Cardano is a blockchain that has gained a reputation as an “Ethereum killer” due to its ability to address many of the issues that Ethereum has, such as high gas fees, low scalability, and slow transaction speed and throughput. Since September 2021, Cardano has been creating smart contracts with its Alonzo Hard Fork implementation. This has allowed it to compete with Ethereum directly. Cardano also incorporates Plutus scripts, which improve its functionality and make it user-friendly for all users. Before discussing Cardano’s smart contracts and how they work, it is important to understand the basics of smart contracts and Cardano. Let’s get started!
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Why should you choose the Cardano blockchain?
Cardano is often referred to as an “Ethereum killer” because it aims to improve upon Ethereum in several ways. One key difference between the two is the way they handle transactions and smart contracts. While Ethereum handles both on the same layer, Cardano separates them into two distinct layers: the Cardano Computation Layer for creating smart contracts and the Cardano Settlement Layer (CSL) for ADA transfers. This separation makes Cardano more efficient and scalable.
Cardano is also a proof-of-stake blockchain. Instead of mining tokens, users validate blocks by staking the native token, making the blockchain more energy-efficient, cost-effective, and scalable. In contrast, Ethereum is a proof-of-work blockchain that is planning to transition to proof-of-stake in September 2022 with “the merge.”
Cardano blockchain development is supported by a research-based framework that incorporates peer-reviewed insights and evidence-based methods. This foundation has helped it make significant progress toward the future of the blockchain network and the Ada token. Now that we have a basic understanding of Cardano and how it differs from Ethereum, let’s delve into the specifics of Cardano’s smart contracts.
What are smart contracts?
Smart contracts are self-executing code written by developers to automatically enforce the terms of an agreement when certain conditions are met. They facilitate transactions between buyers and sellers without the need for middlemen or third parties, which adds transparency to the process.
The code itself controls the execution of smart contracts, and the transactions are trackable and irreversible. They operate without the need for a central authority, legal system, or external enforcement mechanisms.
What are Cardano smart contracts?
Cardano smart contracts, also known as ADA smart contracts, are similar to Ethereum contracts in that they are virtual agreements between two or more parties that automatically execute once certain conditions are met.
ADA smart contracts are free from intermediaries and can execute faster than traditional contracts. They are also stored on a decentralized network, which makes them permanent and resistant to tampering.
Programming languages for developing Cardano smart contracts
Three programming languages are used to build Cardano smart contracts: Marlowe, Plutus, and Haskell. Here is more information about each of these languages:
- Marlowe: This language is specifically designed to create blockchain applications focusing on financial transactions. It offers improved security, a guarantee of termination, and correct behavior. Marlowe also allows smart contracts to have a defined duration, set time length, and preserve value.
- Plutus: This language is used to develop apps that can interact with the Cardano blockchain. Plutus is the language behind the creation of safe apps, the acquisition of new assets, and the construction of smart contracts. It also allows developers to create smart contracts and new tokens in a minimal environment.
- Glow: This language is used to create decentralized applications (dApps) on the blockchain. It enables developers to code secure dApps, ensuring that the smart contracts operate safely in an adversarial environment.
How to create Cardano smart contracts?
There are eight steps involved in creating a smart contract on the Cardano blockchain: Pay, Close, Values, Observations, Actions, Oracles, If, When, Let, and Assert. Here is more information about each of these steps:
- Pay: This step involves transferring a specific token value from the payee’s account to another account in the contract. If there are insufficient funds in the account, a partial payment will be made after a warning.
- Close: This step specifies the cancellation or termination of the contract. The close function allows for the reimbursement of accounts with a positive balance. The process is repeated for each account, but all accounts are reimbursed in a single transaction.
- Values, observations, and actions: Actions are events that occur during the execution phase of the contract. They can be anything from money deposits to finding an oracle value. Values are numerals that change over time, such as slot numbers or balances. Observations are Boolean values obtained by comparing values and merging them using Boolean operators.
- Oracles: Oracles are a feature specifically for developers using Marlowe on the Cardano blockchain. They are modeled as decisions made by a participant with a specialized Oracle role, “Kraken.”
- If: The If obs cont1 cont2 function is performed when the conditional is true and continues as cont1 or cont2, depending on the Boolean value of the observation obs.
- When: This is a contract that is triggered by events that may or may not occur at any time. It describes what happens after specific actions occur.
- Let: The let id Val cont function allows the contract to name a value with an identifier. After evaluating the expression value, the function saves the name with the identifier id. This technique allows developers to capture and preserve volatile data and to use abbreviations such as the current slot number at a specific moment in contract execution to be used later in contract execution.
- Assert: The final step ensures that the property holds at every point in the smart contract. If the execution results in a false assertion, the static analysis will fail.
These are the eight steps involved in developing a Cardano smart contract. Cardano is increasingly competing with other smart contract platforms like Ethereum. Before we conclude, let’s take a look at some of the interesting use cases for Cardano.
Conclusion
Smart contracts have the potential to impact the financial world significantly, and Cardano’s smart contracts offer a digital platform for modeling and executing real-world contracts. When deployed on the Cardano blockchain, these contracts provide complete transparency to all parties involved and are self-executing according to the set requirements of the contract. In Cardano blockchain development, developers can use the Plutus Platform to create secure ways to transfer value and provide services to a global audience.
