Cardano - The next crypto technology

Introduction

This article aims to introduce Cardano technology through a FAQ-like article

What is Cardano ?

Cardano is a technological platform that will be capable of running financial applications currently used every day by individuals, organizations and governments all around the world. The platform is being constructed in layers, which gives the system the flexibility to be more easily maintained and allow for upgrades by way of soft forks. Cardano SL (settlement layer) use proof of stake to validate and verify it's blocks.

What is ADA ?

ADA is the main currency "hosted" by the Cardano blockchain, the cardano team is planning to run multiple Cryptocurrencies (as Bitcoin and Ethereum) on the same wallet.

What is PoS (Proof of stake) ?

Proof of Stake is a novel approach to block generation. The core idea of Proof of Stake is that instead of wasting electricity on cracking computationally heavy problems, a node is selected to generate (or “mint”) a new block with a probability proportional to the amount of coins this node has. If a node has positive (> 0) stake, it is called a “stakeholder”. If a node eventually becomes chosen to mint a new block, it is called a “slot leader”.

Stake or Balance ?

Balance is the real amount of ADA that you have and you can spend.

Stake is a part of your balance that you decide to stake (to hold), once it's done, the stake amount is deducted from your balance.

The locked amount (stake) is used to perform Cardano's proof of stake and by the way get rewarded for block generation.

You can -at any time- unlock your stake (or a part of it), the unlocked amount goes automatically to your balance.

Pool or Solo ?

If you decide to be part of the PoS game you could either do it solo or with other people in a staking pool.

If you mint solo you will get all the fees of the new block that you generate, but, you have very very low probability to be chosen by the Ouroboros algorithm to be a slot leader.

But, if you do it as part of a pool (with other people), then, the sum of your stakes increase your probability to be slot leader witch is great, but, the bad news is...the fees will be divided among the stakeholders of the chosen pool, proportionally to their stake.

Staking Pool, how it works ?

To be a part of a staking pool you have to delegate your stake it.

First, on your wallet you create a PSK (Proxy signing key) and you assigned it to the desired pool, this process is called stake delegation

The delegation feature allows stakeholders to transfer their “committee participation” to some delegates. These delegates will represent stakeholders in the process of slot leader selection.

PS : You have to notice that you only delegate to the pool the power of representing you for one or more slots, you are not -at any time- giving them your coins !

What else ?

Cardano came with a lot of cool features as the offline paper wallet, the ledger wallet, the human-friendly wallet addresses, the very smart contract with their new programming language called Plutus, etc...

All these features will be part of an up to came article.

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