- Cardano (ADA) has been labeled a ‘green blockchain’ due to its significantly lower energy consumption and unique staking mechanism compared to other Layer-1 competitors.
- Cardano’s decentralized applications ecosystem has achieved significant milestones, including a net volume of locked funds exceeding 440 million ADA.
Cardano: The Eco-Friendly Blockchain
Cardano (ADA), currently the third-largest Layer-1 blockchain, has earned the title of a ‘green blockchain.’ This reputation has been bolstered by the developers from Input Output Global (IOG), who recently highlighted the environmental benefits of Cardano’s design.
Why have commentators in newspapers and investing blogs such as the Motley Fool called #Cardano the ‘green blockchain’?
Cardano has two clear advantages: far less energy consumption, and its staking mechanism.
— Input Output (@InputOutputHK) May 25, 2023
Cardano stands out in the field due to two primary reasons – its substantially lower energy consumption and innovative staking mechanism. These factors distinguish it from other Layer-1 blockchains, making it a more sustainable option. Cardano uses Proof-of-Stake (PoS) consensus mechanism, which is known to be more efficient than the traditional Proof-of-Work (PoW) consensus and its variants.
In a PoS-based system, block producers don’t have to expend large amounts of computational power and time finding cryptographic hashes, leading to a substantial decrease in carbon emissions and overall environmental impact. This advantage allows Cardano’s node software clients to operate even on low-cost devices like Raspberry Pi microcomputers, offering a stark contrast to PoW blockchains that necessitate expensive hardware and high energy consumption.
Cardano’s DeFi Ecosystem Makes Strides
Simultaneously, Cardano’s decentralized application (dApp) ecosystem has reached impressive milestones. For the first time, the total value of funds locked in the ecosystem has exceeded 440 million ADA. By the end of May 2023, five protocols had each surpassed the $10 million mark in equivalent funds locked on the Cardano blockchain.
These include Minswap and Wingriders DEXes, the Indigo and Djed Stablecoin collateralization modules, and the Liqwid lending/borrowing tool.
Moreover, the USD-denominated Total Value Locked (TVL) reached a local peak on May 24, 2023, surpassing $163 million, according to data from DeFiLlama. These developments point to a thriving ecosystem, with an increasing number of dApps focusing on “green development” practices, aligning with Cardano’s eco-friendly ethos.