Era of scalable blockchains has begun
2021, are exciting times where alternate blockchains to Ethereum seems to be truly emerging. Blockchains such as Cosmos, Binance Chain already have some live projects inside them, which is one of the reasons the price of cryptos representing these blockchains have increased of late, with their value finally recognized by price appreciation. There are other promising blockchains coming up too, which are almost ready for Dapp development, they promise to have superior features that third generations Blockchains of today need to have - scalability, interoperability and Governance features.
Cardano joining the party of new and promising blockchains of today
Polkadot is one such blockchain, where already many Dapp projects are set to get launched very soon and Cardano is another, which is getting ready end of this month with Mary hardfork taking Cardano Blockchain to the Goguen Phase that gives Cardano Blockchain Smart Contract abilities so that its ready as a Blockchain Platform for developers to deploy their Dapps on.
Cardano is transitioning from Shelley phase which established the core of it’s POS chain capabilities
Till now, Cardano was in the Shelley phase, where Cardano’s staking and validation function was established. Since validator participation has been great, a state of decentralisation has already been established, as control of the network is given to validators, who in turn are supported by ADA hodlers who stake to validator pools and earn staking rewards for it.
Goguen Phase equips Cardano Blockchain with smart contract capabilities
Now, in the Goguen Phase, Dapps can be built on Cardano with the Blockchain having multi-asset support. This will give the ability for projects inside Cardano to create their own fungible and nonfungible tokens(NFTs), just like in Ethereum where projects can create their own tokens which are ERC-20 fungible and ERC-721 nonfungible tokens.
Cardano’s native tokens are not smart-contract based tokens, they are forged on chain
However, the native tokens in Cardano differ from the tokens of Ethereum, with the native tokens being created in the Cardano Blockchain instead of them being created in smart contracts. Native tokens in Cardano don’t require smart contracts to function as their token logic is supported in the Cardano Ledger itself. Therefore, there will be no execution fees charged for transactions that are between native tokens of Cardano network.
DEFI is affordable on the Cardano Blockchain
This means that the Cardano Blockchain will be a more affordable Blockchain for DEFI users compared to Ethereum Blockchain. Ethereum Blockchain tokens need to be deployed on smart contracts to run. For every interaction with a smart contract, gas fees are charged, and we are aware of how costly this has made swapping of ERC-20 tokens in apps like Uniswap. Since Cardano’s Native Tokens are not on smart contracts, swapping between these tokens incur no execution fee.
Cardano Platform is secure with Native tokens not deployed on Smart contracts
Besides this, the Cardano Blockchain is secure, because Cardano’s Native tokens are not on smart contracts. Smart-contract based tokens have complex code written on them and hackers have exploited the vulnerabilities prevalent in the code and stolen funds from many DEFI platforms of the Ethereum network.
Human - error and bugs in these smart contract codes are a real risk, as they can be exploited and funds stolen. Since Cardano’s native tokens don’t need to be deployed on smart contracts, they don’t give room for smart-contract exploitation, making Carnado a secure Blockchain for building DEFI apps.
Defi projects on Cardano can bring more investors into the DEFI fold
Many retail investors are not able to join the DEFI ecosystem, as DEFI projects built on Ethereum are costly affairs, with gas fees going up during peak transaction times. WHile institutional investors are not entering the space, worried about smart contract risks, with the possibility of their money being stolen if the smart contract code is successfully exploited by hackers.
Cardano seems to be a platform where affordable DEFI projects can be built with robust security. If such will be the case, then the platform could bring more retail and institutional players into the DEFI realm.