Cardano approaches a new major upgrade as ADA posts an inspired rally

0
60

The Cardano Foundation’s ADA coin hit its all-time high of $ 0.97 on Feb.12, after kicking the year at $ 0.18, up 438% year-to-date. Aside from the macro trends in the cryptocurrency industry that are driving the price of flagship assets like Bitcoin (BTC) and Ether (ETH) into other altcoins like LINK, DOT, etc., Cardano’s growth could also be due to the network updates that Cardano has run on its blockchain network.

On February 3, Cardano’s development company Input Output Hong Kong successfully performed a hard fork and applied the native Goguen token upgrade known as the Mary upgrade to Cardano’s test network, which resembles the blockchain into a multi-asset network Transformed Ethereum.

The team expects to launch the mainnet by the end of February. The other functions of the Goguen update will be provided simultaneously according to the different phases of the Cardano roadmap.

In terms of functionality, this upgrade would equate Cardano’s native tokens with the fungible ERC-20 tokens and the non-fungible ERC-721 tokens on Ethereum. For the first time, users on the Cardano blockchain can create their own tokens, be it fungible tokens or NFTs. In addition to these similarities with the Ethereum blockchain, there are design differences between Cardano’s native tokens versus Ethereum tokens.

Cardano’s Token Design Difference is Unique Selling Proposition?

The first big difference after the upgrade is that there are “no execution fees” that are normally charged to a user when interacting with a token smart contract on the Ethereum blockchain called gas fees.

The recent bull runs seen in Ether and other Ethereum blockchain tokens have resulted in extremely high gas charges due to network congestion and discouraged retail investors from getting involved. Hinrich Pfeifer, General Secretary of the Cardano Foundation, discussed with Cointelegraph how the native tokens would differ from Cardano in this aspect: “Native tokens on Cardano are ‘forged’ in the chain without the need for a smart contract, and therefore none will Execution fee required to transact native tokens on Cardano. ” He added:

“Instead, sending tokens requires a nominal fee (called the ‘Min-Ada-Value’) that is payable in ADA and must be sent alongside the token. You can also bundle several native tokens together and send them together in one transaction (this increases the ‘min-ADA value’). However, this fee does not depend on network congestion or intelligent contract processing. “

The lack of forged contracts to forge tokens would lead to further benefits as fraudsters would have no leeway to exploit smart contract security loopholes, human error, and other risks associated with smart contracts – something Ethereum co-founder Vitalik Buterin last warned the community about has year.

Pfeifer went on to explain how “the possibility of sucking funds through a smart contract exploit is eliminated in the Cardano blockchain”: “Custom native tokens in Cardano use the same underlying token logic as the Cardano blockchain itself. The scripting language of Cardano does not contain fixed-size integers, and the ledger itself tracks token movements and handles token logic. “

James Beck, director of communications and content at ConsenSys – a blockchain technology company that powers Ethereum’s infrastructure – told Cointelegraph how Ethereum is addressing these smart contract risks:

“Ethereum has supported smart contracts since 2015, but smart contract development is still a mature field. With Ethereum, bugs and security risks are discovered every week and added to the registers of best practices for smart contract security. “

ADA is fighting for fourth place in terms of market capitalization

ADA recently hit its three-year high, leapfrogging Polkadots DOT and XRP to briefly become the fourth largest cryptocurrency currently in circulation. Unlike meme coins like Dogecoin (DOGE), which have received a lot of attention lately from the media and even from personalities like Elon Musk, Cardano’s growth can be attributed to its solid foundations and working principles.

Marie Tatibouet, Marketing Director of Gate.io – a platform for trading digital assets – told Cointelegraph that the team led by Charles Hoskinson, the inventor of Cardano, is taking “a research-first” approach to solving the various problems of modernity I chose blockchain ecosystem: lack of speed, high fees, etc. “She added:” For example, Cardano’s Ouroboros algorithm was the first expert-researched consensus algo in the world. […] Their emphasis on pre-launch work has helped them immensely. “

With institutional investors being a major catalyst for such markets, Cardano intends to use them to gain more traction compared to other blockchain protocols. Pfeifer told Cointelegraph:

“We anticipate that Cardano’s value proposition, particularly the level of security and affordability guaranteed by our indigenous tokens and focused on formal methods, will be popular with institutions and corporations. Other blockchain protocols have struggled with widespread security issues and huge losses in value from intelligent contract exploits. This, in turn, has prompted institutions to exercise great caution when researching blockchain-based solutions. “

Additionally, the fact that Cardano was implemented in Haskell, a functional programming language known for its high liability applications, could open up various business use cases involving large corporations and even governments. Pfeifer continued: “Cardano could capture a completely different market share than Ethereum – that of national-level identity solutions, back-end financial infrastructure and high-performance enterprise use cases.”

Ethereum is still king

Although the concept of the “Ethereum killer” has existed since Ethereum gained the monopoly in blockchain application scenarios, there were no networks that users and developers could generate as Ethereum currently claims. Some networks have tried to live up to this day for a while and have not piqued developer interest as expected.

An important aspect to consider when considering the competition for Ethereum is the scalability problems that Ethereum 2.0 aims to solve by switching to a proof-of-stake protocol. Cardano’s scalability is expected to be achieved via Hydra, which has multiple heads that offer high transaction throughput measured in transactions per second. Each “Hydra” head can potentially handle up to 1,000 TPS.

Pfeifer said that due to Cardano’s Hydra-Heads structure, TPS cannot be the only measure of scalability, as different types of transactions can take place on the blockchain and run a Hydra-Head. Therefore, the TPS of the Cardano network could be scaled according to the number of stake pools with a Hydra head. “

There are currently over 1,400 independent investment pools in the Cardano blockchain. That being said, Ethereum currently has the largest pool of developers building widely used applications and interfaces such as MetaMask, Compound and Protocol, including Ethereum’s core protocol. Beck pointed out how Ethereum’s pool fares against Cardano:

“Ethereum is still the most actively developed blockchain protocol, with 42,457 commits for its code from an average of 220 monthly active core developers. Cardano is not far behind with 37,327 commits, but IOHK is also involved in Ethereum Classic, potentially inflating the data the protocol is associated with. “

This high developer activity is crucial for the growth of a blockchain and its network effects. It’s also important to create smart contract standards and best practices like the way Ethereum tried to do. In addition, the scaling problem is currently being addressed by Layer 2 networks such as Optimist Rollups and ZK Rollups. As Beck went on to point out, they reduce fees and congestion by increasing the throughput of the blockchain to more than 1,000 to 2,000 TPS. ”

The roll-up chain can also be thought of as an independent data shard that allows experimentation with different data and execution models that still settle on Ethereum. These rollups are part of the Eth2 roadmap and are intended to make Ethereum more scalable in the short term.

Metcalfe’s Law states that the value of a given network is directly proportional to the number of users on the network. This could possibly be the most important metric for evaluating a network as it alludes to the activity in the network being measured. Here Ethereum puts Cardano completely in the shade. The daily active addresses are over 760,000 compared to around 71,000 active users on Cardano.

Regardless of their application and the perceived rivalries, it is evident at this point that Ethereum Cardano is still way ahead in the blockchain race, considering the users and the number of DeFi applications based on their respective blockchains.

It is likely that Cardano, with its solid foundations, will be able to successfully keep up with Ethereum over time, which can lead to some DeFi applications migrating from Ethereum to Cardano, as recently done by DNATags. However, Pfeifer approaches the break of hegemony with a positive outlook:

“It is very likely that more than one blockchain protocol will successfully exist in space in the future. Every company in Cardano focuses on interoperability for the benefit of the entire blockchain industry rather than direct competition and comparison. We are open to cooperation with other blockchains. ”