Cardano and Ouroboros

We have talked about the First Generation of Crypto i.e. Bitcoin which was created solely for the purpose of P2P transactions, then we discussed about Ethereum which is the Second Generation, bringing in the smart contracts. Now lets talk about the third Generation- Cardano.

Cardano is founded by Charles Hoskinson. He is the co-founder of Ethereum. In 2015 when the Ethereum foundation was being built, Vitalik Buterin was of the opinion that it should be a Non-Profit organization. Charles disagreed to this and instead wanted to accept Venture Capital funding and make it a profitable concern. Finally Charles quit and founded a blockchain-engineering company IOHK. The main business of IOHK is to develop Cardano.


Cardano does not have a whitepaper. Is it a scam ? Is it a meme coin ? I am sure these questions come up in your mind. It is the first Blockchain project to use scientific philosophy and peer driven research based system. It simply means that the open source Blockchain goes through regular review by a team of scientists and programmers. According to its website, it is the only coin with a “scientific philosophy and research driven approach.” The Non-profit organisation- Cardano foundation has partnered with renowned scientists and scholars for the research and review process. Cardano is the first crypto to use proof-of-stake and it defines its goal to allow “changemakers, innovators and visionaries to bring positive global solutions.”

Proof of Work vs Proof of Stake

These are the two widely used consensus mechanism. These are fault proof methods used in a blockchain to reach to an agreement on the state of a network amongst the distributed nodes. It helps in transaction recording. They can be even understood as a set of rules that define how a network made up of numerous blocks agrees on addition of new blocks.

Proof of Work is the first consensus mechanism which was used for Bitcoin and the initial cryptocurrencies. It was revolutionary as it created secure, permissionless and distributed networks. But the worrisome factor is that in creating consensus for each new block, it required a huge amount of energy which would often cause the network to struggle in speed and scalability. The consumption of high level of energy was also a point of criticism for cryptocurrency.

Proof of Stake is the solution to the energy problems and offers a sustainable solution. So what proof of stake does is, it eliminates the process of rewarding the first miner who solves complex mathematical problems for creation of new block. Instead POS selects participants or stake pools who will create new blocks based on the amount of stake they have in the network. This will help scale the network horizontally and increase the performance by adding additional nodes rather than adding higher grade hardware vertically in POW.

The difference in consumption of energy between Proof of Stake and Proof of Work is huge, it can be compared to the consumption of a household and a big industrial estate.

Native Token

Ada is the native token of the Cardano ecosystem. Cardano has derived its name from 16th century Italian polymath Geolamo Cardano whereas ADA comes from the 19th Century mathematician Ada Lovelace. Let’s look at the numbers-

  • Max Supply- 45,000,000,000 ADA
  • Circulating Supply- 33,313,246,915 ADA
  • All time High- $3.1

    How can you invest in Ada ? You can go to coindcx, easily create an account by completing formalities like the KYC and start investing.
Lovelace Ada


It is the first secure proof-of-stake protocol. It improves the security provided by proof-of-work consensus mechanism and also uses up minimal energy. It uses a combination of cryptography, combinatorics and mathematical puzzle formulas to enhance the protocol’s integrity, performance of longevity of the network. Ouroboros is based on the concept of infinity. The technology believes in the principles of sustainability which means creating better technology and opportunity for the world but at the same time preserving resources so that the future generations can also enjoy it.

Let’s understand the main features-

1) Security

Ouroboros provides security which can be mathematically verified against attackers. The protocol is safe from attackers as long as 51% of the stake in ada is held by honest users whereas in other theoretical definitions is attained by selecting a random leader. Being a peer driven system, the protocol keeps evolving.

2) Rewards to the participants

To keep the participants interest alive in securing the platform, the protocol has a reward mechanism which rewards for participation. This can be done in 2 ways-
i) Operating a stake pool
ii) Delegating a stake in ada to a stake pool

3) Environment Friendly

Ouroboros is the solution to the main criticism faced by existing blockchains i.e energy consumption. Using Ouroboros, Cardano can securely, efficiently and in a more environment friendly way scale with almost 400 million times the energy efficiency of Bitcoin.

The Ouroboros Mechanism

To process blocks, the mechanism divides chains into smaller units known as epochs which are further divided into time slots. Time slots are basically the approx time required to create a node. It does not allow everyone to mine. For each Time slot, there is a node elected who is the Slot Leader. He has the duty to add the blocks. The slot leader is the only person who can mine a block for that particular slot. If he fails to create a block in that time, he loses his chance and has to wait and until he is re-elected. Cardano can create multiple parallel epochs and slots in them thus making it highly scalable.


Cardano aims to be the Internet of blockchains by connecting cryptocurrencies. The network is now preparing for the Hydra upgrade. This will be a level 2 scaling solution and will theoretically bring in a speed of 1 million transactions per second. Though it is highly scalable, has fast transaction speeds and is environment friendly, Cardano’s use is only as a currency currently. There was an Alonzo Hard Fork in September which brought in smart contracts. There are more than 200 contracts listed but they all are time bound and will only unlock with time. Cardano promises of a great vision, only time will tell how they are able to execute it.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s