The crypto market is quite crowded, with over 17,000 coins and more than 400 exchange platforms available for trading. However, only the best projects manage to achieve widespread popularity and high market capitalization. Bitcoin (BTC) and Ethereum’s (ETH) leading market positions are a result of years of hard work by developer teams that aimed to constantly upgrade the features of these blockchains, in order to meet the needs of users. That’s why these two coins are in the top positions of the market.
Cardano (ADA) is another industry leading cryptocurrency, that managed to enter the top 10 largest crypto list, seemingly as an outsider project, but actually, it was a result of years of careful research, peer reviews and massive software engineering efforts.
Let’s take a closer look at ADA to find out how it managed to become one of the largest crypto projects on the market, shadowing BTC and ETH, while being called by many crypto enthusiasts an “Ethereum killer.”
The Story Behind Cardano (ADA)
Cardano was officially launched in 2017, by a blockchain engineering company called Input Output Hong Kong (IOHK). The company was created by Cardano founder Charles Hoskinson, a former member of the Ethereum core developer team. Along with IOHK, the Cardano Foundation is the managing body of the project, while another company called Emurgo is responsible for integrating startups, developer teams and software projects into the Cardano blockchain. These three entities form the core of Cardano’s ecosystem.
The idea behind Cardano is to provide crypto enthusiasts and developers with an innovative blockchain that has advanced smart contract functionalities capable of launching all sorts of decentralized apps, while eliminating scalability issues associated with the Ethereum blockchain.
In order to achieve this goal, Cardano is slowly developing, over multiple project phases, called eras, and it is undergoing rigorous testing and scientific review procedures by top blockchain engineers and mathematicians who are involved in the project. The current result of this process is the highly advanced ADA blockchain that utilizes an entirely different technology compared to old school cryptocurrencies such as Bitcoin, Litecoin (LTC) and Ethereum.
The ADA Blockchain
The Cardano blockchain utilizes a Proof of Stake (PoS) mechanism, rather than the traditional Proof of Work (PoW) blockchain model of BTC, ETH and most other cryptos that can be mined. PoW blockchains primarily depend on the computing power of miners, who act as network nodes, responsible for validating and processing transactions by solving complex mathematical tasks and finding appropriate transaction hashes that prove the validity of each transfer. This process requires a lot of computing power, electricity and time.
The PoS blockchain model used by ADA, eliminates the need for miners and huge power consumption, because Cardano holders literally stake their coins and contribute to the validation of transactions, based on the amount of coins they are holding.
Users guarantee the validity of approved transfers with the coins they are staking, and in case someone approves a scam transaction, they would lose all of their staked ADA automatically. The mechanism requires very little computing power and time, plus it’s fully automated, so ADA holders automatically participate in providing liquidity to the network by putting their coins into a Cardano staking pool.
Since ADA holders are contributing to the blockchain’s security when they are staking coins, they are accordingly rewarded for their work with annual percentage yields that are regularly distributed on a daily, weekly, or monthly basis, depending on their ADA staking pool’s policy.
Key Features of Cardano
Cardano is often referred to as an “Ethereum killer” because it brings numerous features that were first pioneered by the ETH network.The key difference is that ADA is providing these features at considerably lower network transaction prices, higher speed and without network congestion. There aren’t any high gas fees or long waiting periods on Cardano, while the ETH blockchain has become notorious for skyrocketing gas fees as its user base rapidly expanded during recent years.
Smart contracts were introduced on the Cardano blockchain after a key network update in September of 2021. In less than 5 months, the number of smart contracts on Cardano surpassed the 1000 threshold, bringing all sorts of developer projects onboard the ADA ecosystem.
Many of these smart contracts are related to DeFi projects such as the recently launched SundaeSwap decentralized crypto exchange, which is the first such project on the Cardano blockchain.
Another innovative ADA project powered by smart contracts is the Pavia metaverse, which is already gaining huge user attention and market capitalization, thanks to users looking to purchase NFT land plots in the first Cardano based metaverse.
The Ethereum blockchain is by far the largest network for DApps on the crypto market, but since the launch of smart contract functionalities on the ADA chain, developers have rapidly been launching different types of DApps. You can already find everything from lending platforms, decentralized marketplaces to NFT projects on Cardano, and the quick growth of the ADA market cap is definitely a signal that the future of the network holds much more in terms of DApp development.
Piggy Token, a staking pool platform, NFT Dotz, an NFT creation app and Financial Swap, an innovative ADA DEX are just some of the examples that show the variety of DApp functionalities possible with Cardano smart contracts.
Given the fact that ADA is a PoS based crypto, it’s super easy to make it a reliable source of passive income. The annual percentage yield for staking ADA is anywhere between 2 and 5 percent, which is much higher than the interest offered by bank account savings policies.
You should keep in mind that Cardano is a serious project with reputable developers behind it and you can be pretty confident that the team won’t just run off with the coins you’re staking. Also, that isn’t even possible, because when you’re staking your ADA, you aren’t keeping it locked in a staking pool like many other PoS cryptos. Instead, you still have your ADA coins available in your wallet, while staking them and earning interest.
Cardano is growing fast and the number of active holders is constantly on the increase, thanks to the active developer team that’s working around the clock to deliver all the updates and features promised in the ADA roadmap.
In a crypto market filled with thousands of low quality projects with no real utility, Cardano is a really refreshing and promising project that deserves its spot in the top 10 largest cryptos.