Key takeaways
- Cardano is a blockchain that uses proof of stake and is built on peer-reviewed research. Its currency is called ADA.
- Charles Hoskinson, a co-founder of Ethereum, and Jeremy Wood started the project in 2015. The network went live in September 2017.
- ADA holders can take part in staking without their ADA leaving their wallet or being locked.
- There will never be more than 45 billion ADA. That cap is written into Cardano's constitution.
Contents
Cardano is a BlockchainBlockchainA public ledger where transactions are grouped into blocks, each linked to the one before, so past records can't be altered without it showing. that uses proof of stakeProof of stakeA consensus method where crypto is locked up as a stake for the right to create blocks, and anyone who cheats can lose part of that stake. and is built on peer-reviewed academic research. Its currency is called ADA, and it is used to pay network fees, for StakingStakingLocking up crypto on a proof-of-stake network to help confirm transactions, in return for rewards paid in the same crypto. and to vote on the network's future.
Cardano is known for taking its time and doing things carefully. This article covers who is behind the network, how it works and what is worth knowing.
Who created Cardano?
Charles Hoskinson, a co-founder of Ethereum, and Jeremy Wood started the project in 2015. They founded the company IOHK, now called Input Output, and the network went live in September 2017.
Alongside IOHK, the Swiss non-profit Cardano Foundation and the company EMURGO were involved from the start. Today an organisation called Intersect coordinates development, and no single company controls the network.
ADA is named after the British mathematician Ada Lovelace. The smallest unit is called a lovelace, one millionth of an ADA.
What is Cardano used for?
- Research-driven development. Cardano's core protocols were first designed as academic research, reviewed by other cryptographers and only then implemented. Supporters believe this approach produces more reliable software.
- Staking without lock-up. ADA holders can let a stake pool use their weight and receive rewards in return. The ADA never leaves the wallet and isn't locked, so it can be sold or moved at any time. Cardano doesn't use SlashingSlashingA penalty on proof-of-stake networks. A validator that breaks the rules loses part of its stake and is removed from the network., penalties where part of the stake is taken away, either.
- On-chain voting. Since January 2025, changes to the network's rules and spending from its shared treasury have been decided by on-chain votes. The voters are representatives chosen by ADA holders, stake pool operators and a constitutional committee.
- Smart contracts and tokens. Cardano has supported smart contractsSmart contractA program that runs on a blockchain and automatically carries out what it was written to do once certain conditions are met. since September 2021, and tokens are built into the ledger without needing a smart contract. Apps built on it include decentralised exchangesDecentralised exchange (DEX)An exchange run by smart contracts, where people swap crypto straight from their own wallets with no company in the middle. and lending apps, known as DeFiDeFi (decentralised finance)Financial services, such as lending, saving and trading, that run on smart contracts on a blockchain instead of through a bank or other middleman..
How does Cardano work?
Ouroboros
Cardano uses the Ouroboros consensus mechanismConsensus mechanismThe rules that let thousands of computers agree on a single version of a blockchain without trusting any one party., which is based on proof of stake. A research paper on Ouroboros was presented at the CRYPTO conference in 2017. According to Cardano, Ouroboros was the first protocol of its kind with mathematically proven security.
Time is divided into slots of one second each, and 432,000 slots make up an epoch, which lasts five days. For each slot, a draw decides which stake pool may produce the next BlockBlockA batch of transactions added to a blockchain in one go, together with a reference to the block before it., and the odds depend on how much ADA is delegated to the pool. It is like a lottery where every ADA is one ticket.
There is no mining, so energy use is a fraction of what proof of workProof of workA consensus method where the right to add the next block to a blockchain goes to whoever first solves a hard computing puzzle. requires.
Speed and fees
A new block is added about every 20 seconds on average. The fee is a fixed base amount plus a charge for each byte of the transaction, and a normal transaction costs a fraction of one ADA.
Cardano uses an extended version of Bitcoin's UTXOUTXOAn unspent amount from an earlier transaction; Bitcoin tracks what people own as a collection of these, like notes in a wallet, rather than as one balance. model (extended UTXO). The advantage is that your wallet can see a transaction's outcome and cost before you confirm it.
Supply
Cardano's constitution states that there will never be more than 45 billion ADA. That is ADA's maximum supplyMaximum supplyThe largest number of units of a cryptocurrency that can ever exist under its rules, such as 21 million for bitcoin..
When the network launched, about 31.1 billion ADA existed. Of these, about 25.9 billion had been sold to the public between 2015 and 2017, mostly in Japan. The rest sits in a reserve. Each epoch, 0.3% of what remains in the reserve is paid out as rewards and into the network's shared treasury, so the number of new ADA keeps falling.
What are the risks?
- Slow development. Smart contracts didn't arrive on Cardano until September 2021, four years after the network launched. Critics say the caution cost Cardano its head start. Supporters reply that careful work produces a safer system.
- Competition. Ethereum, Solana and other networks compete for the same users and developers, and some have more users and apps than Cardano.
- Price swings. The price of ADA swingsVolatilityHow much and how quickly the price of an asset moves up and down. a lot, as with other cryptocurrencies.
ADA at Myntkaup
At Myntkaup you can buy, sell and hold ADA. You can also deposit and withdraw it on-chain on the Cardano network, ADA's native network.
Always choose the Cardano network when you send ADA, because a transfer on the wrong networkBlockchain networkThe blockchain a cryptocurrency or token is recorded and sent on, such as the Bitcoin network or the Ethereum network. can be lost. Read more in How to send crypto to another wallet.
You can see the price of ADA on the ADA price page.
Frequently asked questions
Is my ADA locked if I take part in staking?
No. When you stake from your own wallet, in Self-custodySelf-custodyHolding the private keys to your crypto in your own wallet, so nobody else controls it but all the responsibility for the keys is yours., the ADA never leaves the wallet and isn't locked. The first rewards usually arrive after 15-20 days, if the pool produces blocks, and then every five days. Read more in What is staking, and what are the risks?
What is the difference between Cardano and Ethereum?
Both networks run smart contracts and use proof of stake, but Ethereum is larger and has more apps. Cardano uses a UTXO model, on-chain voting and staking without lock-up or penalties. See What is Ethereum?
Closing thoughts
Cardano is a proof-of-stake blockchain built on peer-reviewed research from day one. Many people value its careful approach, staking without lock-up and the fact that ADA holders vote on the network's future.
On the other hand, development has been slow, competition is fierce and the price of ADA swings a lot. Learn about the risks before you buy.
