Cardano at Dawn of Scaling Era

9/9/2024

With the Chang Hardfork behind us, Cardano is now moving toward the next steps in its journey in the pursuit of scalability. With the foundations firmly laid with the addition of Plutus V3 and endless possibilities through governance processes, Cardano looks ready to shine its brightest in the near future. This article will delve into how Cardano will scale through various events such as Plutus V3, Zk roll ups, Partner Chains, and more.

Improvements with Plutus V3

The introduction of Plutus V3 after the Chang Hard Fork significantly enhances Cardano’s ability to scale by optimizing transaction efficiency and block utilization. While Plutus V2 could manage around 25 transactions per batch, the 30% reduction in script sizes and faster execution times in Plutus V3 will allow for more transactions to be processed in each block. This helps mitigate network congestion during periods of high network activity and trading volume on DEXs, ensuring smoother performance and quicker transaction confirmation. As a result, Cardano’s network becomes more resilient and capable of supporting growing decentralized applications and increased dapp usage without compromising user experience.

ZK Roll-Ups

The introduction of Plutus V3 not only enhances smart contract efficiency but also integrates new cryptographic primitives, such as the BLS12–381 curve, which enables zero-knowledge (zk) technologies like zk proofs and zk rollups. These zk rollups can batch large volumes of transactions off-chain and verify them on-chain with a single proof, drastically reducing the computational load on the network.

In terms of scalability, zk rollups have the potential to scale a blockchain network by 10 to 100 times, allowing thousands of transactions to be processed off-chain and settled on-chain in a fraction of the time. This significantly boosts the network’s throughput, enabling Cardano to handle increased transaction volumes while preserving security and decentralization. As a result, Cardano will be better equipped to support more decentralized applications, dApp usage, and a growing user base without experiencing network congestion, even during periods of peak activity. Zero-knowledge technology will play a crucial role in Cardano’s scalability, strengthening its competitive standing in the blockchain space.

Layer 2 Protocols

Layer 2 (L2) protocols are designed to enhance scalability by processing transactions off-chain and submitting compressed proofs to the main blockchain, reducing congestion on the Layer 1 (L1). On Cardano, protocols like Midgard and ZkFold are pioneering these efforts. Midgard employs optimistic rollups, which assume transactions are valid unless challenged, reducing the need for immediate verification and thus lowering computational load while increasing throughput. This allows for faster transaction processing and lower costs by deferring dispute resolution until necessary.

In contrast, ZkFold utilizes zk-rollups, which leverage zero-knowledge proofs to offload transaction computations and submit concise proofs back to the main chain. A zero-knowledge proof (zk-proof) is a cryptographic method that allows one party to prove the validity of information to another party without revealing the underlying data itself. This method offers high scalability, enabling nearly unlimited throughput and ensuring instant finality, making it ideal for scaling decentralized applications (dApps) on Cardano.

Sky Protocol will play a critical role in supporting Layer 2 (L2) Protocols on Cardano by ensuring that the off-chain data required for validation is both accessible and verifiable in a decentralized manner. it achieves this by providing a specialized Data Availability Layer (DAL) that allows L2s to operate efficiently, ensuring that the necessary data for transaction proofs can be accessed and validated on demand. This enables L2 solutions to achieve higher scalability and throughput without adding strain to Cardano’s Layer 1 (L1).

Partner Chains

Cardano’s Partner Chains are specialized blockchain networks connected to its settlement layer for security and validation. These chains are designed to manage specific user cases such as data protection or decentralized telecommunications, without overloading Cardano’s Layer 1.

Drawing inspiration from Polkadots parachains and leveraging a modular framework inspired by Parity Techonologies’ Substrate, these partnerchains — the partner chain framework is adapted to Cardano’s architecture. This allows the partner chains to benefit from Cardano’s security while offering flexibility and scalability.

The first partnerchain, Midnight, will focus on privacy-preserving smart contracts through zero-knowledge proofs (ZKPs), protecting sensitive data. By handling specialized tasks, partner chains help Cardano scale efficiently, supporting increased user activity, unique use cases, applications, and transaction volume, while maintaining security and decentralization.

Leios

Leios is a major upgrade to Cardano’s Ouroboros consensus protocol, aimed at boosting scalability through parallel transaction processing. Developed over several years by Input Output Global, a research paper was released in April 2024, explaining how Leios operates and its potential for improving Cardano’s scalability. Leios works by restructuring the consensus process: ranking blocks manage consensus while input blocks handle transaction data.

This allows multiple transactions to be processed simultaneously, significantly increasing Cardano’s throughput and enabling the network to handle more dApps and users without bottlenecks or congestion. Since we have now entered the era of decentralized governance on Cardano, a governance vote will be required to implement Leios.

Conclusion

Cardano is entering a pivotal stage of technological progress, setting the stage for substantial scalability improvements. With innovations such as Plutus V3, Layer 2 solutions, and future consensus protocol upgrades, the network is prepared to accommodate increasing demand and support a thriving decentralized ecosystem. As these advancements take shape, Cardano is well-positioned to address the evolving needs of the blockchain space. It will be interesting to see how Cardano continues to scale and evolve in the coming months and years.

This article is strictly for informational purposes and does not constitute a promotion or financial advice. Our aim is solely to provide users with the latest news and updates within the Cardano ecosystem.

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