Charles Hoskinson, the founder of Cardano (ADA -1.49%), announced that the Cardano blockchain will be releasing a series of upgrades that will go live by the end of June.
Known as the Vasil hard fork, the updates are meant to increase network capacity, thereby increasing transaction speeds and lowering fees. It will also create new smart contract capabilities and other general upgrades to support further development of decentralized finance (DeFi) applications.
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Since smart contracts were introduced onto the Cardano blockchain in September, it has seen explosive growth. The release of smart contracts allowed developers to build new DeFi applications like decentralized exchanges (DEXes), non-fungible token (NFT) marketplaces, and even a metaverse space. However, the higher traffic on the blockchain has meant increased fees and lower speeds.
A new scaling solution
The underlying technology of the Vasil hard fork is known as diffusion pipelining.
Diffusion pipelining is a type of scaling solution that will streamline the process known as block propagation. In order for transactions to be verified on a blockchain, nodes must be in agreement with each other. When nodes are in agreement, transactions within those blocks are successfully verified.
Currently, there's a series of defined steps that have to occur as a block moves through the Cardano blockchain. The process is rigid and takes additional time. And in the world of blockchains, time is money.
Diffusion pipelining will enable some of these steps to be combined and occur simultaneously. Before diffusion pipelining, nodes would have to wait on each other to complete each specified task. Soon, nodes will be able complete some of the work before the block actually arrives. As blocks move faster, fees go down.
Cardano's smart contracts will also get a facelift. As a part of the Vasil hard fork, a series of improvement proposals will be implemented revamping data storage, simplifying scripts that automate processes, and reducing the size of scripts so that smart contracts are more efficient.
Right on time
Cardano has seen exponential growth since smart contracts were integrated into the blockchain.
Since the beginning of 2022, the number of smart contracts on Cardano's blockchain has increased by nearly 300%.
As a result of all the new development and traffic on the network, the total value locked (TVL), a metric used to measure how much money is in a blockchain ecosystem, hit an all-time high in late March of nearly $325 million. At the beginning of the year, the TVL of Cardano wasn't even above $1 million.
A bit of perspective
Cardano is in a unique position at the moment. Like many other cryptocurrencies, it has plummeted this year. Indeed, it has been losing ground sharply since hitting an all-time high of $3.10 in September. Despite trading for less than $0.50 at the moment, the Cardano blockchain has continued to develop. This type of progress is exactly what investors should look for.
Cardano has a defined vision. Although milestones are sometimes accomplished slowly, they are still accomplished. Other Layer 1 smart contract blockchains such as Ethereum, currently rely on Layer 2 scaling solutions, like Polygon, to keep fees low and speeds fast. This Vasil hard fork removes this need for a Layer 2 and helps move Cardano toward its eventual goal of becoming the world's most popular smart contract Layer 1 blockchain.
With the current uptick in use and new updates to be unveiled, Cardano is positioned to grab more market share as developers begin to build new applications on the platform. More development is how blockchains grow in value. It wouldn't be surprising if this momentum lifted Cardano back to higher prices before many other smart contract blockchains.
If Cardano could hit an all-time high when smart contracts weren't even available on its blockchain, imagine where it could go with all of the new functionality and development.
