$ADA Whale: ‘Post Crypto Recession, Cardano Will Be One of Fastest Chains’
On Thursday (June 16), one highly popular pseudonymous $ADA whale (“@cardano_whale” on Twitter) shared his thoughts on the future of the Cardano blockchain.
“ADA Whale” tweeted:
Let’s take a quick look at each of these claims and try to understand the reason(s) he might have for believing these claims to be true.
Speed
The hotly-anticipated Vasil hard fork is planned for this to go live on the mainnet on June 29. On April 12, Charles Hoskinson, who is Co-Founder and CEO of IO Global (aka “IOG”, formerly known as “IOHK”), the company responsible for Cardano’s research and development, released a video released on his YouTube channel to provide an update on various matters of interest to $ADA HODLers.
Hoskinson talked about why he is excited about the Vasil hard fork:
“As many of you know, a major major major hard fork combinator event is happening in June, which is the Vasil hard fork, and that is going to contain pipelining, which will be a massive performance improvement to Cardano, alongside the first wave of significant Plutus enhancements since Plutus shipped in September.“
On February 1, John Woods, Director of Cardano Architecture at IOG, published a blog post, in which he introduced pipelining:
“Pipelining is, effectively, an evolution in Cardano’s ‘plumbing’. It is a key element in our scaling plan this year, one in the series of published steps covering our methodical approach to flex Cardano’s capacity as the ecosystem grows…
“Pipelining – or more precisely, diffusion pipelining – is an improvement to the consensus layer that facilitates faster block propagation. It enables even greater gains in headroom, which will enable further increases to Cardano’s performance and competitiveness...
“Pipelining is just one of the pillars supporting Cardano’s scaling this year. Combined, all these changes will lead Cardano to a position where it is faster than its competitors, and a highly competitive platform for decentralized finance (DeFi) this year.“
As for layer 2 (L2) scaling solutions, IOG is currently working on Hydra, which is expected to increase Cardano’s throughput to one million transactions per second (in contrast, super fast blockchain Solana currently can achieve around 65,000 transactions per second) once the upgrade goes live on the mainnet (hopefully, by the end of 2022).
On 26 March 2020, Greek cryptographer and computer scientist Professor Aggelos Kiayias, who is the Chief Science Oficer at IOG, published a blog post titled “Enter the Hydra: Scaling Distributed Ledgers, the Evidence-Based Way”.
Here is how he introduced Hydra:
“Scalability is the greatest challenge to blockchain adoption. By applying a principled, evidence-based approach, we have arrived at a solution for Cardano and networks similar to it: Hydra. Hydra is the culmination of extensive research, and a decisive step in enabling decentralized networks to securely scale to global requirements.“
Professor Kiayias then gave the “30,000-feet view” description of Hydra:
“Hydra is an off-chain scalability architecture for distributed ledgers, which addresses all three of the scalability challenges mentioned above: high transaction throughput, low latency, and minimal storage per node. While Hydra is being designed in conjunction with the Ouroboros protocol and the Cardano ledger, it may be employed over other systems as well, provided they share the necessary salient characteristics with Cardano.
“Despite being an integrated system aimed at solving one problem – scalability – Hydra consists of several subprotocols. This is necessary as the Cardano ecosystem itself is heterogenous and consists of multiple entities with differing technical capabilities: the system supports block producers with associated stake pools, high-throughput wallets as used by exchanges, but also end-users with a wide variety of computational performance and availability characteristics. It is unrealistic to expect that a one-shoe-fits-all, single-protocol approach is sufficient to provide overall scalability for such a diverse set of network participants.
“The Hydra scalability architecture can be divided into four components: the head protocol, the tail protocol, the cross-head-and-tail communication protocol, as well as a set of supporting protocols for routing, reconfiguration, and virtualization. The centerpiece is the ‘head’ protocol, which enables a set of high-performance and high-availability participants (such as stake pools) to very quickly process large numbers of transactions with minimal storage requirements by way of a multiparty state channel – a concept that generalizes two-party payment channels as implemented in the context of the Lightning network.
“It is complemented by the ‘tail’ protocol, which enables those high-performance participants to provide scalability for large numbers of end-users who may use the system from low-power devices, such as mobile phones, and who may be offline for extended periods of time. While heads and tails can already communicate via the Cardano mainchain, the cross-head-and-tail communication protocol provides an efficient off–chain variant of this functionality. All this is tied together by routing and configuration management, while virtualisation facilitates faster communication generalizing head and tail communication.“
And this was his overview of the Hydra head protocol:
“The Hydra head protocol is the first component of the Hydra architecture to be publicly released. It allows a set of participants to create an off-chain state channel (called a head) wherein they can run smart contracts (or process simpler transactions) among each other without interaction with the underlying blockchain in the optimistic case where all head participants adhere to the protocol. The state channel offers very fast settlement and high transaction throughput; furthermore, it requires very little storage, as the off-chain transaction history can be deleted as soon as its resulting state has been secured via an off–chain ‘snapshot’ operation.“
He also talked a little about Hydra’s potential based on simulation results:
“We see that a single Hydra head achieves up to roughly 1,000 TPS, so by running 1,000 heads in parallel (for example, one for each stake pool of the Shelley release), we should achieve a million TPS.“
Stablecoins
There are several Cardano-powered stablecoin projects. The one that is the most well-known is algorithmic stablecoin Djed, which will be issued by FinTech startup COTI Group.
On 26 September 2021, day two of the two-day Cardano Summit 2021, IO Global (IOG), the blockchain technology firm responsible for the development of Cardano ($ADA), and FinTech startup COTI Group, unveiled Djed, a new algorithmic stablecoin for Cardano that was developed by the former and is issued by the latter.
Djed’s use of smart contracts ensures price stabilization. Djed can be useful in decentralized finance (DeFi). It works by “keeping a reserve of base coins, and minting and burning stablecoins and reserve coins.”
Djed’s white paper states that the Djed protocol “behaves like an autonomous bank that buys and sells stablecoins for a price in a range that is pegged to a target price” and that Djed is crypto-backed “in the sense that the bank keeps a volatile cryptocurrency in its reserve.” It also mentions that Djed is “the first stablecoin protocol where stability claims are precisely and mathematically stated and proven.”
In a blog post published on May 3, IOG said that Djed “operates by maintaining a reserve of base coins, while minting and burning various other stable assets and reserve coins” and that “it is designed to be used for paying transaction fees on the Cardano network,” which helps to “make transaction costs more predictable, so avoiding volatile and exorbitant gas fees for users.”
The COTI team believes that “stablecoins are a ‘killer app’ that will be adopted by a large number of crypto users for settling payments and covering fees.”
Shahaf Bar-Geffen, the CEO of COTI Group, had this to say:
“The stablecoin ecosystem has matured tremendously over the past few years. Blockchain participants are using stablecoins to engage in everyday transactions because they allow monetary value to be exchanged in a seamless manner, regardless of the sender and recipient’s location. I believe that adding the Djed stablecoin to the Cardano blockchain will significantly improve how transactions are settled on the platform.“
And IOG Co-Founder and CEO Charles Hoskinson stated:
“The Djed stablecoin could be a game-changer in the crypto space, appealing to an entirely new audience at a time when the industry is already experiencing astronomical growth. Djed shares our commitment to formal verification, proving a robust method of combating price volatility of crypto markets.
“COTI has been a long-time partner of the Cardano ecosystem. It’s great to have them on board with this new venture.“
In a blog post published on May 4, COTI announced that the public testnet version of their decentralized algorithmic stablecoin has been released.
The blog post went on to say that this release allows them to “test the main functionalities of the protocol in a fictitious and safe space using trial funds and will “give everyone an opportunity to understand the dynamics of the protocol without incurring any risks.” It also mentioned that “SundaeSwap, Minswap and WingRiders are starting to test Djed through test pools on their platforms.”
The COTI team reminded everyone that “the Public Testnet’s purpose is to test all aspects of the release” and that they “expect some technical issues to arise.” As for the Public Mainnet version, they are planning to release it in June.
There are also stablecoin projects, such as Ardana Dollar (dUSD) by Ardana and AUSD by ADADAO.
Decentralized Exchanges (DEXes)
According to data by DeFi Llama, there are currently six DEXes available for Cardano: Minswap ($MIN), SundaeSwap ($SUNDAE), WingRiders ($WRT), MuesliSwap ($MILK), MeowSwapFi ($MEOW), and ADAX Pro ($ADAX).
As you can see the most popular Cardano DEX is Minswap, which had its mainnet launch on March 8.
According to its white paper, Minswap is “an automated market-maker (AMM) decentralized exchange (DEX) on Cardano which supports multiple pricing functions for a single liquidity pool.”
This is an “elevator pitch” description of Minswap from the project’s FAQ guide:
“We aim to bring an innovative multi-model asset pool decentralized exchange to the Cardano blockchain. Minswap aims to be the best liquidity provider on the market by integrating the best asset pool models from across the DEX ecosystem into one protocol. The combination of stable pools, multi-asset pools, and concentrated liquidity will benefit both traders and liquidity providers. Our tokens are fairly distributed without any private or VC investment. This ensures our community of users are maximally rewarded, not speculators and insiders.“
The Minswap protocol has two types of tokens:
- MIN token: “The governance token of the protocol with future utility.”
- MINt token: “A token that can be converted to MIN through usage of the protocol.
Here are a few more facts about Minswap:
- “MIN tokens are distributed fairly to protocol participants and Liquidity Providers, who can participate in governance and vote democratically on protocol changes.“
- “Minswap is permissionless, meaning anybody can list tokens without needing KYC.“
- “Minswap supported SPOs through the FISO and plans to continue doing so with a community-oriented ADA delegation policy…“
- “Minswap will embrace Community Governance through a DAO, and introduce novel features such as gamification or profit sharing.“
NFT Ecosystem
Here is what Hoskinson said about Cardano’s rapidly growing NFT sector during an interview with Yahoo Finance on June 9:
“One surprising area of growth on Cardano is in the NFT space. About 40% of all the applications that are being deployed are NFT-related… About $270 million a month in NFT volume. So, $3 billion a year, and there’s tons of incredible work in the metaverse space, like Cornucopias and others, and it’s really impressive to see how fast it’s grown in just the last year.“
On Tuesday (June 7), American comedian and actor Martin Lawrence explained — during a conversation on Twitter Spaces with Patrick Tobler, Founder and CEO of NFT-MAKER, and Charles Hoskinson — why he is joining the Cardano ($ADA) community to launch his first NFT collection.
During this chat, Hoskinson talked about about how NFTs have evolved on Cardano:
“I didn’t expect Cardano to be a major player in the NFT space, at least initially. It kind of caught us all by surprise. We worked really hard at trying to create great asset standards… We didn’t expect to to have NFTs be quite large, but then it was completely community led. So, all these projects materialised out of nowhere, and about 40% of the 1000+ projects on Cardano are NFT-related, and there’s over five million assets that have been issued on Cardano, and the transaction volume is remarkable…
“There’s about $270 million worth of sales that are occurring on a monthly basis when you look at this in the last three months average. So, it’s an unexpected surprise, but in hindsight it makes perfect sense. When you look at the native asset standard, when you look at the eUTXO model in particular, it makes it really easy to do an airdrop, it makes it really easy and low cost to issue things and manage these things that that are coming through. So, in hindsight, it does kind of make sense.“
Then, on June 10, Lawrence announced that his “Martin: The Reunion” NFT collection had gone on sale on his website www.martincnft.com and that holders of any of these 30 NFTs would be invited to attend on June 15 the Hollywood premiere of “Martin: The Reunion”, which is set to air on Black Entertainment Television (BET) on January 16.
On June 11, Lawrence announced that he had sold the first NFT from his Cardano-powered “Martin: The Reunion” NFT collection for 3,000 ADA tokens.
Image Credit
Featured Image by “Quantitatives” via Unsplash
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