Sunday, April 24, 2022

Advantages of Cardano

Cardano Energy Use

Cardano is PoS, not PoW, so it is much less energy intensive. 


Cardano Staking Model

Cardano's staking mechanism does not require "lock, slash and burn." 

There is no coin locking. 

There is no slashing for unfaithful staking pools. That's pretty unusual. Once I have an ADA coin, the only way I lose it is through my own stupidity, not through someone else's (i.e., a staking pool's stupidity). My collateral is NEVER locked or slashed.

Staking is extremely easy and relatively profitable.

Cardano is hard-capped at a maximum number of coins, so it is not inflationary, it does not need to burn coins.


eUTxO accounting advantages

Cardano uses eUTxO accounting (similar to Bitcoin), whereas most other chains use an account-based system (similar to Ethereum). As a result, Cardano transactions are much cheaper and Cardano fees can be computed precisely before the transaction takes place. Therefore Cardano transaction fees are known ahead of the transaction, and are not lost if the transaction does not execute.

Cardano transaction fees are not the cheapest, but are on the cheaper end of any of the coins out there.

Cardano eUTXO model allows multiple assets to be sent to multiple wallets in a single transaction without requiring a smart contract.

Because Cardano uses the eUTxO model, and transactions are deterministic, the determinism  prevents block producers from reordering transactions for their own profit at the cost of others. 

Because eUTxO transactions are done on-chain, the ability to hack the transaction is greatly reduced. 

Due to the eUTxO transactional model, ADA can be sent to multiple addresses with a single transaction fee. It is also the case that multiple assets (e.g., both ADA and SundaeSwap) can be sent together with one transactional fee.

Account-based models operate using a unified global state machine. Every transaction updates the state, meaning that every transaction has to go through it. The speed of the network is limited by how fast nodes can process all these transactions. With a eUTxO model, the ledger doesn't use global state. It's simply the set of unspent transaction outputs (UTxOs) all of which can exist and be used independently of one another. This makes scaling faster and easier than non-eUTxO models

In Cardano’s eUTxO model, Submitting a transaction does not block you from submitting another one regardless of the first one being completed. 

Cardano treats tokens and NFTs as native assets. Cardano does not require (expensive) smart contracts to mint NFTs. It can be done on-chain. This means no smart contract are necessary, security is improved, an entire attack surface is eliminated. Consequently, things like dusting attacks are impossible. Creating NFTs via smart contracts (the model Ethereum and similar coins use) is a bolt-on solution (a hack) with a wide attack surface. 

With Cardano, if the transaction doesn’t go through, you don’t lose your transaction fees. Cardano fees are known BEFORE the transaction takes place. No guesswork.

Cardano has a cap to it's blockchain storage requirements, other chains don't. With other chains, as the number of transactions grows, the blockchain also grows. 

"Every transaction that stores data on the blockchain needs to include a certain amount of ADA that corresponds to the amount of data. That ADA can only be reclaimed by spending the UTxO but spending the UTxO means that no future transaction can reference that UTxO so the associated data does not need to be stored any longer. All of this means that the size of the state of Cardano cannot grow beyond a certain limit (since ADA has a maximum supply)."

Cardano Speed and Reliability

Cardano has modular design. This is no longer a new thing, but when Cardano started developing this, they were among the first to attempt it. Modularity improves security and limits failure modes. 

Cardano is written in a functional language, Haskell, which can be easily checked for formal mathematical verification, that is, the correctness of the code can be much more easily verified.

Haskell is one of the "safer" programming languages available. Microsoft, Google, Apple are all moving away from C-like languages and towards formal languages like Rust or Haskell. The Haskell community overall reaches for generalizing a solution as far as possible, usually along the lines of some abstract mathematical underpinning. There are huge advantages to this. They build out solutions to problems they didn't even know they had. They are able to rely on mathematical laws to guide designs and ensure concepts compose nicely. Solidity and similar languages aren’t built to do that. 

Cardano's design is so reliable it has never gone down. 

Cardano has never required a hard fork or rollback and never will.

Cardano is fast - not the fastest, but faster than most of the other top ten coins.

Cardano consistently has the most development on the chain every year.

Cardano procedures and protocols have been subject to peer review. Peer review is not some magical cure-all, it has its own problems, but it improves the odds that Cardano procedures and protocols have no major flaws.

Cardano is not single-layer, it is dual layer. That gives it more resiliency and flexibility than single-layer protocols.

Cardano has one of the most active Github developer communities in crypto. It consistently has more code development commits than nearly any other project. When combined with the formal correctness of the code, that means a lot of solidly beneficial code is being consistently produced.


Cardano Decentralization

Decentralization can mean a number of things: 

  1. Decentralized governance: How decisions about future development of the network are made. 
    • Decentralized software development: Who contributes to source code development, and who decides which changes get accepted? This is arguably a subset of governance.
    • Decentralized protocol: are the rules of the protocol the highest authority within the blockchain, or can powerful people in the community change the rules ex post facto, negate the protocol, rollback the blockchain and retroactively enforce a different protocol than the one the community had previously agreed to operate by? This is also arguably a subset of governance.
    • Scattered/equal token distribution: Who owns how many native tokens on the network? This could be an aspect of governance, depending on network design.
  2. Decentralized infrastructure: The (number of) parties running the network infrastructure, the diversity of hardware, and the distribution and number of different locations.

"With Bitcoin, just a handful of mining organizations (often five or fewer) control more than 50% of the hashing power of the network, which is enough to dictate the ordering of transactions. (Just three mining pools control 47% of Bitcoin’s hashing power, and just two mining pools control almost 48% of Ethereum’s hashing power).  Worse, a very small number of providers build Bitcoin mining hardware, so companies like Bitmain effectively control the Bitcoin network."

Cardano is arguably the most decentralized coin available by infrastructure. Cardano is one of the most decentralized chains by infrastructure (number of stake pools) and its protocol doesn't hard-fork or require rollback. The rules of the protocol are still under the authority of IOHK, so it's not the most decentralized protocol on that front yet. It also is not yet most decentralized by governance or software development, although both of those situations are also under development.


Cardano MOUs

While Bitcoin is the only coin that has been declared an official national currency, Cardano is the only coin that has MOUs with national governments.

Cardano's structure has been supported by the peer review process. This is not fool-proof - a lot of stupid things have the "peer review" imprimatur - but it's better than not having it at all. It's like trying to do encryption. Microsoft tried to roll their own for decades. Every time they tried, they got faced by hackers. In every case, Microsoft ended up adopting an open-source encryption tool developed by actual mathematicians. Cardano started out that way.


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