What is the Cardano Blockchain?
Cardano is a next-generation internet platform (Web 3.0) structured as a publicly
traded blockchain-based crypto network. The Cardano open-source software
network coordinates a collection of decentralized computers across the globe
into a fully user-owned and operated unified cloud platform, and the ADA token
represents a piece of ownership in the ecosystem.
Key value drivers
Strong security: Ouroboros PoS. Cardano uses its own Proof of Stake (PoS) approach called Ouroboros. The PoS process gave ADA token holders the ability to delegate their ADA to stake pools or launch their own as a security mechanism for allowing certain computers to contribute to consensus. The protocol’s PoS algorithm uses the amount of ADA each stake pool holds to randomly choose the pools that decide the order of transactions on the network. The security of Ouroboros has been deemed provably secure based on peer-reviewed research according to Cardano.
A new generation of cryptocurrency: ADA Cryptocurrency. The Cardano network has successfully settled over $1.6 trillion in total on-chain transaction value over the Last Twelve Months (LTM). This payment value occurred after the mainnet version of Ouroboros PoS went live with the Shelley upgrade in July 2020, which some may view as an important indication of the network’s security.
ADA Staking & Yield. Staking acts as another key value driver for the ADA token by allowing users to earn interest or yield denominated in ADA on their holdings. ADA holders can now launch stake pools or delegate their tokens to one of the ~3,100 stake pools currently on the Cardano network. In exchange for contributing to consensus, pools receive a reward paid in ADA, consisting of newly issued ADA supply and transaction fees paid by users—which gets paid out to stakers.
Fee revenues rise rapidly. As usage and adoption of the network have continued to grow, fee revenue paid on the network to stake pools has continued to rise rapidly—up nearly ~65x over the last year to a monthly annualized value of ~$56 million for September 2021 ($1.7 million month to date 9/11/21). The ability to earn fee revenue from network users by staking tokens makes ADA a productive capital asset.
Innovative Digital Asset Transactions. Part of the growth in transactions is related to the recently added ability for users to issue and trade digital assets on top of the Cardano network. These assets can represent tokenized real-world assets, digital art like Non-Fungible Tokens (NFTs) or other digital tokens. A unique feature of Cardano’s approach is that users can send multiple native asset types within the same transaction, whereas other protocols only allow users to send one digital asset at a time. This may incentivize additional users to join the network, as it results in transaction fee savings.
A large ecosystem of builders: Smart Contracts & dApps. Cardano recently deployed smart contracting capabilities to make the network a general purpose crypto cloud platform for developers to create Decentralized Applications (dApps).
Large Active User Base. Measuring active addresses as a proxy, Cardano currently has ~2.8 million Monthly Active Users (MAUs). For perspective, currently Ethereum has ~7 million MAUs or 2.5x that of Cardano. However, since July, Cardano active addresses have been growing.
Energy efficiency of PoS vs PoW. The network has to come into an agreement about who is selected to update the ledger amongst a large number of people who don’t know each other and may have competing interests. This is called the consensus mechanism. In PoW miners are rewarded in winning a contest for guessing a random number. The winner gets to update the ledger with the next block. While PoW is very efficient in securing the ledger, it is also very resource intensive. With PoS, with is used by Cardano, participation in the contest is done with coins provided (delegated) to the network instead of computational power and electricity.
Best time to invest in this unique blockchain. Cardano has been able to gain a large user active decentralized base which has been leading to rapid network growth.