Charles Hoskinson, from IOHK, has apparently quietly been working on a new blockchain called Cardano, which was recently launched. Instantly gaining a market cap of half a billion with trading volumes of nearly $100 million in the past 24 hours.
A market cap which didn’t quite come out of nothing. The project had a number of ICOs, or as they call them voucher sales, raising 108,844.5 bitcoin in total, currently worth nearly half a billion.
So there appears to be very little gain for investors at this point, but that may change, both positively and negatively. However, what’s the point of yet another blockchain?
Finding potential answers wasn’t easy because the project doesn’t have a whitepaper. The closest document to it reads more like a general very high level view which doesn’t quite provide much detail.
The biggest difference appears to be a layered approach. The project is, or will be designed, to have a base layer just for currency usage of the 31 billion Cardano (ADA) tokens, and then a second settlement layer for smart contracts.
That’s largely an approach bitcoin takes with Rootstock. Ethereum doesn’t at this stage, but with the addition of Raiden and Plasma, it will too have a settlement layer of sorts.
On the scalability front, the network is limited currently to 5-7 transactions per second, less than eth, but they plan to raise that higher by using a quarum of nodes to handle parts of transactions or an x number of transactions. That is, by implementing sharding.
The network is based on Proof of Stake, with the protocol design presented at a conference where mathematical proofs were given to show why it works. That seemingly gives the project the right to say their blockchain has had academic peer review, but we were not provided any published academic papers, with the only peer review seemingly being of the paper presented at the conference.
They are however working with the University of Edinburgh and we are told on governance they are working with the University of Lancaster.
As you can imagine, considering Hoskinson’s involvement, the DAO is a soft spot, with their sort of whitepaper stating:
“History should never be tampered with. Blockchains provide a promise of immutability. Introducing the power to roll back history or alter the official record introduces too much temptation to change the past in order to benefit a particular actor or actors.”
Considering ethereum had a $1 billion market cap during the DAO and after resolving it rose to as high as $40 billion, while ETC remains at around $1 billion, you’d think the collective decision to prevent a theft of $200 million was very much valued by the market.
But even if the project believes the market is wrong, how exactly do they prevent a collective decision to fork the blockchain when Cardano is designed to both soft-fork and hard-fork. Jane Wild, who works in Communications at IOHK, told trustnodes:
“Cardano will have a governance, voting and treasury model which will be implemented through next year. Users will be able to vote on what changes they want to see on the protocol. IOHK is a developer of the network until 2020 and has designed the network, though in the long term it will be the users that decide on its path.”
The project does not appear to have any automatically binding method to enforce such voting, so we asked what prevents developers from just ignoring the vote:
“Everyone who has stake in the network can vote. There will be a mechanism for voting. This model is in development now, we are working with the University of Lancaster and others on this. We are working on putting all these things into a roadmap and will release that soon,” Wild says.
They appeared to be busy today, so we didn’t receive some important answers, such as whether the code has been audited. But we were able to ask whether the project is competing with eth:
“We don’t think we are a direct competitor, because we see Ethereum’s technology as generation 2 in blockchain, and what we have planned is generation three, where blockchains become interoperable, where there is governance and where they can self sustain themselves and scale,” Wild says.
Which seems to suggest they see themselves as better than ethereum, but we couldn’t quite discern what exactly is new about Cardano or why anyone should prefer it over the top three digital currencies which enjoy some considerable network effects and popularity.
If it is immutability, that’s hardly a differentiation because Cardano’s blockchain is not absolutely immutable, nor is any other blockchain, including bitcoin, so relying on the consensus of the vast majority which can reach a consensus of mutating.
A layered approach is also not new and is actually being followed by nearly all prominent public blockchains. The governance doesn’t appear to add anything as voting is hardly a new invention. Ethereum used it before deciding to DAO fork.
But perhaps we have missed something and there are of course some superficial differences, such as a new smart contracts programming language and the project being coded in Haskell, rather than C++.
Such differences however are minimal compared to the vast gaps in network effects, but competition is always welcomed, as are new entrants, who hopefully will manage to keep the top currencies on their toes, ready to eat their lunch if they slack or lazily drift.
UPDATE: Cardano reached out to say “The code auditing was done by both RPI Sec and Also Grimm. I’m sure that if you contact them they can verify they reviewed the code and provide comment.”