2021 has been an incredible year for cryptocurrencies as we saw one of, if not the biggest, bull markets so far.
This had the spotlight put over many projects, and Cardano was no exception – just on the contrary. The proof-of-stake blockchain platform enjoyed the attention of the entire cryptocurrency community and even celebrities and people from outside of it. After all, the legendary rock star Gene Simmons announced a $300K ADA buyback in February, attracting even more eyes to the project.
But that’s not even the cherry on top of the cake. Cardano saw a whole lot of developments going on in 2021. The team partnered up with two countries in Africa – Ethiopia, and Tanzania – and it will be working to create digital identities, mobile internet connection, and financial acceptance to the communities in these countries.
As the project prepares for the rollout of the testnet of its long-awaited smart contracts platform, its ecosystem continues to expand. On more than one occasion, Charles Hoskinson, founder at Cardano, revealed the multiple participants in it, saying that the platform is massively oversubscribed already.
Amid all this, CryptoPotato had the chance to interview the Chief Technology Officer of IOHK – the software development company behind Cardano, Romain Pellerin, during Miami’s Bitcoin 2021, which turned out to be the biggest-ever crypto conference.
2021 Bull Market Just Part of the Reasons for Cardano’s Explosive Growth
When asked whether the bull market was the reason for the project’s massive growth in 2021, Pellerin said that it’s just part of the reasons.
He argued that they had already seen serious price action in the past whenever they would release new products.
“I looked at the price movements when we released software and we had a lot of price action last summer, before this bull market – when we released the Shelley update.”
He argued that the services launched at the time, including the staking business, was a primary reason for building a huge community of over 2,000 Pareto stakeholders running the network.
“About 70% of ADA is staked. And all of this contributed to the price action. And I think we benefited from the bull market and after all, you have the amplification of the overall industry, so we benefit from that.” – Added Pellerin.
In general, the CTO said that new users are attracted by the new features of the system. He said that “every time we launch a new feature like staking or running a pool, or the ability to launch NFTs, there are more people interested in Cardano. In fact, he pointed out that there are more than 50,000 tokens now on Cardano.
Blockchains are networks and the value of the network is in the number of users. We can see a growth in terms of new users and the price is somewhat correlated to that.
Cardano vs. Ethereum: An Unfair Comparison
When discussing the competition between Cardano and Ethereum – one that’s put forward plenty of times by community members, Pellerin said that he’s not exactly sure why people compare the two projects.
“I’m not sure why Cardano is compared to Ethereum. Ethereum is a proof-of-work blockchain. We run a different ledger model.“
Nevertheless, he did add that Cardano will be on par.
“We (Cardano) have smart contracts capabilities and we will be on par with Ethereum in terms of functionality. But we are very different to Ethereum technically – proof of stake vs. proof of work, and also in the way we develop the network.
We are way more research-focused and we build slowly but our system is robust to support the open financial system of tomorrow. When you look at Ethereum, their approach is rapid prototyping and releasing fast, but at the end it’s a prototype, and we are not building a prototype.”
However, he believes that the community shouldn’t pin projects against each other but rather work together as we all “have to convince the world to use blockchain.”
When asked whether he sees a future where Cardano replaces Ethereum and becomes second to Bitcoin, the IOHK CTO said that he does not think that really matters as we are currently seeing sort of a “verticalization of blockchains to tackle a particular industry – supply chain or financial, for example.”
Moreover, he said that he can’t see what’s going to happen going forward but outlined a few things that Cardano does that “Ethereum is not even looking at.”
For example, Ethereum is not funding projects and innovation from a treasury accruing in value at each block, and a decentralized governance system like Cardano does via its Catalyst initiative. The current treasury of Cardano is about a billion dollars, according to Pellerin.
“It’s a lot of money to fund projects and create a great ecosystem, right?”
0.01% Energy Consumption of Bitcoin
Energy consumption and ESG standards have been a focal point for the entire industry ever since Elon Musk slammed Bitcoin for being too energy-intensive.
Touching on this point, Pellerin pointed out that Cardano’s energy consumption is “0.01% of Bitcoin. But it’s logical because we don’t use proof of work. It’s like comparing apples and oranges. Our proof of stake system is designed not to rely on hashing power, so, in fact, we will always be greener than every proof of work blockchain.”
He also said that the energy consumption issues of Bitcoin aren’t just going to go away.
“This [hashing power] is only going to keep increasing because people are fighting for the next block. They are trying to put in more power to win over other mining pools. So, it’s sort of concerning – not for now, but for the future – imagine if most of the financial system runs on Bitcoin – how much consumption will be in 10 years?”
Pellerin also said that some networks such as Ethereum are already innovating (with the transition to PoS) and that we might be surprised that Bitcoin does something in this regard one day, and added that Bitcoin’s algorithm is not decentralizing things:
“Look at Bitcoin – it’s centralized around huge mining farms which are all concentrated in some part of the world like China and other countries. In Cardano, we have 2,000 stakepool operators scattered across the world, which are producing blocks – and it keeps growing.”
Cardano’s Marlowe: When Smart Contracts On Cardano?
Arguably the hottest topic within the Cardano community is that of smart contract capability and when it will be available on the network.
Speaking on the matter, Pellerin discussed Marlowe – the most recent network update that will introduce smart contracts to Cardano.
“First, it’s important to mention that Marlowe is running on Plutus – our smart contract virtual machine/engine, so to speak. It’s functional programming, so kind of dedicated to experts.
On top of that, we build what we call domain-specific languages that are dedicated to a particular industry. Marlowe is for the financial industry and implements ACTUS standards, which, for example, defines how you transact with escrow and how you actually write that transaction and formalize it through standards. It’s also greatly adapted to create decentralized finance applications (DeFi) while supporting the original language of institutions – financial institutions. It’s very simple for them because they are already used to that language.”
In any case, the CTO confirmed that they are fine-tuning everything through Alonzo’s testnet and that “with great feedback from the community,” they expect smart contracts to be live on the mainnet in the coming summer of 2021, without providing a specific date.
Pellerin also touched on the overall growth of the entire ecosystem, saying that there are more than 2,000 developers working on applications and attending courses in the context of the Plutus Pioneer Program.