What Is Cardano (ADA)

What is the Cardano (ADA)

Cardano (ADA) is a decentralized, open-source blockchain platform engineered to provide a secure, scalable, and sustainable foundation for the development of smart contracts and decentralized applications (dApps). Frequently regarded as a third-generation blockchain, Cardano builds upon the groundwork laid by earlier systems—such as Bitcoin (first-generation) and Ethereum (second-generation)—by addressing their limitations and introducing advancements in functionality, interoperability, and operational efficiency.

Distinct from many blockchain networks that often emphasize either transaction speed or security at the expense of the other, Cardano adopts a balanced approach through its layered architecture. This design separates the platform into distinct operational layers, enabling greater flexibility and precision in managing computational tasks and settlement processes. At its core, Cardano employs Ouroboros, a proof-of-stake (PoS) consensus protocol that markedly reduces energy consumption when compared to the resource-intensive proof-of-work (PoW) mechanisms utilized by earlier blockchains. Ouroboros not only enhances the platform’s scalability but also fosters decentralization by empowering ADA holders to participate actively in network validation through staking, thereby contributing to the system’s governance and security.

Cardano emphasizes developing a blockchain infrastructure informed by scientific research and academic partnerships. The project adopts a methodical, research-oriented approach, collaborating with established academic institutions to subject its protocols and innovations to detailed peer review. This process contributes to Cardano’s reputation as a technically advanced undertaking within the blockchain sector, focusing on creating a dependable and versatile ecosystem suited to various applications.

Who Created Cardano

Cardano was founded in 2015 by Charles Hoskinson, a mathematician, blockchain developer, and one of the co-founders of Ethereum. Recognizing the limitations of existing blockchain networks, Hoskinson sought to create a more structured, scalable, and sustainable platform that could address challenges related to governance and long-term viability.

To realize this vision, Hoskinson established Input Output Global (IOG)—formerly known as Input Output Hong Kong (IOHK)—which serves as the primary research and development organization behind Cardano’s continuous evolution. In addition to IOG, two other key entities contribute to the growth and governance of the Cardano ecosystem:

• The Cardano Foundation – An independent, non-profit organization responsible for overseeing Cardano’s development, adoption, and regulatory compliance, ensuring its long-term success.

• EMURGO – A commercial enterprise dedicated to fostering enterprise adoption and investment in Cardano-based solutions, supporting innovation within the ecosystem.

How Does Cardano Work

Cardano is built on a dual-layer architecture and operates using an advanced PoS consensus mechanism, enabling enhanced scalability, security, and sustainability compared to traditional blockchain networks. These core features distinguish Cardano as a highly adaptable and efficient platform for decentralized applications and smart contracts.

1. Dual-Layer Architecture

Cardano is uniquely structured with two separate layers, each serving a distinct function:

• Cardano Settlement Layer (CSL): Responsible for processing transactions using ADA, the network’s native cryptocurrency. Similar to Bitcoin’s ledger, this layer ensures secure, efficient, and transparent transactions.

• Cardano Computation Layer (CCL): Designed to support smart contracts and dApps, enabling more complex functionality beyond simple transactions.

By keeping these layers independent, Cardano allows for seamless upgrades and enhancements without disrupting the network, ensuring greater flexibility and efficiency.

2. Ouroboros: Cardano’s Proof-of-Stake (PoS) Consensus Mechanism

Cardano employs Ouroboros, a PoS consensus mechanism that enables ADA holders to stake their tokens and participate in transaction validation. This system operates as follows:

• Instead of relying on energy-intensive mining, validators (stake pool operators) are selected based on the amount of ADA they stake, reducing energy consumption compared to PoW models like Bitcoin.

• The PoS model enhances network security and efficiency, making it a more sustainable alternative.

• Participants are incentivized through staking rewards, which encourage long-term network participation and decentralization.

3. Smart Contracts and Decentralized Applications (dApps)

Cardano introduced smart contract functionality with the launch of Alonzo, a major network upgrade. Developers can now build and deploy dApps on the platform using Plutus, a secure and flexible smart contract language based on Haskell, known for its high reliability in critical applications. This upgrade positions Cardano as a powerful ecosystem for DeFi applications and enterprise use cases.

4. Scalability and Interoperability

Cardano is engineered to handle a growing number of transactions while maintaining efficiency and security. Innovations such as Hydra, a layer-2 scaling solution, are designed to dramatically increase transaction throughput, potentially enabling thousands of transactions per second (TPS). This level of scalability makes Cardano a strong contender against traditional financial systems and other blockchain platforms, while its interoperability efforts aim to connect seamlessly with multiple blockchain networks, broadening its use cases and adoption.

Cardano Tokenomics

​Cardano's native cryptocurrency, ADA, has a fixed total supply of 45 billion tokens, designed to ensure scarcity and long-term value preservation. The initial distribution of ADA tokens was as follows:​

• 57.6% – Public Sale: Approximately 25.93 billion ADA tokens were sold to investors during the initial coin offering (ICO) conducted between September 2015 and January 2017.

• 11.5% – IOHK (Input Output Hong Kong): Allocated 2.46 billion ADA tokens, supporting the development and maintenance of the Cardano blockchain. ​

• 4.8% – Cardano Foundation: Received 648 million ADA tokens to promote the platform's adoption and oversee its governance. ​

• 4.8% – EMURGO: Granted 2.07 billion ADA tokens to drive commercial adoption and support ventures within the Cardano ecosystem. ​

The remaining ADA tokens are gradually released through staking rewards, incentivizing network participation and ensuring the platform's long-term sustainability. ​

ADA serves multiple functions within the ecosystem, including staking, governance, and transaction fees. ADA holders play a crucial role in securing the Cardano network through staking. By delegating their ADA to an existing stake pool or operating their own, users contribute to the network's decentralization and security. In return, stakers earn rewards, incentivizing long-term participation and reinforcing the network’s sustainability. This PoS model, powered by Ouroboros, ensures that Cardano remains both energy-efficient and resilient. ​

Cardano employs an on-chain governance model, enabling ADA holders to actively participate in network upgrades, treasury fund allocations, and protocol developments. Through Project Catalyst, a decentralized funding initiative, the community can propose and vote on Cardano ecosystem projects. This governance framework ensures that Cardano remains a community-driven blockchain, fostering continuous innovation and adaptation. ​

ADA is also used to pay transaction fees, process and validate transactions on the network. This ensures that all transactions are efficiently executed and securely recorded on the blockchain, maintaining the integrity of the Cardano ecosystem. ​

Beyond transaction processing, ADA is essential for smart contract execution. Developers use ADA to deploy and interact with smart contracts on Cardano, enabling the creation and operation of dApps. This functionality supports a growing ecosystem of applications, from financial services to gaming and identity solutions.

How To Trade Cardano (ADA) on Flipster

1. Sign up for an account on the Flipster website or by downloading the Flipster app (Android or Apple).

2. Click the [Trade] tab.

3. Search for ADA and click on it.

4. Select the leverage (up to 25x).

5. Select either a Trigger Order or Market Order.

6. Input the amount of crypto you wish to trade, or select a percentage of your available funds to use.

7. Once you have confirmed the details, click the [Long] or [Short] button to open a position.

Disclaimer: This material is for information purposes only and does not constitute financial advice. Flipster makes no recommendations or guarantees in respect of any digital asset, product, or service. Trading digital assets and digital asset derivatives comes with a significant risk of loss due to its high price volatility, and is not suitable for all investors. Please refer to our Terms.