Published: January 19th, 2022
Demand for ADA, the native token of the Cardano blockchain, began the week of 17th January by shooting up to a high of USD 1.55, the highest price seen since late December 2021. Numbers from CoinGecko show it has slightly dipped since then, changing hands at USD 1.49 at the time of writing. However, it’s still up a remarkable 30.2 per cent over the previous week.
Posting a market cap just north of USD 49 billion, Cardano currently claims the fifth spot amongst crypto’s most valuable blockchains.
This week's price action is being driven by several launches and upgrades to the blockchain, including the arrival of Pavia, the first metaverse project to use the Cardano network.
Tech’s buzzword of the moment, ‘metaverse’ refers to the blending of virtual reality with augmented and offline experiences, creating a unified digital/real-world environment that enhances the experience of things like NFT trading, social media sharing, and gaming.
Pavia's launch happened hot on the heels of other Ethereum-based launches, including The Sandbox Game and Decentraland.
Pavia issued more than 100,000 'plots' of virtual land to users. Each plot represents a unique NFT with individual coordinates. About 60 per cent of them were pre-sold in October and November of last year. The unsold plots are scheduled for availability later in the first quarter of 2022.
One Pavia plot has been listed in Cardano's NFT marketplace for sale at 100,000 ADA, or about USD 148,000.
On Saturday, 15th January, a Cardano based decentralised exchange (DEX) called SundaeSwap announced that its mainnet launch would happen on 20th January.
A blog post published by the project says it will be a 'fully-functional beta' release and that new pools will be allowed to be created starting on Tuesday, 25th January.
‘We decided to label it a ‘beta’ because even though we meet all security standards and our smart contracts have been fully audited, fully decentralised governance measures won't be available immediately,’
The blog post says this is because of the existing limits to transaction sizes on the Cardano blockchain. In a related press release, Cardano said performance optimisation and scaling plans in the development pipeline are designed to address these issues.
A recent blog post by Cardano’s parent company IOHK said the blockchain is now moving into the Basho phase of its development, where more resources are slated to boost network capacity and ‘allow more throughput across a rapidly expanding DApp ecosystem.’
IOHK says this will enable Cardano to scale up and eventually accommodate millions of new users, 'from DeFi users to crypto traders in developing countries.’
Planned improvements include an increase to block size, which will see blocks propagated to at least 95 of peers in five seconds or less. IOHK says this will be achieved by slashing the ‘dead time’ between blocks.
The Basho phase will also see several off-chain embellishments, including the launch of sidechains that link Cardano to the Ethereum Virtual Machine (EVM). There are also plans to distribute some of the network’s computation load, improving the network's overall efficiency.
One of Cardano’s key differentiators is that it relies on peer-reviewed research to guide its development. Cryptocurrencies face a host of technical challenges, including energy consumption, scalability, and interoperability with fiat currencies and the legacy payment and banking systems built for physical money transactions.
To get over these hurdles, Cardano says its built a unique community that can solve these problems and eventually leap past predecessors like Ethereum and Bitcoin.
Created initially as a university research project, Cardano has since grown into a new blockchain platform. Its creators knew that blockchains like Ethereum, which use smart contracts to facilitate transactions and keep counterparties anonymous, face scalability and interoperability challenges. Fixing them, they believe, will require an entirely new platform built from the ground up.
Cardano’s developers have taken inspiration from the world of academia and adopted methods like peer-review to guide their approach.
Any features or improvements have to be agreed upon, developed, and then reviewed by academics before going live. Parent company IOHK has published several academic papers that describe the platform and its technology to help it recruit more academics to the review process.
Ethereum is the leading network for new DApps, and it currently uses a proof-of-work (PoW) consensus system to verify transactions. PoW is notorious for its electricity consumption and lack of scalability, which limits how many transactions can be processed at any one time. Ethereum tries to manage this with transaction fees that rise and fall in tandem with network traffic levels, but users see the current system as inefficient and expensive.
Cardano’s alternative is to use the less power-hungry proof-of-stake (PoS) mechanism, and its written a proprietary algorithm called Ouroboros to select who creates and validates blocks. PoS advocates say a staking-based consensus mechanism makes blockchain networks more secure while significantly lowering their power consumption. Ethereum’s 2.0 upgrade will see it move to proof-of-stake this year.
IOHK says it has already been able to improve on things like identity management and traceability over Ethereum, and it's been able to partner with some well-known high street brands. Last year (2021), it teamed up with New Balance to take on the issue of fake knock-off trainers, giving customers the ability to confirm product authenticity. The company is also working with Ethiopia's government to create an identity solution for students.
Instead of using miners for validating transactions, Cardano's ADA coin relies on 'validators', who are selected by the network based on how much ADA they currently own.
If chosen to validate a transaction on the block, the validator makes a bet about how confident they are about their ability to verify every transaction on their plate. If the blockchain verifies a validator's block, the wager pays off with a reward denominated in ADA.
Cardano also claims to be ultra-fast by design. Its ADA coin is a homage to Ada Lovelace, daughter of Lord Byron and one of the early pioneers of computer programming.