{"id":145731,"date":"2020-07-23T16:13:20","date_gmt":"2020-07-23T13:13:20","guid":{"rendered":"http:\/\/www.etoro.com\/?page_id=145731"},"modified":"2025-09-10T09:24:17","modified_gmt":"2025-09-10T06:24:17","slug":"what-is-cardano","status":"publish","type":"page","link":"https:\/\/www.etoro.com\/en-us\/crypto\/what-is-cardano\/","title":{"rendered":"What Is Cardano and How Does It Work?"},"content":{"rendered":"\n

Cardano, alongside its native cryptocurrency ADA, has long been one of the world\u2019s most popular blockchains. Learn about the history of Cardano and what sets it apart from its competitors. Find out more about the price of ADA and where it might go in the future.<\/p>\n\n\n\n

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How does Cardano (ADA) work?<\/h2>\n\n\n\n

Cardano is a decentralized, third-generation Proof of Stake (PoS)<\/e-tip><\/strong> blockchain<\/e-tip><\/strong> that aims to improve on the flaws of other layer 1<\/e-tip><\/strong> networks, such as Bitcoin (BTC<\/a>) and Ethereum (ETH<\/a>).<\/p>\n\n\n\n

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ADA<\/a>, named after female mathematician Ada Lovelace, is Cardano\u2019s native utility token, used for settling payments and governing the network. Users who stake Cardano\u2019s cryptocurrency are rewarded with additional ADA for helping to secure the blockchain<\/strong>.<\/p>\n\n\n\n

The extensive Cardano ecosystem is overseen by the Cardano Foundation<\/a>, IOHK<\/a> and Emurgo<\/a>. The project is based on peer-reviewed academic research and prioritizes openness and transparency<\/strong>.<\/p>\n\n\n\n

What makes Cardano different?<\/h2>\n\n\n\n

First-generation blockchains<\/a>, such as Bitcoin, did not have the ability to run smart contracts<\/e-tip><\/strong> and decentralized applications (dApps)<\/e-tip><\/strong>. On the other hand, second-generation blockchains, such as Ethereum, struggled to scale their networks.<\/p>\n\n\n\n

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Cardano is a third-generation blockchain that focuses on scalability and interoperability<\/e-tip><\/strong>, which is the ability to connect with other blockchain networks. Cardano also allows developers to create smart contracts<\/strong>.<\/p>\n\n\n\n

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\u201cCardano is a blockchain platform for changemakers, innovators, and visionaries, with the tools and technologies required to create possibility for the many, as well as the few, and bring about positive global change.\u201d<\/p>\nCardano.org<\/a><\/cite><\/blockquote>\n\n\n\n

Cardano and Ethereum are often compared to each other, as the two networks offer similar services within decentralized finance (DeFi)<\/e-tip><\/strong>. Ethereum is an older, more established network than Cardano, but the blockchain\u2019s expensive gas fees<\/e-tip><\/strong> often provides a barrier to entry for retail investors. On the other hand, Cardano has less decentralized applications<\/strong> built on its blockchain, but is a much cheaper and arguably more reliable alternative to Ethereum.<\/p>\n\n\n\n

Cardano\u2019s developers have spent years trying to perfect its offering and are still working on the network\u2019s fundamental functionality. As a result of the developers\u2019 methodological approach, Cardano has never experienced any restarts<\/strong>, shutdowns or outages, unlike some of Cardano\u2019s biggest competitors, such as Solana (SOL<\/a>).<\/p>\n\n\n\n

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Tip:<\/strong> \u201cTotal Value Locked\u201d (TVL) is a term used to indicate how much money is locked into a particular ecosystem.<\/p>\n<\/div><\/div>\n\n\n\n

What is the ADA price and forecast for the future?<\/h2>\n\n\n\n

ADA, Cardano\u2019s native cryptocurrency<\/a>, has experienced the same historic, volatile<\/e-tip><\/strong> price movements as the wider crypto market.<\/p>\n\n\n\n

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Year<\/th>Start Price<\/th>Mid-Year Price<\/th>End Price<\/th>Percentage Change<\/th><\/tr><\/thead>
2017<\/td>N\/A<\/td>N\/A<\/td>$0.719<\/td>N\/A<\/td><\/tr>
2018<\/td>$0.719<\/td>$0.138<\/td>$0.041<\/td>-94.30%<\/td><\/tr>
2019<\/td>$0.041<\/td>$0.082<\/td>$0.033<\/td>-19.51%<\/td><\/tr>
2020<\/td>$0.033<\/td>$0.083<\/td>$0.181<\/td>+448.49%<\/td><\/tr>
2021<\/td>$0.181<\/td>$1.384<\/td>$1.310<\/td>+623.76%<\/td><\/tr>
2022<\/td>$1.310<\/td>$0.459<\/td>$0.246<\/td>-81.22%<\/td><\/tr>
2023<\/td>$0.246<\/td>$0.287<\/td>$0.594<\/td>+141%<\/td><\/tr>
2024<\/td>$0.594<\/td>$0.392<\/td>$0.844<\/td>+42%<\/td><\/tr>
Prices have been rounded to the nearest three decimal places<\/em><\/td><\/tr><\/tbody><\/table><\/div><\/div><\/figure>\n\n\n\n

Past performance is not an indication of future results<\/p>\n\n\n\n

Source: Yahoo! Finance<\/a><\/p>\n\n\n\n

When comparing ADA\u2019s price year-to-year, it would appear to have less volatility<\/strong> than some other cryptocurrencies. However, between November 2017 and September 2021, ADA\u2019s price rose from $0.025 to $3.099, an increase of 12,296%.<\/p>\n\n\n\n

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Past performance is not an indication of future results<\/p>\n\n\n\n

It is impossible to predict the future price of ADA, although any price moves have historically been aligned with the price of bitcoin and the rest of the market. ADA has had one of the highest market capitalizations<\/e-tip><\/strong> since 2017, and since the Cardano developers are still actively working on the network\u2019s roadmap, many believe that its price will increase over the long term.<\/p>\n\n\n\n

However, there are no guarantees<\/strong>, either for Cardano, or within crypto in general, so investors should not invest more than they can afford to lose.<\/p>\n\n\n\n

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Who created Cardano?<\/h2>\n\n\n\n

Cardano was launched in 2017 by Ethereum co-founder Charles Hoskinson. Since then, Cardano has followed, and continues to follow, an extensive roadmap<\/a> of five developmental phases.<\/p>\n\n\n\n

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Era<\/strong><\/th>Named After<\/strong><\/th>Key Features<\/strong><\/th><\/tr><\/thead>
Byron<\/td>Lord Byron, the father of Ada Lovelace<\/td>
Shelley<\/td>Mary Shelley, the author of Frankenstein<\/td>
  • Cardano establishes a decentralized proof-of-stake consensus model.<\/li>
  • Users can delegate ADA to a staking pool, and ADA is distributed to stakers as a reward for helping to secure the network.<\/li><\/ul><\/td><\/tr>
Goguen<\/td>Joseph Goguen, an American computer scientist and academic<\/td>
  • Cardano enables smart contract functionality.<\/li>
  • Cardano is designed to be compatible with a range of smart contract languages and platforms, including Plutus<\/a>.<\/li><\/ul><\/td><\/tr>
Basho<\/td>Matsuo Bash\u014d, a Japanese poet<\/td>
  • Cardano optimizes the network\u2019s speed and interoperability to improve scalability.Sharding<\/e-tip><\/strong> is introduced, which allows computational load to be offloaded to shards or side chains to increase Cardano\u2019s capacity.<\/li><\/ul><\/td><\/tr>
Voltaire<\/td>Fran\u00e7ois-Marie Arouet, a French philosopher and author<\/td>