What is Cardano (ADA)

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Cardano is an ambitious blockchain project that aims to provide secure and scalable value transfers for governments, businesses, and individuals. It is a third-generation blockchain platform. Unlike some competitors such as Ethereum, NEO, Bitcoin, and ARK, Cardano works with a methodical, scientific approach.

The platform is developed by researchers and scientists. Each development step has been logged and peer-reviewed before being integrated into the entire platform. Cardano has been in development since 2014 and has not yet been fully developed. However, the mere claim to learn from the mistakes of other blockchain projects and to pursue a methodical-scientific approach makes the platform a serious competitor.

Cardano — Who is behind it?

There are three main actors behind the platform: the Cardano Foundation, Input Output Hong Kong and Emurgo.

The Cardano Foundation

The Cardano Foundation is run by five people. Michael Parsons FCA is the Chairman of the Foundation. Tom Kelly serves as Marketing and Community Manager, Bob McDowall is a Special Advisor, Steve Wagendrop is Delivery Assurance Manager and Juliette Adelfang is Project Administrator.

The team behind the Foundation ensures a high level of transparency regarding the development of the platform. Each development step is meticulously recorded and recorded. This ensures that everyone involved in the project can view the development status at any time, which prevents undesirable developments.

Input Output Hong Kong

Input Output Hong Kong develops solutions for academic institutions, governments, and businesses. The company is led by Jeremy Wood, former CEO of Ethereum, and Charles Hoskinson. A total of 17 Input Output Hong Kong developers are working on the platform’s protocol.


Emurgo is a Japanese company that supports companies in integrating blockchain solutions into their own systems. It also finances start-ups. Emurgo is the interface between the platform and the business world.

All in all, the Cardano Foundation is responsible for building a community, marketing the platform and providing education on cryptocurrencies. Input Output Hong Kong provides the manpower for the development of the protocol and Emurgo helps to establish the protocol on the market.

Cardano — Functionality

Cardano has the claim to learn with academic methods from the mistakes of other blockchain projects. How she implements this is described below.

Two layers: CSL and CCL

This primarily means that the protocol works with two different layers. On one layer, the so-called Cardano Settlement Layer (CSL), information about transactions is transferred, as with Bitcoin. This includes information about the amount, the remitter, the recipient and the transfer time. The token of the platform, ADA, is also transferred on this layer.

The second layer, the Cardano Control Layer (CCL), processes account data. This includes information that is stored in a smart contract, for example, but also digital identities. The separation of the two layers has the advantage that updates can be carried out separately and specifically. In addition, the platform becomes more secure because one hack of one layer does not affect the other. This enables the developers of the platform to store and process personal data metadata separately and securely.

2. Proof-of-Stake instead of Proof-of-Work

Cardano uses a Proof-of-Stake protocol. More specifically, a delegated proof-of-stake protocol. Basically, proof-of-stake protocols have the advantage that developers can precisely control under what conditions a user can become a stakeholder. Stakeholders have a defined set of coins. This set of coins allows them to verify transactions within the distributed network.

If a stakeholder behaves only to his advantage, for example when he tries to manipulate transactions for his own benefit, the protocol recognizes this behavior and excludes this stakeholder directly from the network. This also includes the complete loss of the coins held. Under certain circumstances, this can be very expensive for a stakeholder.

If a stakeholder behaves according to the rules, he is part of a decentralized network with other stakeholders. All stakeholders have the function of checking transactions and verifying them against the relevant protocol. The more stakeholders confirm a transaction, the more likely it is that it has been carried out correctly. For operating a node, stakeholders receive a reward for each verification of a transaction block.

The platform uses a form of the proof-of-stake algorithm, which allows nodes to be selected and chosen. The Delegated Proof-of-Stake algorithm (dPoS) allows stakeholders to choose so-called consensus nodes. These nodes perform a special form of task, they confirm the correctness of transaction blocks that are integrated into the blockchain. Every stakeholder has the possibility to operate a consensus node himself if he is selected. In addition, each stakeholder can choose any other stakeholder.

Both stakeholders, whether the voting stakeholder or the elected stakeholder, have an advantage. Stakeholders who choose another stakeholder will receive a reward if the chosen stakeholder can operate a consensus node. Each consensus node receives a higher reward. This not only provides incentives to operate a consensus node but also to vote for consensus nodes.

Cardano uses the delegated proof-of-stake algorithm Ouroboros. This algorithm was jointly developed on a scientific basis by the Tokyo Institute of Technology, the University of Edinburgh, the University of Connecticut and Input Output Hong Kong. As with Cardano itself, each development step was scientifically tested several times before it was finally integrated into the protocol.

Ouroboros works with so-called time epochs. In each epoch, there are different time intervals, so-called slots, which represent potential blocks. An algorithm randomly selects a consensus node that can select a slot and fill it with transaction information. After a block has been created, the block is forwarded to other nodes for verification. In each time period, all newly created tokens are collected in a pool and then distributed to individual nodes, depending on the participation.

If a forest is to be deforested and only one fixed time window is available for each square meter, the lumberjack is given the opportunity to cut the next square meter that has the most timber. Because he has the most wood, he is chosen by other loggers. If he has been selected, he can cut the next square meter in the given time window. The lumberjacks who have selected this lumberjack will share in his yield. They hold a certain amount of wood for their votes, which they can sell for their own livelihood. If the time window closes, a new woodcutter is selected and the yield is divided among all woodcutters.

The trick of the Delegated Proof-of-Stake algorithm is that Consensus Nodes can process multiple slots on many different blockchains at the same time. This solves the scaling problem. The platform uses the Sharding concept, which is currently being implemented at Ethereum.

3. Haskell, Daedalus, and Governance

Haskell is a programming language based on mathematical principles. It works with functions, which means that values in these functions can be changed, but changing value does not change the underlying function. If the basic functions of the programming language are changed, the programming language no longer works.

The advantage of using Haskell is that every programmer must program according to the same rules in order to advance the development of the protocol. The mathematical principles of this programming language virtually rule out human error and make it easier to check parts of the protocol that have already been programmed. The Wallet Daedalus not only stores ADA tokens but also acts as a node, allowing the staking described above to be carried out.

The governance model is critical for the future development of a project. In order to be able to conduct governance, which means nothing more than to lead and decide, a model is needed that allows decisions to be made. Cardano’s governance model works through the blockchain.

Stakeholders, i.e. owners of ADA, can decide which future developments will be integrated into the protocol. This form of governance has the advantage that each stakeholder can vote on an equal basis and in a democratic way. This integrates the community directly and makes hard-forks superfluous. Voting results, for example on whether another programming language should be used in the future, are achieved before they are implemented in the protocol. The decision to carry out a Hard-Fork, a system update, is thus not only in the hands of the developers. The governance model has not yet been fully implemented.

Another factor is the financing of future developments of the protocol. From each generated block of the blockchain, 25% of the revenue is retained. This ensures the further development of the protocol and the entire platform. This offers the advantage that no crowdfunding or IPO has to be held to ensure the future development of the platform. All in all, this type of financing offers greater independence from investors but makes a large community all the more important.


Cardano is a platform that has set itself the goal of being able to offer a third-generation blockchain. From the beginning, the platform has been designed in such a way that it can also be used by governments as a transaction system. From the very beginning, the developers have ensured that the use of the ADA token is compatible with legal regulations in various countries. Compared to Bitcoin and Ethereum, Cardano combines the approaches of both platforms. This includes the development of DAOs, dApps, and the use of a distributed, peer-to-peer transaction system. The platform could ensure that cryptocurrencies can be used internationally, legally. The platform ensures this through its scientific and methodological approach.

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The Cryptocurrency Consultant

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Bitcoin, Blockchain and Cryptocurrency Educator. Passionate Writer. My talent is to easily explain complicated contexts.

The Startup

Medium's largest active publication, followed by +479K people. Follow to join our community.