The crypto world had barely gotten done with Ethereum’s successful, yet massive transition to the energy-friendly proof-of-stake (PoS). But just days later, it’s time for another hard-fork upgrade in Cardano. Scheduled for September 22, the aim is to drastically level up its speed, and scaling capacities, while simultaneously reducing transaction costs.
The upgrade, however, has not been without its share of delays. Originally planned for June, multiple bugs identified during the testing process pushed the dates ahead. But why is this hard-fork upgrade important?
Currently the 8th largest crypto, with $17.3 billion in market capitalisation, Cardano is one of the earliest prominent blockchains to deploy PoS, before ETH’s transition. As one of the forerunners of PoS, it came with reduced transaction costs, about 0.1 ADA ($0.04), and high speed and scalability, processing 250+ transactions per second.
But what makes it distinct is its proprietary consensus mechanism, called the Ouroboros PoS. Here, users can become validators by staking a minimum of 5.5 ADA (about $2.42).
But, unlike other blockchains, validators here can delegate or transfer this stake to other users, so that they can take up the validation job instead. On Cardano, time is defined in epochs, which roughly translates to 5 days. In every epoch, new validators are voted in by the system to maintain diversification and decentralisation.
Despite the chain being in nascent stages of development, Cardano boasts of extremely healthy developer participation. In 2021, Cardano reported the maximum number of daily active developers (53), ahead of even ETH, which had around 40 active daily contributors. This is important from a long-term perspective since this indicates how much time and effort is being invested by the crypto community to develop work on a particular chain.
But, as per Arjun Vijay, COO of Giottus Crypto Platform, all of this has only stood good in theory to date. “Cardano tech and its protocol have been excellent in theory, but they haven’t been able to attract the wider DeFi community yet. We have to wait and see if Vasil can bring any change in fortunes for Cardano. ADA, its native token, continues to be dependent on the performance of Bitcoin and the wider crypto asset market.”
At present, Cardano is home to 1,100+ projects, with around 32 more in the launch pipeline this year. The majority of them (37%) invested in NFT development.
The main changes in the upgrade will include introducing reference inputs and scripts, which will enable quicker on-chain data sharing and throughput and culling down file size, transaction, and hardware costs.
Rajagopal Menon, vice president of WazirX, said, “Vasil is one of the major updates for Cardano, designed to improve the network’s performance by increasing throughput, script efficiency, and reducing latency in block transmission. This update also affects Cardano’s smart contracts platform Plutus, enabling developers to create powerful and efficient DApps. Even though ADA is one of the 10 largest cryptocurrencies, the blockchain is still in the early stages of development. It is keen on climbing up the pecking order to compete with well-established ones like Ethereum in the long run”.
Ethereum, he said, has started off with maximum expressiveness — it has added security checks and improved efficiency over time. “What sets Cardano apart is that while it has started small, it is gradually implementing major updates while making sure there is no compromise in security and quality,” said Menon.
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