Cardano is an open-source blockchain originating from peer-reviewed academic research, according to the team. Cardano does not have a single published white paper but is developed from a collection of academic papers. Cardano sees itself as a “third-generation” protocol, improving on Bitcoin and Ethereum as the first and second generations, respectively. Cardano is named after an Italian Renaissance mathematician, Gerolamo Cardano, and its native currency ADA is named after Ada Lovelace, a 19th-century mathematician sometimes referenced as the first computer programmer.
Cardano is backed by three entities: IOHK, The Cardano Foundation, and Emurgo. IOHK is a blockchain research and development company founded by Charles Hoskinson and Jeremy Wood that is contracted to work on Cardano from 2015 through 2020. The Cardano Foundation is a non-profit organization focused on core development and ecosystem growth for Cardano. Emurgo is a Japanese venture capital firm.
Cardano’s full launch will consist of five phases: Byron, Shelley, Goguen, Basho, and Voltaire. The Byron era arrived in Sep. 2017 with the mainnet launch of the Cardano blockchain. During this phase, the chain operated as a federated network that only supported ADA transactions. The next phase, Shelley, could launch towards the end of Jul. 2020, bringing Cardano’s proposed Ouroboros Proas Proof-of-Stake (PoS) protocol to life. Cardano development teams, IOHK and Emurgo, are researching and building the network’s remaining phases in parallel with Shelley, suggesting the launch timelines for Goguen, Basho, and Voltaire could be shorter compared to the lengthy development behind Shelley.
Cardano will use a Proof-of-Stake (PoS) consensus mechanism called Ouroboros once it reaches the “Shelley” era. Ouroboros consensus aims for improved network security and modularized design. Cardano’s modularization allows for network delegation, sidechains, and light client data structures.
Ouroboros consensus is determined by slot leaders who are elected by token holders with a sufficient stake in the network. Slot leaders operate in epochs to listen for and confirm transactions to produce blocks, which are then approved by input endorsers. A Cardano input endorser is the second set of stakeholders that verifies transactions included in blocks. Cardano believes this design is scalable since the network can increase the number of slots per epoch and run multiple epochs across the network simultaneously.
The Cardano blockchain has two layers: a settlement layer and a computation layer. The Cardano Settlement Layer (CSL) serves to settle transactions made by peers in the network with ADA, Cardano’s native currency. The Cardano Computation Layer (CCL) is optimized to support smart contracts and decentralized applications.
Cardano developers chose a layered protocol to increase the network’s capacity for protocol changes and soft fork implementations. Cardano is developed in Haskell and Cardano smart contracts are created in Plutus, another programming language that allows for building stricter contracts.
IOHK and the Cardano Foundation currently develop and implement any Cardano protocol updates. This off-chain governance model will continue until the network reaches the “Voltaire” era. At that point, ADA holders and stake pool operators will be able to vote on protocol improvement proposals. The off-chain process of developing and submitted code changes will remain even after the launch of Voltaire. Cardano’s on-chain governance will simply determine whether the proposed change gets implemented or not.