Cardano is a third generation blockchain project. Its ADA token became available for trading in September of 2017, and the project is comprised of three organizations: IOHK (technical development), Cardano Foundation (standardization and promotion), and Emurgo (business development). The Cardano platform, similarly to Ethereum, enables the development of new blockchains, smart contracts and dApps (decentralized applications), but offers some advanced features to try and improve on the concept laid out by Ethereum.

Layered Technology

The Ethereum network utilizes only one layer. Cardano, in comparison, will employ two different layers, namely the Cardano Settlement Layer (CSL) and the Cardano Control Layer (CCL). The settlement layer will be used to handle the ADA token economics and the control layer will be dedicated to smart contracts and digital identity regulation.

Ouroboros Proof-of-stake Protocol

The Cardano platform intends to use the Ouroboros proof of stake protocol. According to the team, Ouroboros is a groundbreaking achievement since it is the first proof-of-stake protocol that was mathematically proven to be secure.

The node that will confirm the block will be randomly selected by the network taking into account the number of coins the address holds. The more tokens one holds, the more likely they will be selected for block confirmation and consequently the more likely to receive the reward. Token holders who won’t be operating a full node will be given the option to use their tokens to “support” a node’s probability to confirm blocks.

Treasury System

The treasury is an intelligent solution that would allow the Cardano network to support its development long after the original development company is gone. The treasury plans to keep 25% of block rewards and use the gathered assets to pay for future development teams. Token holders will vote on which changes they want to fund. A system like this tackles an issue that many blockchain networks are facing.

On-chain Governance System

The vast majority of the decisions related to the Cardano platform will be made by the token holders. There will likely be a library of suggested modifications and upgrades on which the users would vote. When a certain suggestion would be outvoted with the majority and would fulfill the quorum, the development team would start to implement it into the protocol. Ethereum is the complete opposite since it features an off-chain governance system, where decisions are made by the development team itself. This work perfectly as long as the Ethereum community agrees with the implemented changes. However, in case that the community does not approve of the changes, tensions are generated, which can result in a chain fork, with the Ethereum Classic / Ethereum fork being a classic example.

Recently, the IOHK team visited Google’s London offices, and one of the topics that came up in the discussion was Ethereum’s seemingly solidified spot in the blockchain platform sector. Charles Hoskinson, IOHK’s CEO, said that it is still too early to say Ethereum has a significant first-mover advantage.

Even though competition in this space will be fierce, it’s hard to argue with Ethereum’s groundbreaking achievements and very strong community of enthusiasts and developers. Still, Cardano could very well be one of the projects that has the best chances of overtaking it.