September 12, 2021 will go down in Cardano’s history books. This date marks the introduction of the smart contract functions on the Cardano blockchain. This means that the project of founder Charles Hoskinson will, with great foresight, become a serious competitor for Ethereum.
But the last days and weeks have been a bit bumpy for Cardano and reviews have been loud in the community, especially on Twitter and YouTube. The majority of Hoskinson and his team were confronted with the fact that years of research and observation of the competition produced little and that developers of dApps, i.e. decentralized applications, withdrew their projects in the prelaunch phase.
A prime example of theory vs. practice, but the ADA course doesn’t seem to care. In anticipation of the Alonzo upgrade, it gained over 12 percent in the week after the flash crash on September 7th.
Tomorrow is the big day! We are entering a new Era of Cardano.
– Charles Hoskinson (@IOHK_Charles) September 12, 2021
Cardano will soon enable smart contracts
Tonight at 21:44:51 UTC, shortly before midnight in the DACH region, Cardano is giving the go-ahead for smart contracts on its blockchain with the implementation of the Alonzo hard fork. However, due to various design issues, several decentralized applications have delayed their launch. Hence, the likelihood is high that Alonzo will only go live with a few “toy smart contracts” developed by Cardano’s creator himself.
Smart contracts are self-executing components of computer code that provide the basis for decentralized applications such as decentralized exchanges and non-custodial lending apps. With Alonzo, Cardano now wants to compete with Ethereum, which had already introduced smart contracts in 2015, for market shares in this sector.
What may sound ambitious and simple, however, does not turn out to be so in reality. The first Cardano dApp, a multipool exchange called Minswap, stopped working shortly after it started because essential functions were not possible. The difficulty was to process several transactions at the same time, which is one of the core functions for applications in the DeFi area. Of course, there was no lack of ridicule and scorn.
Cardano is the biggest joke in crypto.
Its very existence is an insult to this industry.
– Anthony Wassano 🦇🔊 (@ sassal0x) September 4, 2021
IOHK, the company behind Cardano, countered in a tweet that this was speculation and only open Misconceptions and FUD based. On the other hand, dealing with non-executed transactions offers a greater degree of security and predictability of the fees to be paid.
In the tweet, the author also took the time to go into the individual points again. The thread again provides information about why Cardano works the way it works and what options are available for remedial action, the problem of simultaneity, i.e. the execution of several transactions in parallel, are available.
Cardano’s problems in front of the Alonzo hard fork are real
Despite the extensive explanation, IOHK couldn’t solve its problems with a single tweet thread. Therefore, the upgrade will very likely have to do without the launch of many top applications for the time being.
Several decentralized exchanges have already announced that they will postpone their start until definitive solutions to the bottleneck in transactions are found.
The decentralized exchange Minswap started last week in the testnet and immediately ran into problems. Due to the transaction bottleneck, users were unable to swap and the project had to close its testnet for the time being. The assumption is that other projects fared similarly.
But remedy seems to be in sight. Three key dApps building on Cardano, SundaeSwap, Maladex and OccamFi, said they designed solutions that can overcome the challenges that arise. Several scaling solutions have been proposed, ranging from aggregating multiple transactions to Layer 2 protocols and sidechains.
However, it will take some time to implement these alternatives. SundaeSwap has planned to launch in mid-October and others have suggested a similar schedule. But this information is provisional so far.
Since its launch in 2015, Cardano’s reputation has always been based on meticulous research and testing of its technology. Updates to the protocol always go through lengthy research by scientists.
A failed start could therefore be seen as a major step backwards. But Cardano is not there with empty hands after the hard fork, as IOHK CEO Charles Hoskinson confirmed in a YouTube stream on Wednesday. Some self-programmed applications will be available after the upgrade has been successfully implemented.
Alonzo Hardfork lets prices rise
As the timing of the smart contract function approaches, the price of Cardano’s native asset, ADA, on Binance’s exchange has risen by almost 16 percent.
However, the team at Santiment, an on-chain data provider, warns. The price could fall sharply again as soon as the ADA community becomes very hyped or even fearful.
📈 #Cardano jumped a quick 12.5% in the past 15 hours following last week’s #FUD toward the # 3 market cap #crypto project. Social spikes continue to tell the story. When the $ ADA Crowd gets overly hyped or fearful, the price trend will typically shut down. https://t.co/9p6Lc0qNox pic.twitter.com/OIGlCyENqv
– Santiment (@santimentfeed) September 11, 2021
On September 7th, ADA, along with other cryptocurrencies, plunged sharply from just below the $ 3 mark due to a flash crash, and shortly thereafter marked successive lows of $ 2.16 and then $ 2.21.
However, according to Hoskinson, ADA’s price decline is not due to the technical problems regarding the simultaneity of transactions at Minswap, but rather to the correction of Bitcoin.
At the time of this writing, Cardano is trading at $ 2.72, a little more than 12 percent below its all-time high of September 2.
Conclusion – Cardano still has a lot of work to do after the Alonzo hard fork
One of the longest-awaited protocol upgrades in history since Satoshi Nakamoto’s Bitcoin whitepaper was published will take place on September 12th. With the Alonzo hard fork, smart contracts find their way into Cardano’s blockchain.
After years of research and development, however, the upgrade will not come with the anticipated top applications, for example from decentralized trading platforms, but ‘only’ with a few dApps from IOHK itself.
Due to the technical challenges of carrying out more than one transaction at a time, many projects postponed their start on the Cardano blockchain. Therefore, it will only be shown in a few months what potential Cardano can actually develop, if that is the case.
We can also look forward to the further course of the course. Are the investors influenced by the problems that have arisen or are they more optimistic about being part of a very promising project? We’ll keep an eye on the coming days and weeks for you.