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What is Cardano (ADA) | Whitepaper Summary

What is Cardano (ADA) | Whitepaper Summary


Cardano is a decentralized proof-of-stake (PoS) blockchain platform and has the token – ADA as its crypto token. It is based on scientific philosophy and a research-first driven approach. In PoS, the blocks are verified by the machines of coin owners where the owners keep their coins as collateral to validate blocks.

Cardano’s ecosystem has been developed by highly qualified engineers and academic experts experienced with cryptography and blockchain. Major motivation of this ecosystem is sustainability, scalability, and transparency. It was started as an open source project with an aim to deliver an inclusive and fair infrastructure for financial and social applications on a global scale.

Cardano has been written in Haskell programming language, which makes it easier for components to be tested in isolation, and makes sure that the code is correct in terms of implementation and simulations. Cardano is planning to develop a smart contract platform with an aim to deliver more advanced features than any protocol previously developed and will serve as a stable and secure platform for the development of enterprise-level DApps.

Cardano platform also wishes to use a decentralised governance system that allows the project to evolve over time, and fund itself in a sustainable way through a visionary treasury system.

Also Read: How Cardano Works?


Cardano was founded by technologists Charles Hoskinson and his co-founder, Jerry Wood in 2015. It is overseen by a Switzerland based non-profit organization called Cardano Foundation and for-profit organizations called IOHK and Emurgo. Cardano is referred to as a “third-generation” protocol, improving on Bitcoin and Ethereum as first and second generation protocols respectively.

The first version of Cardano network went live in September 2017. Investors were able to convert their Cardano placeholder tokens to ADA tokens issued on the new Cardano mainnet. This iteration allowed users to buy and sell ADA tokens on a federated network running the Ouroboros consensus protocol.

Also Read: Best Cryptos to Invest under $1


Like any sophisticated and well-thought of blockchain technology, even Cardano has a dedicated roadmap which is broken down into five phases.

  1. Byron(Federated Mainnet) – September 2017
    Phase 1 focused on developing Cardano network and allowing users to buy or sell ADA tokens across the protocol. It ran on a consensus layer called Ouroboro Genesis. Any block rewards generated during this phase were burned, hence there was no inflation during the Byron phase.
  2. Shelley(Proof-of-Stake) – July 2020
    Phase 2 focused on introducing Proof-of-Stake consensus layer. This enabled users to stake their ADA to contribute to the transaction validation process. It established a more decentralized mechanism since earlier mainnet was directly controlled by The Cardano Foundation.
  3. Goguen(Smart Contracts) – TBA
    Phase 3 aims to introduce smart contract functionality, which would help developers create DApps on Cardano. The language to be used for writing smart contracts would be Plutus, which makes use of Haskell. It also plans to introduce a domain specific language called Marlowe, for writing financial smart contracts.
  4. Basho(Scaling) – TBA
    Phase 4 plans to achieve scalability and interoperability to better support growth and adoption for applications that require high transaction volumes. This can be done by introducing sidechains, sharding and parallel accounting styles.
  5. Voltaire(On-chain Governance and Treasury) – TBA
    Phase 5 plans to make Cardano a truly community-governed DAO. It will introduce an on-chain governance and treasury system. Users will be able to use their staked ADA to vote on concerned topics to help decide the future of Cardano ecosystem.

Also Read: Top 10 Crypto to Invest


It is the largest cryptocurrency to use a proof-of-stake blockchain, which is seen as a greener alternative to proof-of-work protocols. One of the most distinctive features of Cardano Project is its “research first” approach to design.

It does not have a whitepaper unlike most of the blockchains, instead it uses design principles which are peer reviewed in Conferences by scientists around the world. Most of its codebase is written in Haskell Language which is a highly secure, purely functional language.

Like other blockchains, it also uses a consensus mechanism to choose the block creator. The consensus mechanism used is called OUROBOROS, and is based on proof of stake, in which the block creator is chosen from stakeholders using a provably random process. One of the key features of this protocol is very high transaction speed.

Additional Read: Cardano Vasil Upgrade


Ouroboros processes transaction blocks by dividing chains into epochs, which are further divided into time slots. A slot leader is elected for each time slot and is responsible for adding a block to the chain. This protocol is guaranteed to be secure as long as 51% of the stakers are honest.

Cardano has two layers:

  1. Cardano Settlement Layer (CSL) – The CSL acts as the ledger of account or balance ledger. This is an idea created as an improvement of the bitcoin blockchain. It uses a proof-of-stake consensus algorithm to generate new blocks and confirm transactions.
  2. Cardano Computation Layer (CCL) – It contains the data about how the values are transferred. Since the computation layer is not connected from the balance ledger, users of the CCL can create customized rules when evaluating transactions. This dual system helps them process transactions faster with minimal overlap, making each layer much more efficient.


The native token of Cardano is ADA. The maximum supply of Cardano in the crypto market is 45 billion. The current token supply in circulation is 33.5 billion. Cardano promises an annual return rate of approximately 5% – 6%. The monetary expansion rate is currently set at 0.3% per epoch and has no bounding period.

The ADA token is primarily used for:


Cardano has a wide array of advantages. Some of them are:


Cardano faces a tough competition in the cryptocurrency industry. Its competitors being:

  1. Ethereum (ETH)
    Though Ethereum might not be as fast as other blockchains that are currently in use, many Web3.0 influencers and investors prefer Ethereum. This can be seen by the market capitalization of this cryptocurrency. It is loved by smart contract developers. Also, with the onset of Eth2.0, the transaction fees are going to reduce a lot, thus making Ethereum even more desirable for NFTs, DApps, and much more.
  2. Solana (SOL)
    Solana blockchain operates at lightning speeds, and its fees equate to a fraction of a cent per transaction. It has experienced strong adoption and settled more than 50 billion transactions since its adoption in 2020. It has established strong growth in the NFT ecosystem and is preferred by many Web3.0 degens.
  3. Polkadot (DOT)
    Polkadot is popularly known for one of its features called “interoperability.” Its infrastructure connects various blockchains together into one network. It enables them to exchange data without compromising their security. Interoperability is essential for the future of Web3.0, in which products, currency and services will move throughout what many hope will be a decentralised digital ecosystem.


ADA/USDT | Source: Tradingview

Additional Read: ADA Price Prediction 


Since its inception, Cardano has been nicknamed as the “Ethereum Killer” and is currently the 8th largest crypto in terms of Total market Cap as on 13 July, 2022. One of its biggest features is that it is built on peer reviewed research and hence can avoid the pitfalls of its predecessors and prevent glitches down the road.

However, the crypto market is extremely unpredictable and it is generally seen that coins that compete with the big two (Bitcoin and Ethereum) , generally end up plummeting in value.


Use this three-step process to buy your first ADA token using the CoinDCX, crypto investment app.

Disclaimer: User Generated Content – Original Content created by a member of BITS Pilani, under the consultation of Dr. Amit Dua, Assistant Professor, Computer Science Department, BITS Pilani, Pilani Campus in association with CoinDCX. The views and opinions expressed within this post belong solely to the author.
Author: Saatvik Mittal, Abhishek Das


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