Question: What is the eUTxO model in Cardano?

Answer: Cardano uses an extended UTxO model (eUTxO): state is represented by transaction “outputs”, and smart contracts define the rules under which those outputs can be spent. This enables predictable execution and parallelism, but requires different design patterns for dApps.

Question: How do Cardano “native assets” differ from ERC-20 tokens?

Answer: On Cardano, tokens can exist as protocol-level native assets (issued via a minting policy), not only as smart-contract tokens. This changes issuance/burn mechanics and reduces a token’s dependence on separate contract code.

Question: What are Plutus (and Aiken), and what are they used for?

Answer: Plutus is Cardano’s primary smart-contract platform; Aiken is a widely used language/toolchain for developing contracts for eUTxO. They are used for DeFi, NFT markets, lending/DEX, and other applications in the ecosystem.

Question: What is Hydra and what is it for?

Answer: Hydra is a family of Cardano scaling solutions (off-chain “heads”) designed to increase throughput and reduce latency in high-activity scenarios while remaining linked to L1 security.

Question: What are sidechains/partner chains in the context of Cardano?

Answer: These are separate chains that can be connected to Cardano to extend functionality (other VMs, specific parameters, enterprise use cases) and offload the main chain, while maintaining compatibility through bridges/integrations.

Question: What key directions of Cardano ecosystem development are typically tracked?

Answer: Scaling (Hydra/L2 and optimisations), on-chain governance, smart-contract platform development (tools/languages), and growth in DeFi/NFT/identity plus integrations with other networks.

What is Cardano (ADA)

Cardano is a Layer-1 (L1) blockchain platform using Proof-of-Stake (Ouroboros) for transfers, staking, and smart contracts/applications, with an emphasis on formal methods and a research-led, peer-reviewed approach to protocol development.

Launch 29.09.2017 Cardano (L1, Ouroboros PoS)

Who created it

Charles Hoskinson, Jeremy Wood, Cardano Foundation, EMURGO.

Why it was created

To build a scalable and sustainable PoS platform for transfers and smart contracts, focusing on a formalised, research-driven (peer-reviewed) approach to the architecture and evolution of the protocol.

How it’s used

ADA transfers (P2P payments and settlement)
Paying fees for transactions and smart-contract execution
Delegating/staking ADA to participate in consensus and earn rewards
Voting and participating in on-chain governance
Launching dApps (DeFi, NFT marketplaces, games, etc.) on Cardano
Issuing and transferring native tokens (native assets) within the Cardano ecosystem

Risks

Regulatory risk: in the US, ADA was cited in SEC allegations as a possible “security”, increasing the risk of restrictions/delistings on certain platforms
Risk of delisting or reduced functionality at brokers and exchanges due to compliance requirements and shifts in regulatory interpretation
Risk of market manipulation on low-liquidity pairs/platforms (pump-and-dump, “thin order book”, wash trading by certain counterparties)
Risk of high volatility (ADA’s price often moves on news/market sentiment rather than purely on fundamental metrics)
Risk of influence centralisation: stake concentration among large pools/operators/custodians may amplify the influence of a limited set of participants
Risk of “governance capture”: governance via vote delegation (DReps/committee/pools) can lead to coalition dominance and contentious decisions
Risk of slower roadmap delivery: feature delays and potential competitive lag of the ecosystem
Reputational risk: community infighting/scandals around project figures can amplify FUD and price swings

FAQ

Question: What is the eUTxO model in Cardano?: Answer: Cardano uses an extended UTxO model (eUTxO): state is represented by transaction “outputs”, and smart contracts define the rules under which those outputs can be spent. This enables predictable execution and parallelism, but requires different design patterns for dApps.
Question: How do Cardano “native assets” differ from ERC-20 tokens?: Answer: On Cardano, tokens can exist as protocol-level native assets (issued via a minting policy), not only as smart-contract tokens. This changes issuance/burn mechanics and reduces a token’s dependence on separate contract code.
Question: What are Plutus (and Aiken), and what are they used for?: Answer: Plutus is Cardano’s primary smart-contract platform; Aiken is a widely used language/toolchain for developing contracts for eUTxO. They are used for DeFi, NFT markets, lending/DEX, and other applications in the ecosystem.
Question: What is Hydra and what is it for?: Answer: Hydra is a family of Cardano scaling solutions (off-chain “heads”) designed to increase throughput and reduce latency in high-activity scenarios while remaining linked to L1 security.
Question: What are sidechains/partner chains in the context of Cardano?: Answer: These are separate chains that can be connected to Cardano to extend functionality (other VMs, specific parameters, enterprise use cases) and offload the main chain, while maintaining compatibility through bridges/integrations.
Question: What key directions of Cardano ecosystem development are typically tracked?: Answer: Scaling (Hydra/L2 and optimisations), on-chain governance, smart-contract platform development (tools/languages), and growth in DeFi/NFT/identity plus integrations with other networks.