A major new Cardano update is coming as ADA records an inspired rebound

ADA, the coin of the Cardano Foundation, It reached its all-time high of USD 0.97 on February 12, after starting the year trading at USD 0.18, representing a gain of 438% so far this year. Apart from the macro trends in the cryptocurrency industry that drive the price of the most popular assets, such as Bitcoin (BTC), Ether (ETH) and other altcoins, such as LINK, DOT, etc., Cardano’s growth could also be attributed to the network upgrades that Cardano has been making to its blockchain network.

On February 3, Cardano’s development company Input Output Hong Kong (IOHK) successfully carried out a hard fork and also applied the Goguen native token update, known as the Mary update, to the Cardano testnet, that transforms the blockchain into a multi-asset network similar to Ethereum.

The team expects to launch the mainnet in late February. The other features of the Goguen update will be released simultaneously according to the different phases of the Cardano roadmap.

In terms of functionality, This update would equate Cardano’s native tokens to ERC-20 fungible and ERC-721 non-fungible (NFT) tokens on Ethereum. For the first time, users of the Cardano blockchain will be able to create their own tokens, either fungible or NFT. In addition to these similarities to the Ethereum blockchain, there are differences in design between native Cardano tokens compared to Ethereum tokens.

Is the design difference of Cardano tokens a USP?

The first big difference after the update is that “there will be no execution fees”, that are typically charged to a user when interacting with a smart token contract on the Ethereum blockchain, known as gas commissions.

The recent bull runs witnessed in Ether and other tokens on the Ethereum blockchain have resulted in extremely high gas commissions due to network congestion, discouraging retail investors from participating. Hinrich Pfeifer, Secretary General of the Cardano Foundation, dHe discussed with Cointelegraph how native Cardano tokens would differ in this respect: “Native Cardano tokens are ‘forged’ on-chain without the need for a smart contract, and therefore no execution fee is required to transact with native tokens in Cardano “. He further added:

“Instead, sending tokens requires a nominal fee (called” minimum ADA value “), payable in ADA, which is sent along with the tokens. Multiple native tokens can also be bundled together and sent together in a single transaction (this increases the ‘minimum ADA value’). However, this fee is not dependent on network congestion, nor is it dependent on the execution of smart contracts. “

There are other benefits to not needing smart contracts to create tokens, as there would be no room for fraudsters to exploit smart contract vulnerabilities, human error and other risks associated with smart contracts. something that Ethereum co-founder Vitalik Buterin warned the community against last year.

Pfeifer further explained how “the opportunity to drain funds through a smart contract is eliminated” on the Cardano blockchain: “The native user-defined tokens in Cardano use the same underlying token logic as the Cardano blockchain itself. Cardano’s coding language does not have fixed-size integers, and the ledger itself tracks token movements and handles their logic “.

James Beck, director of communications and content of ConsenSys, a Blockchain technology company supporting the Ethereum infrastructure, He explained to Cointelegraph how Ethereum addresses these smart contract risks:

“Ethereum has been using smart contracts since 2015, however smart contract development is still a maturing field. With Ethereum, bugs and security risks are discovered every week that are added to the records of security best practices of the smart contracts “.

ADA struggles to be the fourth cryptocurrency by market capitalization

ADA recently reached its three-year high and has overtaken Polkadot’s DOT token and XRP to briefly become the fourth-largest cryptocurrency currently in circulation. Unlike meme-based coins, like Dogecoin (DOGE), who have recently been gaining a ton of attention from the media and even personalities like Elon Musk, Cardano’s growth can be attributed to its strong fundamentals and working principles.

Marie Tatibouet, Chief Marketing Officer at Gate.io, a digital asset trading platform, told Cointelegraph that the team led by Charles Hoskinson, the creator of Cardano, “It has taken a ‘research first’ approach to solving the various problems that plague the modern blockchain ecosystem: lack of speed, high fees, etc.” He added that “for example, the algorithm Ouroboros Cardano’s was the first researched peer-to-peer algorithm in the world. […] Their emphasis on getting the job done before launching the product has helped them immensely. “

Since institutional investors are a major catalyst for these markets, Cardano aims to gain more popularity among them compared to other blockchain protocols. Pfeifer stated to Cointelegraph:

“We hope that Cardano’s value proposition, especially the degree of security and affordability that is ensured through our native tokens and the focus on formal methods, will be popular with institutions and businesses. Other blockchain protocols have had security issues. highly publicized and huge losses in value through smart contract vulnerabilities. For their part, this has led institutions to be very careful when exploring blockchain-based solutions. “

Furthermore, the fact that Cardano has been implemented in Haskell, a functional programming language that is known for its highly reliable applications, could open up different business use cases involving large companies and even governments. Pfeifer stated: “Cardano could stand out to attract a totally different market share than Ethereum: that of national ID solutions, back-end financial infrastructure and powerful business use cases.”

Ethereum is still king

Although the concept of “Ethereum killer” has been around since Ethereum gained a monopoly on blockchain-based use cases, there has been no network that has been capable of generating users and developers like Ethereum today. Various networks have tried to live up to this label for some time and have not gotten the interest from developers that was expected.

An important aspect to take into account when considering Ethereum’s competition would be the scalability problems that Ethereum 2.0 proposes to solve with its move to a proof of stake protocol. Cardano’s scalability is expected to come through Hydra, which would “have multiple heads” that would deliver high transaction throughput, measured in transactions per second (TPS). Each “Hydra head” can potentially process up to 1,000 TPS.

Pfeifer said that TPS cannot be the only measure of scalability due to the structure of Cardano’s Hydra heads, as different types of transactions can take place on the blockchain, adding: “In the future, each Cardano node (provided by our staking pool operators) could run a Hydra head. Therefore, the TPS of the Cardano network could scale accordingly with the number of staking pools running a head. Hydra “.

Currently, there are more than 1,400 independent staking pools operating on the Cardano blockchain. That said, Ethereum currently has the largest pool of developers, who are building widely used applications and interfaces, such as MetaMask, Compound, and Protocol, including Ethereum’s own core protocol. Beck pointed out how the Ethereum pool compares to Cardano’s:

“Ethereum remains the most actively developed blockchain protocol, with 42,457 commits to its code from an average of 220 top developers active monthly. Cardano is not that far behind, with 37,327 commits, but IOHK is also involved in Ethereum Classic, which may inflate data that is attributed to the protocol “.

This great activity by developers is essential for the growth of any blockchain and its network effects. Creating smart contract standards and best practices is also important, as Ethereum tried to do. Additionally, the scalability issue is currently being addressed by layer two networks, such as Optimist Rollups and ZK-Rollups, and as Beck further stated, they decrease “commissions and congestion by increasing blockchain performance to over 1,000-2,000. TPS “.

The rollup chain can also be thought of as a separate piece of data that allows experimentation through various data models and execution that are still based on Ethereum. These rollups are part of the Eth2 roadmap and are intended to make Ethereum more scalable in the short term.

Metcalfe’s law establishes that the value of a given network is directly proportional to the number of users on it. This could be perhaps the most important metric for evaluating a network, as it refers to the activity that occurs on the network that is being measured. This is where Ethereum completely dwarfs Cardano, with over 760,000 addresses active on a daily basis compared to Cardano’s 71,000 active users.

Regardless of its application and perceived rivalries, it is currently clear that Ethereum is still far ahead of Cardano in the blockchain race considering the users and the number of DeFi applications based on their respective blockchains.

Cardano will likely be able to successfully catch up with Ethereum over time thanks to its strong fundamentals, which could lead to some DeFi applications migrating from Ethereum to Cardano, as DNATags recently did. However, Pfeifer approaches the breakdown of hegemony with a positive perspective:

“It is very likely that more than one blockchain protocol will coexist successfully in the space in the future. All Cardano entities are focused on interoperability for the sake of the entire blockchain industry, rather than direct competition and comparison. We are. open to working with other blockchain networks. “

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