What Is Cardano?

Cardano is a third‑generation, PoS blockchain created by Ethereum co‑founder Charles Hoskinson. It features an open-source network secured by Ouroboros, a proof-of-stake (PoS) consensus that replaces energy-intensive mining with ADA staking.

The project aims to combine Bitcoin-level security with Ethereum-style smart contracts while keeping transaction fees low.

• 2015–2017 Byron: network founded; ADA listed.

• 2020 Shelley: staking and decentralization.

• 2021 Goguen (Alonzo fork): smart contracts go live.

• 2022‑2024 Basho (Vasil & Valentine forks): scalability tweaks.

• 2024 Chang fork: first step toward Voltaire on‑chain governance.

• 2025 Voltaire (in progress): community voting + treasury.

Cardano separates settlement (ADA transfers) from computation (smart contracts), letting the ledger scale without bloating contract logic. Peer‑reviewed research underpins every upgrade, a key selling point for institutional users.

• Transfers value: Send ADA globally in seconds.

• Runs smart contracts: Power DeFi, NFTs, and on‑chain identity.

• Hosts native tokens: Create stablecoins or utility coins with no extra code.

• Enables governance: ADA holders soon vote on protocol budgets.

• Stake ADA to a pool (no lock‑up required).

• Validators are chosen proportionally to stake.

• Block rewards are paid in ADA; delegators share the yield.

• Slashing risk: dishonest pools forfeit rewards, protecting the chain.

• Energy efficiency: PoS uses a fraction of Bitcoin’s power.

• Formal verification: code is built with Haskell‑inspired languages.

• Hydra layer‑2: state‑channel “heads” target sub‑second finality.

• Interoperability: sidechains and Plutus scripts can communicate with other networks.

Cardano runs its own Layer‑1 blockchain (neither an Ethereum fork nor a sidechain) secured by thousands of stake pools.

Native tokens live directly in Cardano’s ledger (no ERC‑20‑style wrapper). Fees are paid in ADA, but tokens inherit the chain’s security without additional smart‑contract risk.

Cardano’s smart contracts: how they work

• Written in Plutus (Haskell‑based) or Marlowe domain‑specific code.

• Executed deterministically to avoid network‑wide halts.

• Support NFTs, lending, and on‑chain identity solutions today.

The max supply is 45 billion ADA. Roughly $35 billion is in circulation. New ADA enters the market via staking rewards that decline over time.

See our expert picks of the best crypto wallets.

ADA is the Cardano coin used for network fees, staking, and (in the Voltaire era) governance.

Learn where to buy Cardano.

• DeFi: DEXs like Minswap and Indigo.

• Real‑world assets: Atala PRISM handles academic credentials.

  Gaming: Hydra demos process thousands of in‑game moves off‑chain.

• Stablecoins: USDA and AgeUSD pilot programs are live.

* Transactions per second figures are network estimates.

IO Research outlines a five‑year push toward Ouroboros Omega, zero‑knowledge proofs, and full Voltaire governance. Hydra state channels should boost real‑world throughput, while tail‑protocol upgrades aim for seamless cross‑head communication.

For US taxpayers, ADA is treated as property. Selling, swapping, or spending ADA triggers capital‑gains tax, while staking rewards are ordinary income on the day you receive them.

TokenTax helps you determine your cost basis so you can report accurately.

Learn more about Cardano taxes.