What is Cardano? ADA explained

The ADA coin and the Cardano blockchain are in the news after ADA became the fifth-largest cryptocurrency. But what are ADA and Cardano?

The Cardano cryptocurrency logo – Photo: Shutterstock


One of the biggest cryptocurrency success stories right now is the growth of Cardano and its associated token, the ADA coin. Seemingly from out of nowhere, ADA has exploded to become the fifth largest coin by market cap, beaten only by the long-established crypto giants of bitcoin, ether and binance coin, and the Tether stable coin. However, like most of these things, it has taken it quite some time to become an overnight success. If you are wondering what is Cardano, or what is ADA coin, here are some answers for you. 

What is Cardano?

Cardano is a blockchain, much like Ethereum or Bitcoin. While many new blockchains promise new and exciting features, something that is notable about Cardano is the fact that it does not really do anything too different to what other blockchains do. What has generated such a massive interest in it and the ADA coin recently is not so much what it does, but how it does it. The organisation behind the technology likes to emphasise how much it bases what it does on research. It wants people to notice the academic nature of its work, and issuies its reports in peer reviewed papers, which will, it hopes, encourage them to make use of it themselves. 

Cardano has been around since 2017, when it was founded by Charles Hoskinson, who had previously been a co-founder of Ethereum. This kind of experience would prove useful as he attempted to set up his own blockchain. The chain itself is, in effect, run by three separate companies. These are

The three companies behind Cardano

Prior to the launch in early 2017, Cardano held an Initial Coin Offering (ICO) which saw it raise $62.24m. Around 31 billion ADA were up for grabs, with 26 billion going to investors and the remaining five billion going to people who worked for the Cardano Foundation, IOHK, and Emurgo. 

DeFi and ADA

The idea behind the Cardano blockchain is linked in with decentralised finance, or DeFi for short. This is designed to allow people who do not have bank accounts access to financial services, as well as enable people to transmit money around the world more cheaply. Many deals on the blockchain are carried out using smart contracts, which are computer programs which execute themselves once certain conditions are met. 

Every blockchain needs a cryptocurrency, and Cardano’s is called ADA. This coin allows people who hold it to vote on proposals concerning the governance of the blockchain. The coin can also be traded on a range of exchanges. People who hold ADA can manage the blockchain, and they can allocate their voting rights in return for more ADA coin rewards.

 Cardano itself makes use of two layers. The first, Cardano Settlement Layer (CSL) records transactions and transfers the ADA coin, while the second, Cardano Computational Layer (CCL) employs smart contract technology that developers can make use of to move funds. There are also three sorts of users who can link in on the network. These are mCore nodes, which take part in governing the Cardano blockchain, relay nodes, which transfer data between the mCore nodes and the internet itself, and edge nodes, which create cryptocurrency transactions. 

Mining ADA

One of the interesting aspects of ADA is how to mine ADA. Traditionally, cryptos have been mined using proof-of-work, which means people have to solve increasingly complex computations to gain access to them. This uses a lot of electricity which is very expensive and, in turn, increases carbon emissions, making the process environmentally unfriendly. Proof-of-stake, on the other hand, allows someone to mine based on how many tokens or coins they already hold. This makes it easier, cheaper, and more environmentally friendly. 

The algorithm used for ADA mining is called Ouroboros, named for the mythical "serpent that eats its own tail."  It works by dividing time into two measurements, epochs and slots. Epochs are overarching periods, up to five days in length, while slots consist of 20-second blocks within those epochs. Every slot has someone in charge of it, selected randomly, and they put blocks into the Cardano blockchain. Every time an epoch ends, the previous epoch’s slot leaders vote on who should be the next one’s slot leaders. There are two sorts of blocks used on the Cardano chain. These are 

Types of blocks on Cardano

Block leaders are rewarded for their efforts, making a share of the fees from the transactions that take place. These are paid in ADA. Only mCore nodes can become slot leaders, with the payment serving as an incentive for people to plug into mCore nodes and to take part in the work on the blocks. 

There are currently 32.13 billion ADA in circulation, representing around 71% of the total supply of 45 billion. 

Why is Cardano called Cardano? Why is ADA called ADA?

Cardano is named after the Renaissance mathematician Gerolamo Cardano, and ADA is named after Ada Lovelace, who was arguably the world’s first computer scientist. There have also been updates to the system, including one called Byron, after Lord Byron, the romantic poet and father of Ada Lovelace, one called Shelley, after Percy Bysshe Shelley, the contemporary of Lord Byron’s, and another called Voltaire, after the French Enlightenment writer and philosopher.


ADA coin is used to make decisions based on the governance of the Cardano blockchain. It can also be traded and staked. It also serves as payment for people who upload Main Blocks and Genesis Blocks on the blockchain.

ADA is the cryptocurrency, Cardano is the blockchain. While you’ll hear people talk about the Cardano coin or the Cardano cryptocurrency, this is not really accurate. It is ADA that is the coin which has been driven to new heights recently. 

You can get ADA coin by signing up to be an mNode on the Cardano blockchain and then serving as a slot leader. You can also trade it and buy it on exchanges. While it is not available through currency.com yet, we will let you know as soon as it is. Regardless, we do need to tell you that cryptocurrencies, like ADA, can be incredibly volatile. You should always do your research before investing in them, remember that prices can go down as well as up and that past performance is no guarantee or indicator of future results. You should also never invest more money than you can afford to lose. 

Further reading

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