Cardano: Worth the Hype?
Cardano is a proposed platform for smart contracts development, built on a proof-of-stake blockchain. Its goal is solving scalability while balancing the need for regulation with the privacy and decentralization of blockchain technology. This vision is ambitious and promising, but much of Cardano’s platform is still undeveloped and progress is moving slowly.
The reason why progress is moving so slowly is also one of the major reasons for the hype around Cardano. The founders envision a blockchain platform built on the strength of academic peer review. Researchers and cryptography experts around the world contribute to the principles, systems, and even codebase underlying the Cardano network. Nothing gets implemented on the network without a rigorous review of its security, scalability, and effectiveness.
This focus on peer review and highly secure coding practices is Cardano’s unique proposition in a blockchain community that’s largely making stuff up as it goes. In an industry rife with scandal, stalled projects, and outright scams, it’s refreshing to see a project take an academic approach to developing new technologies.
As a result, Cardano has received a lot of attention and quickly risen to be one of the top ten cryptocurrencies by market cap. All this despite not yet having a working smart contracts platform. The idea behind Cardano is admirable and will likely be valuable if executed well. However, so far Cardano has been overvalued in terms of real outputs and innovation. The project is still far from becoming the Ethereum-killer that so many blog posts suggest.
1. Security & Scalability
Cardano has two goals when it comes to developing a smart contracts platform: security and scalability.
The security goal is in evidence from the peer review process that Cardano requires for new updates to the network. The founders and stakeholders want to make sure that anything new that gets implemented into the Cardano ecosystem doesn’t compromise security.
We’ve seen recent examples of blockchains with security issues like Verge’s multiple hacks over the past few weeks. Other projects haven’t seen security breaches but have gotten flak from the community for rolling their own crypto or implementing new algorithms that are relatively untested. The IOTA-DCI scuffle is perhaps the most prominent example.
Cardano is also written in a security-focused programming language: Haskell. Haskell features strong static typing and is a purely functional programming language. That means that Haskell’s components only rely on the arguments fed to them and they disregard changes to overall state. Functional programs are easier to secure and more walled off from outside influence.
On the scalability front, Cardano calls on cryptography researchers to source ideas for scalable consensus, contract management, and high user loads. Some of these ideas have been implemented and are undergoing testing. However, many of these concepts are still in the ideation and research phase. Cardano has yet to deploy a single smart contract on its platform.
2. Layered Approach
The basics of the Cardano architecture are already in place. The platform will use a dual-layer approach with the addition of side chains. The two layers separate the transaction data from the contract data about why transactions occurred. The side chains allow interoperability between the two layers and other blockchains.
2.1 Cardano Settlement Layer (CSL)
This is where all the work of creating and confirming new blocks takes place. The layer implements a proof-of-stake algorithm names Ouroboros Proof of Stake. Anyone holding and staking Cardano coins (ADA) has a chance of becoming a slot leader and creating a block as part of an overall epoch of confirmations.
The CSL will use two different scripting languages. One set will move value from wallet to wallet. The other will enhance overlay networking. In other words, it helps Cardano connect to normal networks. Users will be able to create their own assets on Cardano, like ERC-20 tokens on Ethereum.
2.2 Cardano Computation Layer (CCL)
The CCL allows users to create rules for evaluating transactions before they pass to the CSL. This has been a challenge for Ethereum to date because smart contract computation and transaction settlement all happen on the same blockchain. Cardano promises to modularize these two parts of a transaction. This makes permissioned ledgers possible and leads to greater regulatory power on Cardano for those who want to use it.
The CCL is where smart contracts will process. On Cardano, these contracts will be written in a new language called Plutus (but Cardano will also support Solidity from Ethereum contracts). So far, however, the Plutus language is only in prototype and is not yet ready for prime time. In fact, most of the CCL’s final functionality has yet to be built.
2.3 KMZ Sidechains
Cardano’s sidechains are based on research from Kiayias, Miller, and Zindros (KMZ) that use proofs of proofs of work to enable cross-chain transactions. Continuing research from the University of Athens and the University of Edinburgh is bearing out the potential of these side chains to reliably compress data from other blockchains, allow cross-transactions, and prevent double spends.
As with many elements of Cardano’s approach, however, KMZ Sidechains still have a ways to go before the technology can be implemented in working code.
Academic and reviewed research into cryptographic advancements is a worthy and noble goal. On that basis alone, Cardano is a valuable project. It’s entirely possible, however, that Cardano will fail in its efforts to translate academic insights into working code. It’s also possible that competitors like Ethereum and NEO could steal and implement Cardano’s best ideas as the research gets published. After all, these projects would be stealing ideas for use in active smart contracts and dapps on their functional platforms. It’s a very long shot, but if Cardano can pull off the technical changes it claims, it’ll be a big leap forward for smart contracts platforms.
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