Cardano (blockchain platform)

• 1. Introduction

  ›

  In August 2022, the advertising agency MBLM ranked Cardano 26th for brand intimacy out of 600 brands, placing it between Ford and Nestlé. Ad Age, an advertising trade magazine, quoted an MBLM partner attributing the high rank to what they called the gambling element of crypto. That ranking sits oddly for a decentralized ledger built to move a cryptocurrency called ADA between strangers with no bank in the middle. Behind that number lie a founding dispute with a rival blockchain, a mathematician's name attached to the coin, and a regulatory fight that would shake its price.

• 2. Splitting From Ethereum

  ›

  In 2014, Charles Hoskinson left Ethereum after a dispute with fellow co-founder Vitalik Buterin over how the project should be run. Hoskinson wanted to accept venture capital and build a company; Buterin preferred to keep the project a nonprofit organization. By 2015, Hoskinson and Jeremy Wood had set out their plans for a new platform called Cardano.

  Wood and Hoskinson co-founded IOHK, a business built to develop blockchains for corporations, governments, and education institutions. Cardano reached the public in 2017, and at launch it was the largest cryptocurrency running on a proof-of-stake blockchain.

  That same year, IOHK partnered with the University of Edinburgh to open the Blockchain Technology Laboratory. The lab created six post-doctoral and professorial positions, with up to 35 jobs in total, led by Aggelos Kiayias, the developer of the Ouroboros protocol. Kiayias's protocol would decide how Cardano validated transactions without the energy bill that came with mining.

• 3. A Mathematician's Ledger

  ›

  The platform takes its name from Gerolamo Cardano, an Italian mathematician, while its currency, ADA, is named after the English mathematician Ada Lovelace. Each Ada divides into a million smaller units called Lovelaces, the platform's own tribute to her work.

  Three separate entities originally controlled Cardano: the Cardano Foundation, IOHK, and Emurgo. The Cardano Foundation, based in Zug, Switzerland, works to standardize and promote the ecosystem. IOHK handles the engineering behind the blockchain, and Emurgo focuses on commercial applications. Since 2021, Frederik Gregaard has served as the Foundation's chief executive.

  Behind that Swiss-based foundation sits a protocol built to run without the miners that power Bitcoin and Ethereum.

• 4. Proof Of Stake In Practice

  ›

  Unlike most cryptocurrencies, Cardano has no foundational white paper explaining its design. Instead, its designers set out to fix problems they saw in older systems: scalability, interoperability, and regulatory compliance. Cardano's team argues Bitcoin is too slow and inflexible, and that Ethereum lacks sufficient safety and scale.

  Like Bitcoin, Cardano tracks ownership through a UTXO ledger, though its version is extended, called EUTXO, to support smart contracts and scripting languages.

  Cardano runs on a proof-of-stake protocol called Ouroboros. This set it apart from Bitcoin and from Ethereum's original proof-of-work system, though Ethereum switched to proof-of-stake in 2022. Proof-of-stake blockchains use far less energy than proof-of-work chains, since they eliminate the heavy computing resources mining requires. In February 2021, Hoskinson estimated the Cardano network used 6 gigawatt-hours of electricity annually. Researchers at the University of Cambridge calculated Bitcoin's network used 110.53 terawatt-hours a year. Hoskinson's figure for Cardano came to less than 0.01 percent of that.

  Within Cardano, a settlement layer keeps track of every transaction. A second layer, the computation layer, is built to resemble Ethereum, running smart contracts and applications. Cardano's native wallet is called Daedalus, and it downloads a full copy of the blockchain's entire transaction history. Wallet users risk losing access to their funds entirely if the wallet's seed phrase is lost or stolen.

  As with other proof-of-stake cryptocurrencies, Cardano offers staking, letting token holders delegate tokens to help validate transactions on the blockchain. The amount of tokens staked determines the likelihood of being chosen to validate, and successful validators are rewarded with more of the same token. Through various wallet tools, users can also join staking pools alongside other token holders. These staked tokens both secure the network and enable participation in governance.

  That governance link would matter later, when Cardano's development moved through five distinct phases toward letting token holders vote directly on the network's future.

• 5. Five Ages Of Development

  ›

  Cardano's rollout unfolded in five phases, each named after a figure from poetry or computer science: Byron, Shelley, Goguen, Basho, and Voltaire. The first three stages built out a basic blockchain, then added decentralization and smart contract capability. The Basho era is focused on scaling the network, while the Voltaire release introduces a treasury model.

  In 2024, a proposal called CIP-1694 reached the network through the Chang upgrade and the subsequent Plomin hard fork. This established what the project calls on-chain governance. This let Ada holders create, vote on, and implement proposals through a decentralized decision-making process. It marked IOHK's transfer of control over the network's development to the community it built.

  IOHK's next task was proving that ceding control did not slow Cardano's spread into industries far from cryptocurrency trading.

• 6. Reaching Beyond Crypto

  ›

  In 2018, IOHK signed a memorandum of understanding with the government of Ethiopia to explore using Cardano in its coffee supply chain. The partnership also looked at other ways to deploy Cardano within the country. In 2019, Georgia's Ministry of Education signed an agreement with the Free University of Tbilisi. Together they planned a credential verification system using Cardano and IOHK's identity software, Atala. That same year, New Balance piloted a program on Cardano letting buyers verify the authenticity of its OMN1S Kawhi Leonard basketball shoes.

  By April 2021, IOHK and Ethiopia's Ministry of Education announced plans for an identity and record-keeping system covering the country's five million school pupils. In 2021, Hoskinson also began working with DJ Paul Oakenfold on an album called Zombie Lobster, released on the Cardano blockchain. That year, IOHK and Dish Network announced a collaboration to investigate distributed ledger technology.

  The magazine Quartz cited Cardano's potential to help citizens in Zanzibar, Ethiopia, and Burundi obtain digital identification. By 2022, a Cardano-based project called World Mobile Token offered remote mobile network access through around 150 nodes in East Africa. Investor Mark Cuban was skeptical about the project and about Cardano's adoption generally. In 2023, a Ghanaian startup called Mazzuma received funding from Adaverse, a Cardano ecosystem accelerator. Its product, MassumaGPT, aims to use AI in its contract creation platform.

  These pilots ran alongside a different track entirely: a decentralized finance system that Cardano turned on in September 2021.

• 7. DeFi And Digital Art

  ›

  On the 12th of September 2021, Cardano turned on decentralized finance services, an upgrade that enabled smart contracts and decentralized applications. The upgrade included Plutus, a smart contract language written in Haskell, and Marlowe, a language designed by Simon Thompson for non-programmers working in finance.

  In November 2023, Cardano began introducing sidechains it calls partner chains, designed to run off-chain computations while settling through the main Cardano network. The first of these, named Midnight, combines the Polkadot framework with Cardano.

  In April 2022, the musician Snoop Dogg released several thousand NFTs on Cardano as part of a project called Baked Nation. In 2023, a digital artist from the UK sold 7,200 individual works depicting humanoid deer, earning almost £500,000 through the Cardano blockchain.

  That kind of attention followed Cardano from its early days too. Back in May 2021, its Ada token briefly reached a $77 billion market capitalization, the fourth highest of any cryptocurrency at the time.

• 8. Under Regulatory Scrutiny

  ›

  In 2023, the US Securities and Exchange Commission filed a complaint against the cryptocurrency exchange Kraken. It accused Kraken of offering unregistered securities and promising returns on staking, including staking in Cardano. Without admitting wrongdoing, Kraken agreed to pay a $30 million fine and halt its staking program.

  In June 2023, the SEC sued the exchange Binance. Among the allegations was that Cardano itself was a security, making Binance's trading of it illegal in the US. IOG responded that the filing was inaccurate and that Ada was not a security. Robinhood Markets said it would remove Cardano and two other proof-of-stake coins from its platform.

  On the FT Wilshire index, Ada's price fell from $0.38 to $0.26 in a single day. Both the Wall Street Journal and The Times linked a 19 percent June fall in Cardano's price to the SEC's actions against other major coins.

  In late November 2023, Robinhood re-enabled trading in Ada. The token closed out the month at $1.09, back on a platform that had dropped it only months earlier.