Cardano (ADA) Proof-of-Stake Smart Contract Platform

A 3rd generation proof-of-stake (POS) blockchain platform. Written in Haskell.

DWR Score:

Analysis by Dani B. | #001 | January 10, 2022

Table of Contents

Research Summary


Founded in 2015 by Charles Hoskinson, the Cardano project aims to serve as a “trusted computation framework” for sophisticated systems, such as gambling and gaming systems. Utilizing the Ouroboros consensus protocol, Cardano is the first provably secure proof-of-stake blockchain network. This allows for extended features and energy efficiency that the Bitcoin network currently lacks.

The Cardano ecosystem currently has and operational treasury system, smart contract capability, the ability to transact between wallets and dedicated infrastructure for staking ADA.

The development of the project is overseen and supervised by the Cardano Foundation based in Zug, Switzerland, in partnership with EMURGO (Commercial Incubator) and IOHK (Research and Engineering Team).

The Cardano roadmap has been organized into five eras:

  1. Byron (Foundation)
  2. Shelley (Decentralization)
  3. Goguen (Smart Contracts)
  4. Basho (Scaling)
  5. Voltaire (Governance)

Each era is centered around a set of functionalities that will be delivered across multiple code releases. The eras are delivered sequentially and happens in parallel, with research, prototyping, and development often in progress all at once across the different development streams.


Cardano’s ADA coin was made available through an ICO that began September 2015 and ran through January 2017.

$62 million was raised, with roughly 30 billion out of 45 billion ADA sold (the public sales distribution accounts for 25,927,070,538 ADA). None of these sales were conducted with US citizens.

Currently, over 70% of the total token supply is in circulation. The remainder of the coins are made available through staking rewards at a rate of approximately 5% annually.


The Cardano project is over a million followers across its official social media pages. While Cardano is not currently sitting at the top of the smart contract niche, the project seems to be making strides in the proof-of-stake arena. The project’s development has gone a long way towards ensuring the community will oversee the protocol long-term as well. 

Based on the research conducted, Cardano (ADA) appears to be a fundamentally strong project.



What is the URL of the official cryptocurrency project website?

Are there any obvious errors on the website (broken links, misspelling, grammar, etc.)? 

No obvious spelling, grammar, etc. mistakes were found on the official website pages.

Is comprehensive documentation available for the project?

The official cryptocurrency project website has direct links to resources, including explainers, information on all the core components of Cardano, details of how Cardano was designed and its architecture, how the Cardano network works, explanations of the fee structure and monetary policy, release notes, a compatibility matrix, a glossary of terms, as well as community resources.

There is also content to support native tokens, how to use Marlowe and Rosetta, and are currently building out materials for how to on board and work with Plutus (the language smart contracts on Cardano are built with). Research materials can also be found on IOHK’s website.

Project Use-Case and MVP

What problem is the project trying to solve?

The Cardano project aims to change the way cryptocurrencies are designed and developed. The overarching goal is to create a more balanced and sustainable ecosystem to better fulfill the needs of the Cardano users, as well as other systems looking to integrate. 

What is the project’s solution to the problem the project aims to solve (aka use-case)? 

Cardano is a proof-of-stake blockchain platform: the first to be founded on peer-reviewed research and developed through evidence-based methods. It combines pioneering technologies to provide unparalleled security and sustainability to decentralized applications, systems, and societies.

Cardano intends to move beyond the settlement layer to a Control layer, which will serve as a “trusted computation framework” for sophisticated systems, such as gambling and gaming systems. As well as applications for identity management, a credit system, and Daedalus — a universal cryptocurrency wallet with automated crypto trading facility and crypto to fiat conversion capabilities.

Is there a working product (MVP)?

There is infrastructure built that currently allows stake pool operators (SPOs) to process transactions and produce blocks. Many exchanges are part of the Cardano ecosystem, contributing to network sustainability by running their own pools or delegating their stake to the existing ones.

The project also has digital wallets built for users to transact with the ADA native token.

Furthermore, Cardano currently has decentralized applications being built within its ecosystem.

The Team

Is there a known development team for the project?

There Are Three Key Partners That Play Pivotal Roles: Cardano Foundation, EMURGO and IOHK.

  • Cardano Foundation is an independent non-profit that oversees and supervises the advancement of Cardano as the legal custodian.
  • EMURGO develops, supports, and incubates commercial opportunities and helps integrate businesses into our blockchain system.
  • IOHK is a pre-eminent blockchain infrastructure research and engineering company as well as the driving force behind the decentralized and smart contract platform. As of January 12,2022, the IOHK development team consists of 112 team members.

Where is the development team headquartered?

It is worth noting that Cardano is quickly moving more towards a decentralized development process and one specific headquarters for development will not exist.

  • Cardano Foundation is based in Switzerland.
  • EMURGO has offices and manages projects in Singapore, Japan, the USA, India, and Indonesia.
  • IOHK was founded in 2015 by Charles Hoskinson and Jeremy Wood. Both individuals are based out of the United States.

Are there known sustainable incentives to grow/retain developers?

To ensure the sustainability of the blockchain networks using Ouroboros, the protocol features an incentive mechanism that rewards network participants for their participation. This can either be operating a stake pool or delegating a stake in ADA to a stake pool. It distributes network control across stake pools: node operators with the infrastructure required to ensure a consistent and reliable connection to the network.

For each slot, a stake pool is assigned as the slot leader, and is rewarded for adding a block to the chain. ADA holders may delegate their stake to a specific stake pool, increasing its chance of being selected as the slot leader, and share in the stake pool’s rewards.

The Cardano Foundation established its Ambassador Program in 2018 to promote awareness and educate the wider community to drive the adoption of Cardano. Phase 2 (Rewards) includes both monetary and non-financial rewards, further strengthening the transparency and decentralization.

Audits and Recent Issues

Has the codebase undergone a 3rd party audit by a reputable company/extensive public testing?

In April 2020, Cardano undergone an independent source code audit by Root9B (R9B). R9B had done a static analysis of the code and tried to find common classes of vulnerabilities that might compromise the confidentiality, integrity, or availability of the Cardano software. R9B audited blockchain (ledger), Cardano node, Ouroboros network, crypto tools, and a few other parts. There were a few minor findings and a description of a few theoretical vulnerabilities but found no critical security vulnerability. The IOHK team addressed and possibly fixed all relevant issues.

In 2018, FP Complete conducted an audit focusing on creating robust and high-quality server software. As a result, the Cardano Foundation established a monthly internal audit to provide transparency on the development works being carried out by IOHK. Also, enabling IOHK to optimize on the developments done so far and seek ways to improve their coding standards. The key details that emerged: not enough testing done, and redundant codes used in multiple areas.

Does the project have any known, recent (within the last 6 months) technical issues?

In September 2021, the network’s first dApp —a multi-pool decentralized exchange (DEX) named Minswap—was forced to prematurely shut down its testnet for performing poorly when multiple users interacted with it at the same time.

Critics complained that the blockchain wasn’t fit a decentralized finance (DeFi) platform and the concurrency difficulties are the result of Cardano’s use of “unspent transaction outputs,” or UTXO, which are used to track users’ funds. The highly anticipated launch of smart contracts will enable developers to build decentralized finance apps to lend, borrow, and trade assets without intermediaries. The feature will enable Cardano to take on other smart-contract platforms, such as market leader Ethereum. While several projects claim to have solved the concurrency issue, none have publicly revealed their solutions.


Is there a clear roadmap for development?

The Cardano roadmap summarizes the project’s development and has been organized into five eras:

  1. Byron (Foundation)
  2. Shelley (Decentralization)
  3. Goguen (Smart Contracts)
  4. Basho (Scaling)
  5. Voltaire (Governance)

Each era is centered around a set of functionalities that will be delivered across multiple code releases. While the eras of Cardano will be delivered sequentially, the work for each era happens in parallel, with research, prototyping, and development often in progress all at once across the different development streams. All the latest updates on technical progress are delivered as part of the Cardano Weekly Technical Reports.

Have any significant milestones within the roadmap been reached?

In context of the 5 main eras of development for the Cardano ecosystem, it appears as though the project has made strides towards accomplishing its goals. 

Recently, smart contract functionality (Goguen) has been the primary focus of development. The team has been testing parameters and onboarding users since smart contracts were added to the system. 

Scaling (Basho) and governance (Voltaire) are the next major milestones to come for the project.


Coin Use-Case

What is/are the intended use(s) of the project coin within the project?

Named after Ada Lovelace, ADA can be used as a secure exchange of value – without requiring a third party to mediate the exchange. Every transaction is permanently, securely, and transparently recorded on the Cardano blockchain.

Every ADA holder also holds a stake in the Cardano network. ADA stored in a wallet can be delegated to a stake pool to earn rewards – to participate in the successful running of the network – or pledged to a stake pool to increase the pool’s likelihood of receiving rewards.

ADA will also be usable for a variety of applications and services on the Cardano platform.

Transaction Validation

How is consensus determined?

Transactions on the Cardano blockchain are validated by the Ouroboros consensus protocol.

The first provably secure proof-of-stake protocol, based on peer-reviewed research, the protocol allows for Bitcoin-like security guarantees at a fraction of the computing power. 

Different implementations of the Ouroboros protocol have been developed using a combination of design elements. 

Coin Origination

When was the project’s coin launched?

The platform began development in 2015 and the first version of the Cardano platform was released September 2017.

Initial Coin Offering (ICO)

Was there an Initial Coin Offering (ICO)?

There was an ICO conducted that began September 2015 and ran through January 2017.

$62 million was raised, with roughly 30 billion out of 45 billion ADA sold. None of these sales were conducted with US citizens.

What was the initial coin distribution?

The total amount of ADA available at launch was equal to 31,112,484,646 ADA, or approximately 70% of the total supply. 

Development team distribution:

  • Cardano Foundation, Switzerland: 648,176,761 ADA
  • EMURGO: 2,074,165,644 ADA
  • IOHK: 2,463,071,701 ADA

The public sales distribution accounts for 25,927,070,538 ADA.

Coin Supply

How do coins come into public circulation?

New coins (ADA) are introduced into the total supply through stake pool operation and delegation rewards — using the Ouroboros consensus mechanism.

What is the yearly inflation rate of the coin?

Per the official staking calculator for the Cardano platform, the delegation reward rate is approximately 4.6% per year.

Are most of the coins in circulation (>50%)?

Cardano’s cryptocurrency ADA has over 33 billion coins in circulation. 73% of the maximum total supply.



Which industry or community does the cryptocurrency project aim to serve?

Cardano was built by a community of scientists, engineers and thought leaders for a common purpose: to create a platform that will ignite positive change in the world. It was made for changemakers, innovators and visionaries. Cardano has tools and technologies to make this common purpose a reality.

What is the size of the official project social media pages (Reddit, Telegram, Twitter, YouTube)?

As of January 11, 2022, Cardano’s community is active on YouTube, Meetup, Twitter, Facebook, and Reddit.

  • The Cardano Foundation’s YouTube channel has 24.3K subscribers.
  • There are 71 meetup groups in 46 countries consisting of 26k members.
  • The official Facebook group has 227k members.
  • The Reddit page has 681k Cardanians globally since March 2017.
  • Also, the project’s twitter page has 1.2M followers and has been active since January 2017.

Are the social media posts and reactions related to the project recent and do they appear organic? 

The posts related to the project are recent and the community appears to be organic.

Are community members generating their own independent content to promote the project (YouTube, TikTok, Etc.)?

There appears to be independent YouTube creators generating content for the project as well as various podcast series.

Partnerships and Investors

Does the project have any notable partnerships?

Metric not included in the current Dark Paper for the project. Check back for an updated version.

Does the project have any notable investors?

Metric not included in the current Dark Paper for the project. Check back for an updated version.


What is the project’s governance process (if any)?

At the heart of the Cardano ecosystem is the community. As such, much thought has gone into making the community the driving force behind the future of the platform.

“Project Catalyst is an experiment in community innovation, providing a framework to turn ideas into impactful real world projects”.

Project Catalyst allows for ADA holders to submit and vote on proposals to build out the ecosystem. Winning proposals get paid out a predefined amount of ADA over time and voters get paid to vote on these proposals.


What are the most prominent directly competing projects?

Solana (SOL) appears to be the largest directly competing project, with a market capitalization of ~$42.29b on January 11, 2022. In comparison, Cardano (ADA) has a market capitalization of ~$38.25b.

Solana is considered a Layer 1 blockchain protocol that utilizes Proof of History (PoH) as its consensus mechanism. It is based around the validation of the time difference between two events on the blockchain. This mechanism runs prior to the Proof-of-Stake consensus, thereby increasing the transactional throughput on the network to over 50,000 transactions per second and is scalable up to 100,000 transactions per second as well.

While not currently operating in the realm of proof-of-stake and massive throughput, Ethereum still reigns supreme as the dominant smart contract platform as of February 5, 2022. 

experience, feedback, survey-3239623.jpg

DWR Score

Based on the research conducted, the project appears to be fundamentally strong. 

View the full Cardano (ADA) fundamental analysis package for the scoring criteria.

Fundamental Analysis Package

Get the full Cardano (ADA) Fundamental Analysis Package #001

The package contains the following original documents in high definition:

  • The Dark Paper (.pdf) – project fundamental analysis and research
  • Scoring Rubric (.xlsx) – project scoring and criteria
  • QC checklist (.xlsx) – peer-review criteria and scoring

Below are sample images of  the Cardano (ADA) Dark Paper.

Project News

Cardano (ADA) Letter of Dawn

A living report of materially important events happening for the Cardano project and its cryptocurrency (ADA).

Table of Contents
    Add a header to begin generating the table of contents
    Scroll to Top