-source wallet. It is a full-node wallet, meaning it lends itself more to security. While this means that the Daedelus wallet is more secure, downloading the entire blockchain can prove to be a tedious operation.

Yoroi, on the other hand, is a light wallet focused on ease-of-use and simplicity, and does not download an entire copy of the blockchain.

Both support staking Cardano and were developed by IOHK and EMURGO, respectively.

Cardano’s main use cases

Cardano focuses on four areas of development: Digital identity, credential verification, product counterfeiting, and traceability.

These pain point solutions, with specific use cases such as academic verification, supply chain records, and stopping counterfeit goods, rely on the security and immutability of blockchain technology. And because Cardano is specifically focused on these issues, its partners IOHK and EMURGO have developed applications such as Atala trace and EMURGO’s own supply chain tracking solution.

With these problems being at the forefront of Cardano’s development along with its far-reaching academic and governmental connections, the platform is well-suited to tackle them.

Cardano’s Developer Ecosystem

Because Cardano utilizes a PoS mechanism, it can handle more throughput, and is cheaper and faster for developers. This, along with its emphasis on research-based development, has proven quite promising for developers.

Tools

There are multitudes of tools provided to make it as seamless as possible for developers to deploy their dApps on the platform. Cardano’s has tools that allow for its integration with existing services, the usage of various APIs, the creation and management of wallets, native tokens, and NFTs, etc.

With all of these tools and because Cardano is cheaper and faster than other blockchains, developers have been flocking to the platform, making it all the more attractive, as according to its developer site, the ecosystem has over 2 million wallets.

Who oversees the development of Cardano?

Cardano is a decentralized blockchain platform designed to not only allow for developers to deploy smart contracts and thus dApps on its blockchain, but also develop solutions to multiple problems we see in today’s world. The main problems that Cardano is set to tackle are credential verification, product counterfeiting, supply chain tracking (traceability), digital identity. These are quite large problems to solve for, and so Cardano needs the appropriate support to follow through. Hence why oversight of the platform’s development is shared by different entities: The Cardano Foundation, IOHK, and EMURGO.

The Cardano Foundation

The Cardano Foundation is a not-for-profit entity responsible for the legal custodianship and overall reach of Cardano. It essentially helps make sure that the platform’s development is in-line with its values. It is also tasked with connecting with regulatory bodies around the world to ensure the smooth expansion of Cardano’s technology.

IOHK

IOHK is Cardano’s technology and research provider. Its research arm provides a peer-reviewed and academically rigorous backing to Cardano’s developments and leads blockchain education initiatives. IOHK’s technology solutions cover public, private, and governmental sectors.

EMURGO

EMURGO is Cardano’s partner that provides commercial solutions, which basically means it’s in charge of fostering a strong environment for developers on the Cardano platform. As such, it develops and provides dApp tools, building our infrastructure to support smart contract deployment.

What can you do with ADA?

ADA, the native cryptocurrency of the Cardano platform can be used like any other cryptocurrency to pay for goods and services, or as a store of value. Fees on the platform are also paid using ADA, and holders can, as previously mentioned, stake their ADA to secure the network and earn rewards in return.

Where to buy Cardano (ADA)?

ADA is available to buy on multiple exchanges like Poloniex! You can acquire ADA through trading or through buying directly with your debit or credit card.