Cardano Vocab to Know
ADA
ADA is the primary currency of the Cardano network. It is used for various purposes such as making transactions, interacting with decentralized applications (dApps), staking, and voting.
It is named after Ada Lovelace, the 19th-century mathematician who is recognized as the first computer programmer.
Lovelace
ADA can be divided into smaller units called Lovelaces, similar to how a dollar is divided into cents. One Lovelace is the smallest possible unit of ADA.
One ADA is equivalent to 1,000,000 Lovelace. Inversely, one Lovelace is equal to 0.000001 ADA.
Blockchain
Blockchain is a secure, digital ledger that records transactions and actions on the blockchain into tamper-proof blocks, creating an unalterable and transparent history. It is useful as a platform for cryptocurrencies, smart contracts, and important records.
Block
A block in a blockchain is like a timestamped witness statement, forever locked in place and connected to other blocks. Blocks are created by block-producing nodes called stake pools. The permanence of a block ensures everyone agrees on what happened and when.
Wallet
Blockchain wallets are software or a device that allows users to store, manage, and transact with digital assets. These assets can include various cryptocurrencies and NFTs. Wallets can be connected to use applications on the blockchain called dApps.
Node
A computer running blockchain software, verifying transactions and maintaining the network.
Ouroboros
Ouroboros is the set of rules, also known as the consensus mechanism, which determines functioning of the Cardano network. It determines which stake pools are chosen to create blocks and how the network reaches agreement. Ouroboros is an essential element of the security of Cardano.
Proof of stake
Proof of Stake (POS) is a consensus mechanism in blockchain networks where validators are chosen to create new blocks and validate transactions based on the amount of cryptocurrency they hold at stake, thus incentivizing network security and participation.
Staking
Staking involves delegating, or pointing your ADA to a stake pool you trust. This enhances the security of the network by making it more expensive for an malicious stake pool to gain sufficient stake to create compromised blocks. In return for this simple service, users staking ADA earn recurring rewards every epoch (5 days). On Cardano, staked ADA remains in the user's wallet and is not at risk when staking.
Stake Pool
A stake pool is a type of node that creates blocks and validates transactions on the Cardano blockchain. They are run by an individual or group and have a dedicated, always-on computer to do the computing. There are more than 3000 active stake pools currently. A stake pool's chances of minting a block increases in proportion to the amount of ADA delegated to them. When a block is minted, the stake pool receives some of the rewards and their delegates receive a portion of rewards.
Stake Pool Operator (SPO)
A stake pool operator is an individual or entity responsible for managing a stake pool on the Cardano Proof-of-Stake network. To have a successful pool they must find ways to attract delegators, and ensure the proper operation of the pool to mint blocks consistently and maximize rewards.
Epoch
An epoch in blockchain refers to a 5-day period during which network parameters remain constant. At the end of each epoch staking rewards are paid out and any pending network changes are enacted.
NFT
NFTs, or non-fungible tokens, are unique digital assets stored on a blockchain. They represent ownership or proof of authenticity of an item, such as digital art, collectible, or real world asset (RWA).
Native Currency
Native currencies are cryptocurrencies that is are built on Cardano. They might also be referred to as native assets, digital currencies, or tokens. They share the same ledger with ADA.
dApp
A dApp, or decentralized application, is a software application that operates on a decentralized network. They function based on the code in smart contracts and offer accessibility and equal service to all users.
DEX
A decentralized exchange (DEX) is a type of dApp that allows users to trade cryptocurrencies for each other.
Stablecoin
A stablecoin is a type of cryptocurrency designed that is pegged to a fiat currency. It allows users to hold and transact with digital versions of USD, Euro, and other state-backed currencies.
Governance
Cardano's on-chain governance empowers ADA holders to vote on proposals and steer the network's future. Cardano's governance focus makes it one of the most community-driven self-evolving blockchains.
Project Catalyst
Project Catalyst the world's largest on-chain innovation fund, empowers the Cardano community to propose, evaluate, and vote on impactful projects using their ADA, fostering innovation and shaping the blockchain's future through collective decisionmaking.
Smart Contracts
Smart contracts are digital agreements written into code. They execute automatically once the terms of the agreement are met.
Smart contracts enable people and businesses to execute financial agreements without the need for a middleman. It also allows for the creation of decentralized applications (dApps) that can disrupt traditional industries and empower users.
Plutus
Plutus is the original smart contract language of Cardano. Plutus is written using the functional language Haskell. It was the first programming language to allow for secure dApp development on Cardano. There are now many additional options for creating smart contracts such as Aiken, Opshin, and Plu-ts.
UTXO and eUTXO
Unspent Transaction Output (UTXO) is an accounting model used on some blockchains including Bitcoin. Cardano added to this model and created extended UTXO (eUTXO) which allows additional functionality. These models allow unique abilities such as many inputs and outputs to happen in a single transaction.
Self Sovereign Identity (SSI)
Digital identity solutions allows users to self-manage their identities without depending on third-party providers to secure their data. Credentials and personal info are secured on the blockchain and users have greater autonomy over their personal data.
Web3
Web3 is the union of the internet and blockchain tech. It gives users direct ownership of content, data, identity, and value on the internet in ways that they did not have before blockchain.
On-Chain
On-Chain actions are actions that takes place on the blockchain. Because they are executed on the blockchain and stored in blocks, on-chain actions are permanent, transparent, and verifiable.