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The year 2022 will be Cardano's most important yet. The two final stages of Cardano's development plan will be completed this year, bringing enhancements in everything from efficiency to governance and beyond.
Cardano hasn't really captured the industry's attention in 2021's boom of NFTs, DAOs, and DeFi products, and critics have been scornful of the slow burn successes that have come out thus far. But where does Cardano go from here? Is it still the beast it used to be? Here's where we are now, as well as what we may expect from the Cardano team in 2022.
Cardano DeFi Alliance
For ADA holders, DeFi has been a bit of a mystery. Despite the fact that Cardano has staking built-in, the ecosystem currently lacks numerous effective dApps that can compete with BNB or Avalanche. Despite the fact that the Alonzo Smart Contracts update was issued four months ago.
However, according to Hoskinson, the ecosystem is present and will be quite active in the next weeks. In one of his live videos, he addresses concerns about the Cardano DeFi alliance, specifically, the lack of DeFi use cases on the network. "A concern that I have, a concern that you probably have," he responded, adding that he knows of 127 projects currently in development, including wallets, DEXes, and NFT Marketplaces.
The DeFi Alliance, a group of developers attempting to define standards and best practices in the spirit of "cooperative competitiveness," is guiding the network's future. We can't entirely let Cardano off the hook here. They mostly missed out on the $100 billion DeFi sector's expansion this year, but there appear to be some catalysts on the horizon.
What's in the future for Cardano?
The Alonzo Hard Fork gave the Cardano blockchain some much-needed functionality. It finally lets developers employ Smart contracts to build on the network. Plutus, a programming language comparable to Haskell but built expressly for Cardano, is used in these contracts. It's currently known as a functional programming language.
During one of his live sessions during the holiday season, Charles Hoskinson discussed the upcoming hard fork combinator event in February, which will bring several improvements to the Plutus programming language on Cardano, which will make it much easier for light wallet developers to integrate dApp stores, allowing developers to expand the DeFi ecosystem on Cardano even further.
But what excites me the most about this improvement is the possibility for interoperability. According to Hoskinson, complete Ethereum interoperability will be pushed on the main net in the second half of 2022.
This would connect Cardano to the enormous Ethereum ecosystem while still letting users benefit from Cardano's low fees. And this would coincide with the Voltaire hard fork, which we expect to happen around June. Voltaire will be focused on governance, allowing Cardano and its community to create suggestions and then vote on them as a community.
Transaction fees are one illustration of this in practice. Assume that people begin to believe that Cardano fees should be reduced. We may make that decision and vote on it as a community to impose lower network fees. This is accomplished through a technique known as Cardano Improvement Proposals or CIPs. CIPs may be divided into three categories, according to Cardano.org.
First is Standards Track CIP. These may be thought of as significant modifications that could have an impact on the network protocol or system compatibility. The second is a Process CIP. This might suggest a modification to a Cardano process or event.
This resembles a series of minor adjustments. It might be a development method, guideline, or tool. Finally, there are Informational CIPs. for example, Design concerns or general rules, might be addressed without necessarily introducing new functionality.
All of this implies that the network is getting closer to being a truly decentralized environment, which has been Cardano's objective since the beginning. It's also worth noting that if you want to engage further in the Cardano network, you need to stake your ADA. This not only benefits Cardano but also generates passive money that is sent straight into your wallet.
Why is Africa so crucial to Cardano's expansion strategy in 2022?
Another important component of Hosk's announcement was his commitment to continue working to deliver financing to Africa's underbanked and unbanked countries. Last year, Hosk and the lads went on a trip to six nations.
They presented methods to aid African enterprises that require funding outside of the regular banking system during that visit. The African banking sector is in a state of disarray. It's one of the world's worst and most predatory banking systems. As a result, the idea is to allow these people to bypass traditional banking and move straight to Web3 banking solutions.
The absence of regulations and transparency is a concern in many of these nations. As a result, predatory services emerge, complete with security hazards and interest rates that make Scott Tucker blush. What matters most in these nations is capital availability.
This is the key to a thriving economy, and in my opinion, one of the most intriguing use cases for cryptocurrency in general. Getting funding to these countries is quite exciting. In the future, I envision Cardano forming more and more government relationships.
Partnerships like the one they struck with Ethiopia to develop and deliver a blockchain-based student identification system for more than 5 million kids. With, if you think about it, the combination of cryptography and governments seems like an oxymoron or like a match that would never happen.
Owing to Cardano's philosophy of engineering and safety to the Nth degree, a mentality that has actually damaged them in recent months due to the complexity of their systems, Cardano is likely to be the number one pick.
As a result, it's a fascinating thought experiment. Who wins in the long run, the first movers who can grow a user base that they then try to defend in the long run as other projects emerge and build better and better systems, or the slow but careful movers who measure twice, cut once, plotting along, making sure everything is perfect at the expense of losing potential users in the short run in order to have the best possible product in the long run? If we go back in history, we may see examples of both sorts of people winning.
Gillette Razors is an example of a firm that was a pioneer and has remained successful throughout time. They invented the safety razor in 1903 and enjoyed a monopoly on the razor business for almost a century.
On the other hand, there's Xerox, which makes fax machines, and Netscape, which makes an Internet browser. Both of these firms were first to market, gaining significant market share before succumbing to competition.
So I went looking for additional information on this, and I came across an article in the Harvard Business Review about whether it's feasible to predict if a first mover will win in the long run. And it turned out to be really enlightening.
As a result, they stated that the first-mover advantage is maintained in three ways. First, gaining a technological advantage over competitors, second, removing scarce assets that competitors require, and third, establishing a client base that would find switching to a competitor particularly costly or unpleasant.
Now, if we compare Ethereum to Cardano based on these three characteristics, we may have a clearer insight into the future.
Does Ethereum have a technological advantage?
Yes and no, in my opinion. Although Cardano is more efficient, Ethereum is currently simpler to develop on. Is Ethereum robbing Cardano of its limited assets? I would suggest that the answer is most likely no. I would think that switching from Ethereum to another network is not at all expensive for users.
So, based on these factors, it's difficult to say that Ethereum's advantage is unshakeable, but will Cardano emerge victoriously? I wish I had the ability to tell you. There are a lot of fascinating layer-1 projects out there right now. However, the essential point is that the tides may change, and Ethereum may not remain number one indefinitely.
And, if the Harvard Business Review is to be believed, it won't stay that way indefinitely. So, adding on this, HBS looks at which markets are most likely to have a first-mover, allowing them to keep their top spot. And the explanation is that when the seas are quiet, the winners keep the course.
This means that in companies where technology does not evolve fast, the CEO is more likely to stay ahead of the game. And one of the worst industries for maintaining the top spot? According to HBS, sectors that adapt quickly have the greatest chance of dethroning the emperor.
So, looking at the crypto market, I'm not sure there's a faster-moving industry. The landscape is completely different now than it was even a year ago, or even six months ago.
My Thoughts From All of this
On Ethereum, I have a sneaking suspicion that there is a ticking clock. It will be difficult for them to be number one in the long run if they do not enhance their fees and technology fast. If Cardano can get dApps and usability up and running quickly, I believe they'll be a serious contender. But, as I have stated, the competition is fierce right now. We must be realistic in our expectations of ourselves.
So what else is in store for Cardano?
As I have stated, there will be two significant hard fork occurrences in the coming year. It will be the first time in Cardano's history that the project undergoes two major transformations in the same year. The debut of Basho is scheduled for the first quarter of this year, with scalability solutions being the primary focus.
This is due to the fact that numerous DeFi protocols will go live at the same time, raising the possibility of network congestion and the need for additional scaling solutions. The establishment of side chains, or secondary blockchains that are linked and compatible with the Cardano main chain, is the primary answer here.
This work by offloading part of the work from the main network to be handled elsewhere, freeing up some of the capacity on the main network. Mithral is one of them, and it's named after a mythical metal from The Lord of the Rings. Mithral will eventually be utilized to make multi-signature transactions quicker and more efficient while keeping all of the main network's security characteristics.
Hydra is the name of a new sidechain solution. This one is quite exciting, and it could come out sooner than expected. It's a layer-2 scaling solution that seeks to increase Cardano network throughput while lowering latency at a low cost.
Isomorphic state channels are the idea that allows this to happen. Hydra heads are siblings of the ledger that have native assets, NFTs, protocols, and supported transaction speeds of 1000 per second. So, if Hydra grows to be a 1000-headed monster, we could witness 1 million transactions per second one day.
Bottomline
Now, I believe a lot of people like Cardano because of its philosophy, which is to try to do things correctly the first time, and it's quite evident that they aren't in a rush to beat all other projects to the punch, which is a strategy that will only reveal its rewards over time.
In any case, this is still an exciting time for the ecosystem and crypto in general, and it's crucial to remember that we're still in the early stages. Even in a few months, a lot may happen. At this moment, the only things we can be certain of are uncertainty and excitement. There will be a lot that happens, and we will see a lot of it.