Cardano Smart Contracts adding the missing piece
The growth of cryptocurrency has been nothing short of explosive in recent years, with Cardano being one of the most popular blockchain platforms.
In September 2021, Cardano introduced smart contracts, which are self-executing contracts that can be used to automate a wide range of financial and non-financial transactions. This major update, known as the Alonzo Hard Fork, also improved the transaction and processing speed of the Cardano blockchain.
Cardano founder Charles Hoskinson has described smart contracts as the “missing piece” of the blockchain puzzle, and their introduction is expected to greatly expand the potential use cases for Cardano.
Definition
Cardano is a third-generation blockchain platform that is designed to be scalable, secure, and sustainable. One of the key features of Cardano is its support for smart contracts. Smart contracts are self-executing contracts that can be used to automate a wide range of financial and non-financial transactions.
Key takeaways
- Cardano’s Smart Contracts: Alonzo Hard Fork introduced smart contracts in September 2021, boosting transaction speed and expanding use cases.
- Diverse Languages: Marlowe, Plutus, and Haskell offer various smart contract programming languages catering to different complexities.
- Enhanced Security: Ouroboros consensus and Haskell-based Cardano Settlement Layer ensure security, scalability, and efficiency.
- Promoting: Cardano Foundation promotes accessibility through user-friendly Marlowe, driving adoption and impacting various industries and assets.
Main programming languages
Three programming languages can be used to write cardano smart contracts on Cardano: Marlowe, Plutus, and Haskell.
Marlowe is a high-level language that is designed to be easy to learn and use. It is ideal for developers who are new to smart contracts.
Plutus is a low-level language that is designed for performance and security. It is ideal for developers who need to create complex smart contracts.
Haskell is a functional programming language that is known for its safety and correctness. It is ideal for developers who want to create smart contracts that are mathematically proven to be error-free.
The Cardano team is committed to making Cardano easy to use and accessible to everyone. The Marlowe language is a major step in this direction. Marlowe makes it possible to create smart contracts without having to learn a complex programming language.
The introduction of automated agreements to Cardano is a major milestone for the platform. It opens up a world of possibilities for decentralized finance (DeFi). With automated contracts, Cardano is well-positioned to become a leading platform for DeFi applications.
Cardano: The Blockchain Platform With a Difference
Cardano stands as a third-generation blockchain platform meticulously crafted for enhanced scalability, security, and sustainability compared to its forerunners. One of the key features that sets Cardano apart is its use of a unique consensus mechanism called Ouroboros.
Ouroboros is a proof-of-stake (PoS) consensus mechanism that is based on a scientific approach to game theory. This makes it more secure and efficient than traditional PoS mechanisms, such as the one used by Ethereum.
Cardano also uses a unique mathematical framework called the Cardano Settlement Layer (CSL) to manage its ledger. The CSL is based on the Haskell programming language, which is known for its safety and correctness. This makes Cardano more secure and reliable than platforms that use other programming languages, such as Ethereum.
In addition to its unique consensus mechanism and mathematical framework, Cardano also has a unique architecture. The Cardano network is divided into two layers: the CSL and the Cardano Computational Layer (CCL). The CSL is responsible for managing the ledger, while the CCL is responsible for running automated contracts.
Cardano and Ethereum
This two-layer architecture makes Cardano more scalable and efficient than platforms with a single layer, such as Ethereum. It also makes Cardano more secure, as the CSL can be updated without affecting the CCL.
Cardano is a promising new blockchain platform with several unique features. Its unique consensus mechanism, mathematical framework, and architecture make it more scalable, secure, and efficient than its predecessors. Cardano is primed to lead in decentralized apps and smart contracts.
Here is a comparison between Cardano and Ethereum:
| Feature | Cardano | Ethereum |
|---|---|---|
| Consensus mechanism | Ouroboros PoS | Proof-of-work (PoW) |
| Mathematical framework | Haskell | Solidity |
| Architecture | Two-layer: CSL and CCL | Single layer |
| Scalability | More scalable | Less scalable |
| Security | More secure | Less secure |
| Efficiency | More efficient | Less efficient |
Overall, Cardano is a more scalable, secure, and efficient blockchain platform than Ethereum. However, Ethereum has a larger community and ecosystem of developers. As a result, Ethereum is currently the leading platform for decentralized applications and smart contracts.
Also note that comparing Cardano to Bitcoin is not logical due to their fundamentally different purposes, technological architectures, and objectives within the blockchain space.
Use cases of Cardano Smart Contracts
Supply chain tracking
Cardano smart contracts can be used to track the movement of goods and materials through a supply chain. This can help to ensure that goods are authentic and meet quality standards, and it can also help to reduce fraud.
For example, cardano smart contracts could be used to track the temperature of food products as they move through a supply chain, ensuring that they are not exposed to unsafe temperatures.
Cross-border payments
Smart contracts can be used to make cross-border payments more efficient and secure. This is because smart contracts can automate the process of sending and receiving payments, eliminating the need for intermediaries such as banks.
For example, a smart contract could be used to automatically send money from one country to another when a certain condition is met, such as the delivery of goods or the completion of a service.
Voting
Automated agreements can be used to create secure and transparent voting systems. This could be used for a variety of elections, from local elections to national elections.
For example, a smart contract could be used to verify the identity of voters and to ensure that each voter can only vote once.
Mortgages
Smart contracts can be used to automate the process of taking out a mortgage. This could make it easier for people to get a mortgage, and it could also help to reduce the cost of mortgages.
For example, cardano smart contracts could be used to automatically disburse funds to a lender when a borrower makes a mortgage payment.
Legal
Smart contracts can be used to automate legal contracts, making them more efficient and secure. This could be used for a variety of purposes, such as the creation of wills, the transfer of property, and the settlement of disputes.
For example, cardano smart contracts could be used to automatically transfer ownership of a property when a certain condition is met, such as the payment of a mortgage.
Creating Cardano Smart Contracts
Payment Agreement (Pay)
In the realm of Cardano smart contracts, a “Pay” scenario involves the transfer of a specified token value from the payee’s account to another designated account within the contract.
Here’s the catch — if the value involved turns out to be negative or if insufficient funds exist to cover the payment entirely, an automated warning mechanism comes into play. Subsequently, a partial payment is executed utilizing the available funds. Additionally, any necessary modifications to the contract are carried out.
Contract Termination (Close)
The “Close” stage addresses how Cardano contracts can be formally terminated or canceled. The rationale behind this stage is to facilitate the reimbursement of accounts that maintain a positive balance. This reimbursement process occurs within a single transaction. The course of action hinges upon the definition of values, actions, and observations.
Values, Observations, and Actions
Delving into the terminology — “values” encompasses dynamic numeric attributes that fluctuate over time. Examples include the present slot number, the balance of specific tokens within a designated account, as well as decisions made earlier. These values are often referred to as “volatile values.” Furthermore, these values can undergo operations like addition, subtraction, and negation, and can be contingent on an observation.
Now, onto “observations” — these comprise Boolean values derived from value comparisons. They can be combined using standard Boolean operators. Moreover, they can determine whether a particular choice has been made or not in the context of Boolean values.
Throughout the execution process, these observations play a pivotal role. Conversely, actions unfold at specific junctures during execution.
Some of these actions encompass:
- Depositing funds
- Selecting from multiple options, including Oracle values (details about Oracles are upcoming)
- Indicating external values
Oracles
Cardano Oracles are meticulously designed for pervasive utilization across the Cardano blockchain, accessible to users both within Marlowe and Cardano ADA smart contracts. They epitomize decisions made by users holding the distinct role of “Oracle,” with the role’s name aptly being “Kraken.”
Conditional Execution (If)
Given a valid condition, the “If” mechanism, denoted as If obs cont1 cont2, is activated. It subsequently proceeds as either cont1 or cont2 based on the Boolean assessment of the observation, obs.
Trigger-Based Execution (When)
“When” signifies a contract triggered by events that might transpire at any point in time. The contract’s clauses delineate the course of action when specific actions materialize.
How is the contract’s fulfillment ensured? Enter the “timeout” contingency — as soon as the stipulated timeout and slot number are reached, this condition guarantees the contract’s fulfillment.
Value Assignment (Let)
The “Let” aspect on Cardano enables the assignment of a name to a value through the Let id Val Cont function, akin to a lease agreement. Values evaluated within the expression are saved under the identifier ID, extending the contract’s functionality as cont.
This strategy empowers developers to harness both abbreviations and capture dynamic data, allowing for the accommodation of volatile attributes that may evolve during the development journey.
Assertion (Assert)
The “Assert” stage signifies that a given property holds throughout the static analysis of the smart contract. Any execution outcomes that diverge from a valid assertion would trigger failure.
Using Cardano Smart Contracts
Interacting
Once your wallet is ready, you can initiate interactions with the smart contract. This typically involves creating and sending a transaction. The transaction contains specific data and instructions related to the smart contract’s functions.
Transaction Processing
After you send the transaction, it’s broadcasted to the Cardano network. The network validates the transaction and ensures that you have sufficient ADA to cover the transaction fees. The network also verifies the smart contract’s conditions and executes the associated code if the conditions are met.
Smart Contract Execution
The smart contract’s code is executed based on the transaction’s data and instructions. Depending on the smart contract’s logic, it might perform various actions, update values, or trigger certain events.
Transaction Results
Once the automated agreement execution is complete, the results are returned to your wallet. This might include updated data, status changes, or any outputs generated by the smart contract.
Review and Monitoring
You can review the results of your transaction and monitor the changes made by the smart contract. Many Cardano wallets provide user-friendly interfaces to track your transaction history and monitor the status of your interactions.
Transaction Fees
It’s important to note that interacting with smart contracts on the Cardano network involves transaction fees, which are paid in ADA. These fees cover the computational resources used by the network to process and execute your transactions.