This is why Cardano can be a major player in 2022
Kraken, the major crypto exchange, revealed in its report that the current price movement of Cardano (ADA) combined with its daily trades could be a bullish indicator.
Cardano came back to life with the Shelley hard fork in July 2020, 3 years after blockchain’s debut, and saw a massive spike, holding a solid position in the top 5 crypto assets by market cap for much of 2021. .
While ADA the price is significantly related to the volume of activity on the network, according to research by Kraken, this has not been the case since late 2021, when the price of Cardano did not follow the increase in daily transactions.
Cardano’s strategy and attitude is significantly different from its L1 contemporaries, which could provide them with a competitive edge if progress goes well. Above all, Cardano is a value-driven project that prioritizes community governance, academic peer review, and high-assurance development.
The Kraken team is certainly bullish on Cardano. The reason for their beliefs is explored below.
Improved Cardano Ouroboros
Ouroboros is a Cardano-based blockchain technology that uses a Nakamoto-style consensus, similar to Bitcoin, in which nodes agree by following the “longest chain rule”. Unlike Bitcoin’s PoW process, which relies on hashing power or energy to generate new blocks, Ouroboros leverages the network token (i.e. ADA) to influence how often a node is chosen. to generate new blocks.
In addition to security, Ouroboros’ design has improved throughput over Bitcoin and Ethereum (7 TPS and 15 TPS, respectively), reaching up to 257 TPS at the base layer in early testing.
Additionally, a slashing mechanism is not required on Cardano due to the nature of the Ouroboros protocol. As a result, the sums put into play by the delegators do not risk being seized by the OPP or the network.
Users can continue to delegate their ADA to their preferred SPO from smart contracts, a feature unique to Cardano.
Extended UTXO model
Cardano’s accounting model, which refers to how transactions are processed and wallet/account balances are maintained and updated, is one of the features that sets it apart from most other smart contract platforms.
The capabilities and benefits of the UTXO paradigm attracted the IOG team to Cardano, but they also wanted to retain Ethereum’s programmable smart contract functionality. Accordingly, Cardano uses the extended UTXO model, which is an extension of Bitcoin’s UTXO paradigm that allows the use of smart contracts.
The EUTXO model allows users to pay network transaction fees in any user-defined token (e.g. USDC, wBTC, wETH) instead of ADA, which IOG calls babel fees.
Concerns about dApps
IOG creates Marlowe, a smart contract language built on Plutus exclusively for financial contracts and designed for use by financial contract professionals who do not have programming capabilities, to address concerns about the dApp community.
Cardano’s founding organizations have also partnered with external development companies such as Five Binaries and Runtime Verification to accelerate the development of supporting infrastructure and make smart contract development on Cardano accessible to developers of any language. , including Solidity, C++, Rust and Java.
Cardano’s Web3 developments
Cardano’s Web3 ecosystem is currently in the early stages of development. Despite this, the network is home to a diverse set of projects. Cardano’s mainnet has yet to see many dApps go live, although smart contracts were launched as part of Alonzo’s hard fork in September 2021. Cardano’s first DEX, MuesliSwap, has become operational in early January 2022, and the much-hyped DEX, SundaeSwap, debuted a beta version of its DEX on the network just recently on January 20th.
Part of the reason for the delay in dApp adoption on Cardano is the paradigm shift brought about by the EUTXO model. To adapt to the UTXO architecture, developers have to rethink the core logic of many dApps, such as how to build a liquidity pool for a DEX.
Another important reason for the dApp delay is that developers are waiting for the release of the Plutus Application Backend (PAB). PAB is not essential for dApps to get started, but it does provide a foundational set of frameworks for developers to implement core dApp functionality, including wallet backend infrastructure and blockchain interaction. blocks. PAB also makes testing easier and speeds up dApp development.