Cardano is the name of the blockchain that houses ADA, a long-time, top-10 cryptocurrency by market capitalization. The blockchain supports smart contracts—which let users run a wide variety of programs in finance and other fields—and runs on a proof-of-stake consensus algorithm called Ouroboros.
Due to its high speeds, low fees, and smart contract-supporting infrastructure, Cardano proponents have long touted it as an “Ethereum killer”—a blockchain that promises to overtake the market-leading smart contract blockchain. Cardano launched in 2017 but only implemented the smart contract layer in 2021.
For now, though, Cardano has not come close to surpassing Ethereum. As of May 2023, investors had locked up around $27 billion into Ethereum compared to the approximately $135 million they had locked into Cardano’s smart contracts. Still, Cardano’s ADA token itself is relatively popular, peaking at a market cap of $95 billion in September 2021 before crashing to about $15 billion a year later.
The design of Cardano’s settlement layer borrows from Bitcoin, a blockchain that does not support smart contracts. This layer is a system of “unspent transaction output” (UTXO), whereby the network calculates coins held in wallets after processing cryptocurrency transactions. Bitcoin, the most popular blockchain, is also based on UTXO.
The network is, like all public blockchains, decentralized, although development is led by Input Output Hong Kong (IOHK), a software company founded by Ethereum co-founder Charles Hoskinson in 2015, as well as a nonprofit called the Cardano Foundation. Hoskinson stopped working on Ethereum after claiming engineers ignored his advice on how to improve the network. The Ethereum community, for its part, has accused Hoskinson of fabricating or embellishing his contributions and his biography.
While anyone can contribute to upgrades on Bitcoin or Ethereum, upgrades to Cardano rely on the determinations of a panel of academics. This, at least theoretically, ensures that smart people are responsible for alterations to the blockchain.
Go deeper:
Cardano’s documentation
See also:
What is DeFi?
What is Solana?
What is Ethereum?
Try it:
Cardanoscan—Cardano blockchain explorer
Daedalus—a popular Cardano wallet