Cardano is a smart contract platform that seeks to deliver more advanced features than any blockchain protocol before it. Developed using a strict, academically sound philosophy, Cardano is looking to set new security standards for the rest of the crypto industry.
In this beginner’s guide to Cardano, we’ll cover:
- What is Cardano?
- The Scientific Method Behind Cardano
- How Does Cardano Work?
- Cardano’s Future
- How to Buy Cardano
- Best Cardano Wallet
While Cardano has occasionally been referred to as the “Ethereum of Japan”, the team behind it considers the project to be a third generation blockchain — building on what existing blockchains have done right, and implementing novel technology where improvements are needed.
The Cardano blockchain was publicly launched on September 29th, 2017, with the platform’s native token, “ADA”, being made available for trading on October 1st. The team behind Cardano is made up of three entities:
Cardano Foundation: The Cardano Foundation is a Switzerland-based non-profit which aims to standardize, protect, and promote the Cardano protocol around the world. Most recently, the Cardano Foundation has connected with Ledger, the French hardware wallet manufacturing firm, to integrate ADA compatibility.
IOHK: Input Output Hong Kong (IOHK) is an engineering company that builds cryptocurrencies and blockchains for academic institutions, government entities, and corporations. Founded in 2015 by Ethereum co-founder Charles Hoskinson and Ethereum alum Jeremy Wood, IOHK describes itself as, “a decentralized company that loves small, innovative teams forming and executing ideas that cause cascading disruption”. IOHK is contracted to design, build, and maintain the Cardano platform through 2020.
Emurgo: Emurgo is a Japanese company formed to integrate, develop, and support businesses that want to utilize Cardano’s decentralized blockchain. It was Emurgo’s decision to hire IOHK and many argue that Emurgo looks to be the ConsenSys to Cardano’s Ethereum.
Ultimately, Cardano aims to become a better, more secure Ethereum. While both platforms seek to provide a strong foundation for developers to build smart contracts and decentralized applications, they differ in how they plan to get there. Cardano is the first blockchain platform to evolve out of a scientific philosophy and a research-first driven approach.
Also Read Our Cardano vs Ethereum Comparison.
Charles Hoskinson and IOHK have adopted a unique development philosophy that aims to raise the standards of due diligence we expect from blockchain developers. With this goal in mind, Cardano was built using a rigorous process that ensures the safety and security of its code by means of formal verification, first principles, and peer reviews.
Here’s what you need to know about Cardano’s scientific philosophy:
- Cardano is written in the Haskell programming language, which enables the formal verification of code. To formally verify code is to make a claim with mathematical certainty on what functions a program is capable, or incapable of performing.
- First principles thinking is the act of boiling a process down to the fundamental parts that you know are true and building up from there.
- A peer review is defined as an evaluation of scientific, academic, or professional work by others working in the same field.
This approach is completely new to cryptocurrency, which is surprising given the billions of dollars at stake in the industry. An impassioned Hoskinson reiterated this point in a recent interview:
“If they’re going to be worth this much money, shouldn’t we at least demand that somebody spends a few months of fucking time to go to the world’s top people and get those people to give it a little checkmark…that’s just common sense.”
The average person reading a white paper often has no idea how to interpret technical specifications. Therefore, there is an implicit trust that these technical elements are valid. But what if they aren’t?
Peer review is a time-tested method of ensuring a particular theory is sound. According to Hoskinson there are bright people who don’t have adequate domain experience within crypto who are writing papers that “kind of, sort of” work, but their security holes won’t be discovered for years because nobody is actively trying to tear them apart.
IOHK holds Cardano to a higher standard, because they feel that they have a moral obligation to ensure the platform’s quality and safety. The Cardano team hopes that this kind of rigorous development philosophy eventually becomes a standard in the cryptocurrency industry.
Cardano is composed of two primary parts: a settlement layer to handle cryptocurrency transactions, and a computing layer, which handles computation for smart contracts and decentralized applications (dApps).
The separation of payment and computation is a design choice intended to make future upgrades easier. This way the Cardano team is able to make changes to the settlement layer, such as tweaking the consensus algorithm, without affecting the computing layer. End users are unlikely to notice the behind-the-scenes improvements earned by this modular design.
Cardano regards itself as third generation blockchain. The reasoning goes something like this:
- Bitcoin is a first generation blockchain. Bitcoin figured out how to transfer value from one person to another without requiring a third party in the transaction, but isn’t well suited for smart contracts.
- Ethereum is a second generation blockchain. Ethereum brought programmable transactions (smart contracts) to the blockchain, but struggles with scale and governance, among other things.
- Cardano claims to be a third generation blockchain; citing scalability, interoperability, and sustainability as its major technological improvements lacking in earlier blockchains.
Cardano plans to realize its potential as a third generation blockchain by achieving consensus in a modular, future-forward way, handling large amounts of bandwidth efficiently, and coming up with clever ways of managing data without compromising security.
Achieving Consensus with Ouroboros
Cardano uses a modified proof-of-stake (PoS) consensus protocol called Ouroboros. Proof-of-stake algorithms choose who will make the next block randomly, with each person having a chance that is proportional to their total ownership (stake) of the native token. According to Charles Hoskinson, Ouroboros is among the most efficient consensus protocols in the crypto space. Here’s how it works:
Time in Cardano is divided into epochs (pronounced “epics”), which are further divided into slots. Slots are short time periods of around 20 seconds, and each slot has a designated leader. Slot leaders can create no more than a single block in their assigned slot. Transaction fees in a given epoch are pooled together and distributed to the slot leaders.
Slot leaders serve the same purpose in Cardano as miners in Bitcoin, but without the extreme computational demands required in a proof-of-work system. Cardano claims to offer a similar security guarantee as Bitcoin’s proof-of-work despite being considerably cheaper to run.
How are slot leaders chosen?
Network participants must hold a minimum threshold stake in ADA. All qualifying participants are considered electors for the next epoch. Slot leader elections are performed via a distributed method of random number generation. The final output is a unique identifier for an existing coin and the owner of this lucky coin becomes a slot leader!
Cardano finds itself relatively early in its development cycle. According to the project roadmap, Cardano is currently working on completing “Byron”, the bootstrap phase, in which they are actively making improvements to code, debugging, and working on the ‘Daedalus’ wallet. There are a lot of exciting features the IOHK team is working on, but it’s likely to be another year or two before we see Cardano operating at full capacity.
One of the coolest upcoming technologies being developed for Cardano revolves around the concept of interoperability. Cardano is of the belief that there won’t be one token to rule them all; instead, we will likely use multiple public blockchains for different purposes. If this is true, and the future presents a world in which Cardano, Bitcoin, and Ethereum can co-exist with legacy banking platforms like SWIFT and ACH, we’ll want some way to communicate between different blockchains and legacy networks.
Third generation blockchains like Cardano will have the capability to understand and watch other blockchains, while also enabling metadata and compliance framework optionality for legacy systems in a privacy-conscious way. This approach won’t permit custodianship of personally identifiable data.
Cardano also plans to work on a solution for the sustainability and governance of decentralized protocols. The development of cryptocurrencies today is funded mostly through initial coin offerings (ICOs). ICOs quickly generate huge lump sums which must be strategically allocated, leaving vulnerable investors hopeful that the ICO’s team does the right thing with their newfound riches. Unlucky cryptocurrency investors have learned that people don’t always do the right thing.
Cardano hopes to address this problem with a treasury system that is funded by inflation. In short, the idea is to print money into a decentralized bank account. The funds from this account will then be spent through an unspecified democratic process that will allow network users to vote on which proposals receive funding. IOHK believes that finding solutions to sustainability problems like this is essential for the overall health of a decentralized protocol.
‘ADA’ is the cryptocurrency native to the Cardano platform and is named after the world’s first computer programmer, Ada Lovelace. In the Cardano network’s current state, ADA is only used to send and receive value. The process for sending and receiving ADA works just like Bitcoin, Ethereum, and most other cryptocurrencies. In the future, ADA will also be used for staking, smart contracts, and the treasury.
The only wallet that currently supports ADA is called Daedalus. Daedalus is a highly secure wallet for the ADA cryptocurrency and was developed by the IOHK team. Although Daedalus is currently the only option, Ledger appears to be working on supporting ADA in the near future.
Just like Cardano, the Daedalus wallet has a promising roadmap that includes features like supporting non-ADA cryptocurrencies, custom themes and plugins, and a mobile wallet for Android and iOS. You can find more information regarding the Daedalus wallet at it’s official website here.
Cardano is an innovative third-generation blockchain platform that has been carefully constructed from the ground up in a provably secure manner. The Cardano team, driven by IOHK, is determined to outclass its competition by holding its product to scientific standards we haven’t yet seen in the cryptocurrency industry.
The Cardano project is far from finished. ADA currently holds the sixth largest market cap at the time of writing, placing it above plenty of complete, and nearly complete projects. It’s no secret that market cap isn’t a perfect metric, but it’s worth noting in this instance as it indicates there is a lot of enthusiasm about the platform.
Cardano has a long list of exciting developments expected to be realized over the next couple of years. Whether it’s the aforementioned interoperability and governance features, or the adoption of a “K”-based virtual machine to allow non-Haskell developers to participate, the Cardano project is setting itself up to be a potential leader in the cryptocurrency industry.
Grayscale Buys Another $186 Million in Bitcoin: Approaching $6B Crypto Assets Under Management
Grayscale has enlarged its Bitcoin Trust, as 17,100 BTC were added to Grayscale’s funds at current prices, as the investment is worth approximately $186 million.
Crypto AUM Approaches $6 Billion
The total assets under management (AUM) for all Grayscale Investments crypto funds totaled $5.8 billion according to its last market report for the week ending September 25.
09/25/20 UPDATE: Net Assets Under Management, Holdings per Share, and Market Price per Share for our Investment Products.
— Grayscale (@Grayscale) September 25, 2020
The Bitcoin Trust, or GBTC, is by far the largest fund, containing 82.75% of the total investment, or $4.8 billion. Following that is the Ethereum Trust, which has almost $784 million invested, or 13.5% of the total.
The rest is divided into smaller funds for Bitcoin Cash, Ethereum Classic, Litecoin, XRP, Zcash, and a couple more.
Grayscale buys shares for its investors so that they do not have any direct exposure to the underlying asset. Its BTC shares are currently trading at $11.23, and the Bitcoin holdings per share are up almost 46% so far this year.
The move signifies continued institutional interest in Bitcoin and crypto assets despite having corrected almost 20% since its peak this year. Grayscale also stated that there would be a huge wealth transfer over the next quarter-century, and the younger generation is interested in Bitcoin and crypto;
“$68 trillion will be transferred from older generations to younger generations over the next 25 years. It’s time to pay attention to the behaviors of the next generation of investors.”
Bitcoin Closes Bullish on The Weekly Candle
The weekend has seen Bitcoin grind slowly higher again in an attempt to reclaim the psychological $11K price level.
Analyst Josh Rager has observed the weekly candle close, adding that Bitcoin has up-trended for the third week in a row and remains bullish.
Weekly close looks good and don’t know why people continue to be overly bearish
Bitcoin got a short term pullback and -20% is nothing unusual
Bitcoin continues to uptrend and for the third week in a row has closed above the support zone of $9900 to $10,175
$11ks next pic.twitter.com/5YFwtEX4Nd
— Josh Rager 📈 (@Josh_Rager) September 28, 2020
A retest of the monthly high is also a sign that there are more buyers than sellers at the moment though the next level is critical, and BTC must hold the $11k zone to register further gains.
The $150 million KuCoin hack did not cause any significant sell-off over the weekend, which is a testament to how resilient cryptocurrency markets have become to such incidents.
Almost 2 Million Test ETH Currently Staked on Ethereum 2.0’s Medalla Testnet
Validator participation in Ethereum 2.0’s Medalla testnet is on the rise. And with the growing number of them, the number of staked test ETH is about to close in on a new high of Almost two million test ETH tokens, that are now staked on Medalla.
This comes amid the launch of the Optimism Layer for Ethereum and DeFi TVL clocking $11 billion.
Ethereum 2.0 Medalla Testnet: The Numbers Say It All
As per the latest update, validators have staked a little close to 2 million Goerli test tokens on the Ethereum 2.0 Medalla test net. Active validators are just above 62,000, with network participation ranging between 72 percent to 80 percent in the last 24 hours.
As of now, close to two million test ETH tokens are eligible for voting whereas only little more than 1.5 million Ethers have actually voted to validate Medalla.
According to the last update on test ETH staking, around 38,000 participants had plugged in more than 1.1 million Goerli Ethereum tokens. Since then validator participation has gone up to 63.2% in a month’s time.
ETH Layer 2 Testnet Launched To Give an ‘Optimistic Shape’ To Scaling
As seen above folks are actively working to make Ethereum 2.0 a roaring success. But besides Medalla, Plasma Group developers have been hard at work to reduce the activity load on the Ethereum main net.
Dubbed as ‘Optimism Layer 2,’ the test net will find deployment over the currently trending projects to test Ethereum’s scaling capabilities.
In its entirety, Optimism is OVM, a fully-featured Ethereum Virtual Machine (EVM) compliant execution environment. It’s objective is to work off the root chain to process data and transactions faster.
Optimism is the only generic L2 solution for Ethereum. This means that it does not need to include specific functionality to support existing L1 protocols.
DeFi protocol Synthetix will take the beginning shot at trialing Optimism. And in the process will offer 200,000 SNX in rewards to their users for participating. Synthetix said that currently, the test net is open to the public, but is not available for public contract deployment.
Total Value Locked In DeFi Clocks $11 Billion
Speaking about defi, recent data points to a resurgence in USD deposits in decentralized finance protocols. As per the latest numbers, the total value locked (TVL) has topped $11.13 billion.
The recent rise in activity comes after decentralized exchange Uniswap clocked around $2.3 billion in liquidity, an all-time high for the Ethereum based DEX. This has made it the top DeFi project with an almost 19% dominance.
DeFi lending projects Maker and Aave are also closely trailing behind Uniswap with $1.95 billion and $1.53 billion in USD deposits.
But the current star of the ecosystem is dForce which is designed to be an ecosystem that offers a full-stack solution for DeFi. The project has experienced a near 150% infusion of funds which parabolically pumped its TVL number from $104 million to $257 million in the last 24 hours.
Despite the explosive trend in the DeFi market, ETH has portrayed a lackluster price action. The token is trading sideways $357 a coin.
Huobi Guide & Exchange Review: How to Trade Options, Futures, and Perpetual Swaps
Founded all the way back in 2013, Huobi Group is one of the leading blockchain companies in the industry.
It’s safe to say that the company has come a long way since then and it’s currently offering a variety of services for its wide user base. Employing people globally, Huobi offers a myriad of crypto-related services, including digital asset trading, wallet, mining pool, incubation, research, proprietary investment, and so forth.
Cryptocurrency trading has surged in interest throughout the past few years and exchanges such as Huobi have worked hard to expand their offerings. Derivatives products, apart from traditional spot trading, have exploded in interest, and Huobi is doing its best to accommodate.
Among its popular trading products are the futures, perpetual swaps, and options platforms. In this guide, we will take a closer look at how these tools operate and provide a step-by-step explanation of how to use them.
How to Register on Huobi?
Before anything else, however, you’d first have to register for an account. The process is fairly simple. There’s no mandatory Know-Your-Customer (KYC) procedure for spot trading, but if you want to start using the derivatives platforms, the ID verification is obligatory.
This is how the registration screen looks like:
All that is needed here is an email address that has to be verified through a verification code later on.
Once you have your account opened, it’s highly recommended to take a few additional security steps. First, it’s important to enable the Two-Factor Authentication (2FA), using the Google Authenticator app.
In addition, Huobi has taken a few extra steps that protect your account in the event of it being hacked such as email verification codes, phone verification codes, a designated fund password to ensure fiat asset security, and so forth.
If you want to trade on the derivatives platform, you’d have to go through an additional ID verification step which requires you to input your names, a government-issued passport, driving license or ID number, and upload a picture of it.
We’ve completed all the steps and, in our experience, the process was seamless and the KYC took no more than a few minutes to be completed and approved by Huobi’s team.
How to Deposit and Withdraw Funds?
Now that you have your account set up, it’s time to load it with some funds. Depositing is fairly straightforward and users can choose between a myriad of cryptocurrencies, including Bitcoin, ETH, USDT, and many others.
From the top navigation bar, you need to hover over “Balances” and choose the account you wish to fund. Regardless of where you deposit initially, you can easily transfer the funds between the accounts – it’s instant.
After you select the cryptocurrency you want to deposit, all you need to do is click on the “deposit” button, which will pull up this screen. In this case, we’ve deposited the stablecoin USDT.
In any case, regardless of the cryptocurrency you deposit, make sure to correctly select the transaction network (when applicable) – in our case, we used USDT on Ethereum’s ERC-20 standard.
From here, you can make quick, zero-fees transfers between the different internal accounts and fund your derivatives one. All you need to do is open the account, select the currency that you want to transfer, specify the amount, and confirm the operation:
Once this is done, you are ready to begin using the offered derivatives products. Let’s have a look at all of them.
How to Trade Bitcoin Options on Huobi?
Options contracts are one of the most popular derivatives, used constantly in traditional finance. Lately, there’s a huge demand for cryptocurrency options as well. However, keep in mind, derivatives and options are not recommended for beginners as they carry more risk.
Huobi Futures has a dedicated options platform where currently users can trade both Bitcoin and Ethereum options. In this guide, we will focus on Bitcoin.
By definition, an options contract represents an agreement between two parties to facilitate a transaction on the underlying asset (in this case – Bitcoin/USDT index), at a preset price (known as the Strike Price), prior to the expiration date.
Purchasing a CALL option means that the buyer has the right to buy BTC corresponding to the contract face value at the strike price. On the other hand, a PUT option means that the buyer has the right to sell BTC under the same conditions.
In the top left corner is where you select the type of Bitcoin options contract you want to trade with. For this example, we’ve used the Weekly BTC contract with a strike price of $8,500 and expiry on September 18th, and a leverage level of 5x.
Below is the board where you can monitor the prices for the different contracts based on their strike price factor.
As can be seen in this example, our contract costs around $2,400 to buy (bid). Huobi uses a system where traders can open positions based on contracts, where one BTC options contract equals 0.001 BTC or about $10 at current rates, as of writing this guide.
The par-value for a contract of ETH option equals 0.01 ETH, or about $3 at current rates. Unlike other margin exchanges, users can join options trading on Huobi with fairly low entry barriers.
Now, let’s see how to open a CALL position, as we assume the price of Bitcoin will close above the strike price of $8,500 on September 18th.
From the order menu, we’ve selected a price that we want to buy the contract at – it’s $2414 and the number of Contracts that we want to purchase, in this case, it’s the maximum amount of 25 contracts, which is about $250.
As soon as we hit the Buy Call button, our Limit order will be placed and when the Mark price of the contract reaches it, the order will be executed and we will have 25 Contracts ($10 each) giving us the right to buy Bitcoin at $8,500 (strike price) when the contract expires on September 18th.
If the price of Bitcoin is above $8,500, we will realize a profit, if it’s below that, we will lose the options premium.
If you want to close the position, you can specify the price at which you want to close and the overall amount of your position that you want to close.
Now, in this example, we’ve only shown how to buy a CALL option for Bitcoin, but users can also buy PUT options and they can sell contracts as well. For detailed information on how to do those operations, you can check the official guide.
How to Trade Bitcoin Futures on Huobi?
Moving on, Bitcoin futures are also available on Huobi. Here, users can buy these contracts and speculate on whether or not the price of Bitcoin will be above or below the current price on a pre-set date.
From the left pane, users can choose from a verity of the over 60 cryptocurrencies and the available futures contracts. For Bitcoin, Huobi offers weekly, bi-weekly, quarterly, and bi-quarterly contracts, and supports leverage up to 125x.
Basically, if you believe that the price of Bitcoin will be higher than the current price at the expiration date of a given contract, you should open a long (buy) position. If you think it’s going to be lower, you should open a short (sell) position.
How to Trade Bitcoin Perpetual Swaps
Perpetual swaps are probably the most popular cryptocurrency derivative instrument. They are like traditional futures with the exception that they don’t have an expiry date. In other words, traders can open and close them whenever they want to.
It’s worth noting that Huobi even offers USDT/USD perpetual swaps with leverage of 1X -1000X, becoming the industry pioneer in USDT derivatives.
Besides, for the non-stablecoins, traders can use perpetual swaps with extremely high leverage of up to 125X for BTC swaps and 75X for other swaps. In other words, you can open a position worth 125 times the amount you have in your account.
Huobi Futures offers different leverages such as 1x, 3x,5x,20x, 125x, and even 1000x. Users can choose freely according to their needs.
While this brings opportunities for big profits, please be aware that it’s also extremely risky as the slightest movement in the opposite direction of your position can liquidate your position, causing you to lose your capital. Using high leverage is definitely not recommended for inexperienced traders.
Huobi’s overall customer support is very satisfying. From our test experience, the team is very responsive and easy to communicate with.
Elsewhere, the KYC verification process is particularly quick. After we submitted the documents needed for the identity verification, the team took no more than a few minutes to have them checked and approved the account for trading.
Security: Is it Safe to Trade on Huobi Futures?
Huobi is one of the largest cryptocurrency exchanges in the world. It’s an established company with thousands of employees. While it’s never recommended to keep a large amount of crypto in an exchange, Huobi is regarded as being very safe to use.
The team has also added a myriad of additional security features that users can opt in to further protect their accounts. Of course, you should also beware of scam artists and phishing attacks.
Trading Fees on Huobi
When it comes to the trading fees, Huobi has various fees on its platforms, so let’s have a look at a detailed breakdown for individual traders:
- Futures Trading Fees
- Huobi Perpetual Swaps Trading Fees
- Huobi Options Trading Fees
It’s also worth mentioning that Huobi Futures also provides VIP Sharing Program and Market Maker Program to lower big user’s switching costs to Huobi. For example, Huobi options maker fee rebate is as high as 0.003 USDT per contract.
In general, Huobi is one of the most reputable exchanges out there and they live up to the statements. The customer support is quick and easy to communicate with, the exchange offers a range of different tools to accommodate the needs of various traders.
Their Bitcoin Options trading platform is convenient, rather intuitive, and easy to work with. There’s a range of different contracts with various leverage options and expiration dates.
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