In anticipation of the Alonzo hard fork – a global update in the Cardano blockchain – the ADA network’s internal coin has risen to the third line in the list of the largest cryptocurrencies by capitalization.
The entire crypto community awaits the activation of the Alonzo hard fork with bated breath, as this update will take the project to the next level of technical development. So, after the successful activation of Alonzo , the long-awaited smart contracts will finally appear on the Cardano network .
We tell in simple language about the main changes that await the Cardano network, as well as why some members of the crypto community criticize the project team for activating Alonzo.
ADA is one of the few cryptocurrencies , the value of which reached its all-time high in August, even despite the difficult situation on the crypto market. So, since July 20, when the ADA quotes reached a local minimum of $ 1, by the beginning of September the price of the coin had already increased to $ 3, showing an increase of 200%. Since then, the Cardano network coin has confidently risen to the third place in the ranking of the largest cryptocurrencies by capitalization on CoinMarketCap.
Such a rapid rise in the cost of ADA is not accidental – in mid-August, IOHK Marketing and Communications Director Tim Harrison announced the date of the long-awaited Alonzo hard fork: September 13, 2021, at 00:44 Moscow time, an update will be activated on the Cardano network that will add support for smart contracts and will take the project to a new level.
Cardano blockchain device
Work on the Cardano crypto project began back in 2015. Then the development team led by the famous mathematician and co-founder of Ethereum Charles Hoskinson set a goal for themselves to create a blockchain network that would be fast, scalable and secure.
The Cardano platform is named after Gerolamo Cardano, a famous Italian mathematician, engineer, physician, astrologer and philosopher. And the internal ADA coin got its name in honor of Countess Ada Lovelace – an English scientist-mathematician who, in the 19th century, was the first to describe the structure of a calculating machine and wrote a program for it.
Two years after starting work on Cardano, the project team launched a blockchain platform and conducted a series of Initial Coin Offerings (ICOs), raising a total of $ 63 million.
The peculiarity of Cardano is that the blockchain runs on an advanced dPoS consensus algorithm called Ouroboros. Thanks to this, there is no mining on the Cardano network, and new ADA coins are mined through staking . At the same time, ADA holders have the right to vote on decisions on the future development of the platform.
Full-scale development of Cardano will take several years and takes place in five phases, each of which is responsible for the implementation and activation of the key functions of the blockchain network : the launch of the main network, decentralization, smart contracts, scalability and the transition of project management to the community. All stages of Cardano’s development are divided into eras and are named after famous writers:
- Age of Byron – The launch of the mainstream Cardano blockchain and ADA coins.
- The Shelley era – activation of the dPoS algorithm, launching ADA staking, integrating the ability for users to launch nodes, join pools and take part in voting.
- The era of Gauguin – the launch of smart contracts, decentralized applications (dApps) and custom tokens.
- The Basho era – scaling the network and increasing Cardano interoperability, which will allow sidechains to be launched.
- The era of Voltaire is the beginning of the transition of Cardano governance from the development team to the community.
Cardano is now in the final stages of completing the Shelley era and is preparing for the transition to the Gauguin era.
Several organizations are responsible for the development of the ecosystem at once:
- The Cardano Foundation is a non-profit foundation in charge of managing Cardano.
- Input Output Hong Kong (IOHK) is a research company that develops Cardano.
- EMURGO is a world renowned blockchain solutions firm.
One of the main problems preventing the mass adoption of cryptocurrencies is the technical component, which is difficult for an ordinary user to understand. The Plutus programming language developed by the Cardano project is intended to partially solve this problem.
This programming language was created specifically for Cardano and should become a more advanced analogue of the smart contract standard for launching ERC-20 tokens for Ethereum. Plutus will allow users to create their own decentralized applications based on Cardano. At the same time, this programming language will make the process of developing and deploying smart contracts much easier, as a result of which developers can launch products for the Cardano ecosystem faster.
And for those users who are far from programming, the Marlowe language will be available. It will allow you to create smart contracts without going deep into development and technical details. This feature is expected to become Cardano’s trademark and attract more developers to the ecosystem.
The project also plans to create a «playground» Marlow, which can be used to create financial smart contracts . And this will allow specialized specialists to independently create smart contracts without delving into the topic of programming.
Among other things, in the era of Gauguin, which will come after the activation of the Alonzo update, a multi-currency ledger will be added to the Cardano network. It will allow users to create new tokens, including the currently popular NFTs. In addition, the new version of the blockchain will allow the tokenization of digital and physical assets.
Thus, after the update, Alonzo Cardano will move from the category of potential Ethereum competitors to quite real ones. We are sure that this will allow Cardano to occupy an even larger part of the crypto market, including by attracting new developers. After all, the long-awaited update of Ethereum to version 2.0 and the full integration of the Proof-of-Stake consensus algorithm will not take place soon.
Main features of Alonzo
As we wrote above, after the activation of the Alonzo update, smart contracts will finally appear on the Cardano network. This means that it will be possible to run decentralized applications (dApps) and DeFi products, which have become especially popular in the last two years, on this blockchain.
So, according to the DeFiLlama service, as of September 10, funds worth $166.18 billion were blocked in decentralized financial services. At the same time, a year ago, the amount was only $18 billion, and at the beginning of September 2019 it barely exceeded $5 billion. Therefore, for the Cardano project, support smart contracts will play a key role in the issue of further development.
As for the activation of the Alonzo update, it is also divided into several stages:
- Alonzo Blue
- Alonzo White
- Alonzo Purple
Alonzo has already passed two test versions – Blue and White. Now the hard fork is at the final stage of Purple, within which a public testnet was launched, available to all Cardano users.
The last stage of Alonzo activation is also divided into light and dark. The first will allow you to work with simple smart contracts, while the second involves the use of more complex smart contracts.
But that’s not all. The most recent final stages of preparing Alonzo Purple for activation are within Alonzo Red and Alonzo Black. The Alonzo Red stage is designed to check the code of the entire update for problems and bugs. And Alonzo Black will provide Cardano developers with the opportunity to fix issues and bugs found during Alonzo Red.
The final stage of Alonzo will be the actual activation of the update itself in the main Cardano network, as well as the long-awaited addition of smart contracts. This will happen on September 13 at 00:44 Moscow time, after which it will be possible to create and run various applications and protocols based on Cardano, including those from the DeFi sphere.
Criticism of Alonzo activation
Despite the fact that Alonzo is a long-awaited update that many Cardano users are waiting for, not all crypto market players support Charles Hoskinson’s team.
So, on September 4, it became known that after the launch of the first decentralized crypto exchange (DEX) Minswap, large-scale errors occurred in the Cardano test network. Ethhub.io co-founder Anthony Sassano spoke about this on his Twitter. According to Sassano, DEX was unable to conduct parallel processing of transactions, which is a basic function of this type of decentralized applications (dApp).
Difficulties arose during the use of unspent outputs (UTXOs) to track user funds. At the same time, one Reddit user noticed that the Cardano-based decentralized exchange can only process one transaction per block, jokingly calling Minswap “unoswap” (uno is Spanish for one). As a result of this error, the test network had to be temporarily disabled, which caused outrage among its users.
For this reason, according to Anthony Sassano, DeFi products based on Cardano will not be able to compete with existing solutions like Uniswap or PancakeSwap. A similar opinion is shared by the head of investments at Arcane Assets, Eric Wall, who sees no prospects for Cardano in the DeFi market.
In response, on September 5, the Cardano team released a report on the work to resolve the issue, emphasizing that, despite this, the activation of Alonzo will take place at the scheduled time. Also in response, Charles Hoskinson on his Twitter said that critics are only trying to spread FUD (fear, uncertainty and doubt) about the upcoming update. He observed exactly the same reaction of the crypto community before activating the Shelly update.
Further development of Cardano
After the Gauguin era, the Basho era will follow, which is associated with optimization, improving the scalability and compatibility of Cardano. While previous eras focused on decentralization and new features, Basho aims to improve network performance to support the growth of dApps as well as the adoption of applications that require more transactions.
One of Basho’s main features is the introduction of sidechains. New blockchains compatible with the Cardano network can be used to increase its throughput or introduce experimental features without compromising the security of the system.
The final era of Walter will make the Cardano system completely decentralized . A voting function will appear on the network, thanks to which project participants will be able to influence the future of Cardano. A treasury system will also be added to finance further development of the system during the Walter era. In accordance with it, part of the transaction fees will be directed to the implementation of ideas for the development of Cardano, which will be adopted during the voting.
The developers claim that after the voting and treasury systems are introduced into the network, Cardano will become truly decentralized and will no longer be under the control of IOHK. After that, the fate of the project will pass into the hands of the community, which will receive everything necessary for development on a decentralized basis.
