Once the Mary Hard Fork is implemented, users on Cardano will be able to pay transaction fees in native tokens, essentially requiring no ADA to utilize the blockchain. And while this might seem like a huge technical conundrum, IOHK’s engineers have actually come up with a rather simple, free-market-oriented solution.
Cardano’s Extended UTXO makes native token transactions possible
Aside from opening up the world of DeFi to its users, the addition of native tokens to the Cardano blockchain comes with a whole new set of technological benefits. The biggest advancement made possible by native tokens is Babel fees, a mechanism that enables users to pay transaction fees on the blockchain with user-defined tokens, rather than just using the blockchain’s native token.
In practice, this means that any token issued on Cardano can be used to pay transaction fees, a move that will enable users to completely circumvent the use of ADA.
This is made possible by Cardano Extended UTXO (EUTXO) model. Unlike Ethereum’s account-based model, issuing a valid transaction on Cardano requires consuming one or more UTXOs. However, a UTXO on Cardano is able to carry a bundle that contains multiple different tokens, both fungible and non-fungible.
According to a blog post by Prof. Aggelos Kiayias, IOHK’s chief scientist, this model makes it possible to issue a transaction that declares a liability denominated in ADA that’s equal to the amount of fees that the transaction issuer is supposed to pay. This type of transaction is perceived as an open offer on the blockchain, asking interested parties to cover the liability. In return for covering the liability, the party would be paid a reward in the form of other tokens included in the transaction.
However, a transaction with a liability wouldn’t be admissible to the blockchain by itself. Block producers are the ones tasked with creating a matching transaction that will absorb the liability, covering it both with ADA and the other tokens included in the transaction. As such, the transaction with the liability and its matching transaction become admissible to the ledger as a group.
Stake pool operators become liquidity providers under Babel fees
The only way for this mechanism to work is for the Cardano blockchain to introduce the notion of liquidity providers. These LPs are participants in the blockchain that are willing to issue matching transactions on the blockchain.
In the case of Babel fees, it’s the stake pool operators that become the liquidity providers. They are incentivized by the market to provide exchange rates for specific native tokens they want to accept. Prof. Kiayias explained that any SPO can declare that they will accept a certain token for a fixed exchange rate, for example, 3:1 over ADA. If a transaction costs 0.16 ADA, the sender can declare a liability of 0.16 ADA and offer 0.48 of token X. Cardano’s native asset model implements this as a single UTXO carrying a token bundle with the following specifications:
ADA → -0.16, token X → 0.48
In the bundle, the liability is represented with a negative sign.
The stake pool operator that accepts the transaction recovers the liability from the mempool and issues a matching transaction consuming the UTXO with the liability. The matching transaction transfers 0.48 of token X to a new output, owned by the SPO.
What makes this rather simple mechanism revolutionary for blockchain technology is the fact that it’s entirely op-in for SPOs. Each stake pool operator can determine their own policy and exchange rate irrespective of each other. This means that different stake pool operators can provide different exchange rates for the same token, pushing users issuing liability transactions to offer an amount of tokens that corresponds to the minimum, average, or even maximum of the posted exchange rates on the network.
“In this way, a natural trade-off arises between settlement time of liability transactions and the market value of tokens they offer,” Kiayias explained in IOHK’s blog post.
To further promote the free market experience, Babel fees don’t require SPOs to be the only entities on the network covering liabilities. Stake pool operators can partner with an external liquidity provider that will issue matching transactions. In addition to that, third-party providers can also independently on the network and issue matching transactions themselves, removing the need for stake pool operators.
Aside from Babel fees, this mechanism enables a variety of other innovative applications. While IOHK has remained mostly silent on the issue, its latest blog post highlighted atomic swaps for spot trades as one possible implementation of the mechanism.
According to Kiayias, the mechanism enabling negative quantities in token bundles will be implemented in the basic ledger rules of Cardano following the Mary Hard Fork. And while there’s still no clear date as to when Babel fees will be enabled, it’s safe to assume that they will see the light of day sometime shortly after the introduction of native assets.
Cardano-based DEX RavenDex Unveils Frontend Demo Version
RavenDex demonstrates UX/UI of its trading service ahead of RAVE seed tokensale
Cryptocurrency enthusiasts and traders can experiment with the UI of a pioneering decentralized exchange that leverages the largest proof-of-stake (PoS) blockchain, Cardano (ADA).
RavenDex releases front-end demo
According to the official announcement shared by the RavenDex team, the demo version of its frontend (UX/UI) is released for experimentation.
This is the first technical progress announcement after the completion of the oversubscribed private tokensale of its core native asset, RAVE.
Therefore, this is the working demonstration of RavenDex operations and the utility of its RAVE token for early adopters who participated in a private tokensale.
RavenDex Labs team is behind the development and promotion of the platform. The team is focused on advancing trading instruments in Cardano’s nascent decentralized applications ecosystem.
RAVE seed tokensale is in the cards
Also, the team shared the details of the next phase of its funding, i.e., the “seed” public tokensale of RAVE token. Currently, purchasing RAVE tokens is the only option for those interested in joining the RavenDex platform.
RavenDex private tokensale kicks off on Oct. 20, 2021. All ethusiasts of Cardano’s solutions are welcomed as early contributors of RAVE.
The RavenDex team is going to collaborate with the alumni of Plutus Pioneer, a Cardano-focused developer incubation program. The next release will bring RavenDex closer to the mainnet launch.
As covered by U.Today previously, Cardano’s developers, Input Output HK, completed a Project Catalyst Fund6 voting round.
A total of 711 projects applied for funding and consulting support in the sixth iteration of Project Catalyst.
Here’s how Cardano [ADA] plans to offer NFT creators an eco-friendly solution
Ever since the debate of energy consumption sparked this year, Cardano [ADA] has been at the forefront of exploring eco-friendly solutions for the industry. In line with this, IOG, which happens to be the technical team behind Cardano, has announced the joint creation of an official cross-chain ‘bridge’ with the NFT platform, Bondly.
The bridge in question will connect the Cardano and Ethereum networks and enable non-fungible token [NFT] creators to opt for an eco-friendly alternative for their NFTs. According to Bondly, the project will be four million times more energy-efficient than Bitcoin [BTC]. The NFT creators will be able to easily move their NFTs from the “energy-intensive Ethereum” to Cardano. Bondly also revealed that the latter “will only ever use the energy equivalent of a family home.”
Meanwhile, Ethereum has been known to use the power equivalent to the nation of Qatar. Bitcoin, on the other hand, has been at the centre of this debate for a long time. The increasing concern about potential environmental impact has always followed the rise of the prices of these cryptocurrencies. And the 2021 bull run was no different. As a matter of fact, the partnership comes at the backdrop of a major NFT explosion that has witnessed several well-known faces hopping on the bandwagon.
NFT bridge between Ethereum and Cardano
With the new bridge, the NFT creators will be able to mint or transfer non-fungible tokens without the risks associated with lost transactions or sudden high costs since Cardano provides price predictability as well as stability for transaction costs.
As part of the joint project that is slated to release in early 2022, Bondly is tasked with the development of a special series of eco-friendly NFTs celebrating the launch of smart contracts on Cardano.
According to Harry Liu, CEO, Bondly, the latest project of a cross-chain NFT bridge between Ethereum and Cardano marks a “pivotal moment” in the transformation from traditional blockchain technology to highly-anticipated ‘third generation’ networks.
Following the development, Charles Hoskinson, Founder of Cardano and CEO of IO Global, stated,
“We built Cardano with energy efficiency in mind, which is why this partnership with Bondly is so crucial, as it will allow NFT creators access to a leading solution for token creation which doesn’t compromise on environmental credentials.”
Bullish for Cardano?
Cardano [ADA] might have lost the third spot to Binance Coin [BNB], but the slew of developments taking place in its ecosystem could help boost its price movement. The much-awaited summit last month saw some of the most crucial partnerships.
Crypto Economy had earlier reported its partnership with Oasis Pro Market, which happens to be the first-ever United States regulated multi-asset Alternative Trading System [ATS], to bridge the traditional finance sector and decentralized finance [DeFi]. During the same event, Hoskinson had revealed another major partnership with the American Fortune 250 company, the Dish Network.
Cardano, Polkadot and Four Additional Altcoins Are Set To Explode in 2022, According to Crypto Trader Austin Arnold
Crypto trader and Altcoin Daily host Austin Arnold thinks six major altcoins are gearing up for massive rallies in the next year.
In a recent crypto update, the YouTube star tells his 1,040,000 subscribers that Ethereum layer-2 (L2) scaling solution Polygon (MATIC) is gaining momentum after landing a partnership with the $20 billion gambling company DraftKings.a
Arnold shares a statement from DraftKings’ president of global product and technology, Paul Liberman, explaining how the company is positioning itself to grow alongside Polygon.
“Although DraftKings marketplace is still in its nascency, we are bullish on the possibilities that blockchain, NFTs, cryptocurrency and more will present as we prepare for Web 3.0 alongside Polygon and the new innovations ahead for digital collectibles.”
Next, Arnold looks at the decentralized interoperability platform Polkadot (DOT). He points to a recent tweet from Polkadot founder Gavin Wood explaining that there are currently just under 19 million DOT tokens stored in the DOT treasury to fund community projects.
If any DOT goes unused, it gets burned. Currently, the Polkadot treasury is burning 239,988 tokens every month, according to Gavin Wood.
“Either burned or used, the DOT token is only getting more scarce. We have seen a rally in the DOT price recently. This could be linked to some exciting developments ahead, such as the upcoming parachain launch and slot auctions – these parachain auctions will take DOT off the market as well.
And with the first 11 parachain auctions coming to Polkadot next month, along with the 100 or so available slots to be filled, this could boost Polkadot’s presence in the crypto sector, and could cement the multichain system’s rising status.”
The third coin Arnold looks at is the supply chain management protocol VeChain (VET). The trader highlights that VeChain recently landed a partnership with major logistics company DHL for enterprise NFT (non-fungible token) issuance.
“This collaboration with DHL China, one of the first things it will allow customers to experiment with is customize the DHL mascot and then mint it as NFTs on the VeChainThor blockchain solution.”
Next up is the smart contract platform Cardano (ADA). Arnold notes that Cardano appears to be gaining more traction after landing partnerships with television satellite provider DISH and announcing that the network has received $100 million for investment in Cardano-focused projects in Africa.
“Simply put, there are so many people in more developing areas of the world that don’t have financial stability, and that can be changed with Cardano with blockchain.”
Another coin on Arnold’s list is the decentralized oracle network Chainlink (LINK). He notes that despite the token’s lackluster performance over the last few months, he believes there is still massive upside for LINK to realize in the market as partnerships continue to rise month-over-month, with 84 integrations made just in September.
“I get it, but in my opinion, Chainlink still has a lot of room to grow. Think about this: Chainlink already has a ton of exclusive, big partnerships with big companies – Google and Oracle to name two – over 75 different blockchains already use Chainlink technology, as well as being used by many data feeds, including USD [US dollar] currency pairs. That’s a strong foundation.
My speculation is this: over these next few years, as DApp [decentralized application] platforms like Ethereum [ETH], Cardano, Solana [SOL], Polkadot, Elrond [EGLD], etc. continue to fight for market share… Chainlink is integrating with all of them… Something to think about.”
Finally, the crypto trader thinks that the leading smart contract platform Ethereum is gearing up for a huge 2022. He notes that Ethereum developers announced that ETH is planning to make the transition into Ethereum 2.0 in May-June of 2022, which will convert the blockchain to a proof-of-stake protocol.
“The code should be ready around February 2022. The merge to mainnet, to ETH 2.0, in June of 2022 at the earliest. Next year will be known as the year of ETH. That’s where DeFi [decentralized finance] is, that’s where NFTs are.”