A Definitive Guide to Understanding Cardano Smart Contracts

Published : Jan 16, 2023

Cardano Smart Contracts

  • The world of blockchain is witnessing tremendous growth in terms of technologies. Traditionally, Bitcoin and Ethereum were the major blockchain networks. However, both of them faced scalability and speed issues. To address these challenges, new blockchain platforms are emerging now and then. One such platform is Cardano which tackles the problem of older networks. It is becoming popular due to Cardano smart contracts development that gives high security and sustainability advantages. Learn more about these self-executing programs with this blog.

    Understanding Cardano Blockchain 

    Firstly, a basic understanding of the Cardano blockchain is crucial to learn about its smart contracts. 

    Cardano is an open-source, public blockchain network that enables peer-to-peer transactions with its native cryptocurrency, ADA. The network aims to tackle the scalability, sustainability, and interoperability of other blockchain platforms. Popular blockchain networks are facing issues like slow network speed and high transaction fees. Cardano tackles these problems by adopting the following characteristics: 

    Layered Architecture

    Cardano blockchain has the following two layers:

    • The Cardano Settlement Layer (CSL) for transaction processing
    • The Cardano Computational Layer (CCL) – for deploying Cardano smart contracts and governing the network.

    These two layers of Cardano can seamlessly interoperate with each other. Moreover, they can separately perform their functions. So, this layer-wise division of the activities increases the efficiency of the platform. As a result, Cardano can handle transactions and compute smart contracts at the same time.

    Cardano Smart Contract

    Cardano smart contracts are self-executing programs that act as digital agreements between two or more parties. When a party fulfills the prerequisite conditions of the program, it executes the outputs. Cardano blockchain will save the record of all these outputs. No one can tamper with Cardano smart contracts since they lay on a decentralized network. Like other smart contracts, Cardano smart contracts are also immutable as you cannot make any changes after their deployment.

    Cardano Smart Contract Programming Languages

    Cardano smart contract development uses two programming languages. Marlowe and Plutus are the two languages used to build Cardano smart contracts.

    Marlowe is a DSL (domain-specific language) that lets users design financial contracts for blockchain application development. It enhances security and guarantees termination as compared to a Turning-complete language. 

    Plutus is a platform of the Cardano blockchain that lets you write smart contracts. Additionally, the platform supports basic multi-signature scripts.

    Why Choose Cardano Smart Contract for Blockchain Solutions

    The following are the advantages of selecting Cardano smart contracts for your blockchain solutions:

    Programming Language Support

    Marlowe lets developers build smart contracts specific to the financial sector. This feature makes it simple for anyone to write and read Cardano smart contracts. Even if people do not have any developing experience, still they can easily understand this language.

    Plutus is a powerful and secure programming platform to develop Cardano smart contracts. Here, developers can use the Plutus Core programming language, based on Haskell, to create smart contracts.

    Vasil Hard Fork

    Cardano's Vasil hard fork strengthens the capabilities and improves the functionalities of Cardano smart contracts. It enables better data processing and thereby increases the developers' experience. 

    In addition to enhancing the Cardano network for every user, the Vasil hard fork also enhances the development environment for Cardano developers that utilize Plutus for decentralized application development.

    Ouroboros Consensus Mechanism

    Cardano blockchain uses a unique proof-of-stake (PoS) consensus mechanism called Ouroboros. Cardano claims that this protocol is the first peer-reviewed and verifiably secure consensus mechanism. In comparison to proof-of-work (PoW), Ouroboros only uses a fraction of the energy cost. Apart from being, cost-effective, this protocol is also energy efficient and scalable. Ouroboros guarantees its integrity and performance by applying combinatorics, cryptography, and mathematical game theory.

    In Ouroboros consensus, network participants do not mine tokens. Instead, the protocol uses staking as a block-validation process. Users have to stake their ADA tokens to validate a transaction in the network. After an epoch (a period), Ouroboros selects the set of validators.

    Low Gas Fees and High Transaction Speed

    Cardano blockchain charges low gas fees, about 0.16-0.17 ADA. Also, it provides a high transaction speed of 250 transactions per second (TPS). This speed is directly proportional to the execution speed of Cardano smart contracts. So, higher transaction speed leads to the quick execution of smart contracts. Since the TPS of Cardano is more than traditional blockchain networks, Cardano smart contract becomes a better option than the rest. 

    Also, Read | A Guide to Ensuring Smart Contract Security

    Cardano Smart Contract Use Cases


    You can use Cardano smart contracts in various ways in the legal industry. For instance, a chain of custody, conceptual property rights, land registry, financial settlements, and more. These programs make the execution process quicker. Since it requires fewer intermediaries, they give you a security guarantee. 


    You can use Cardano smart contracts in games as well. Players do not need to undergo paperwork to join an eSports team. Cardano may help in increasing customer engagement by offering personalized gaming solutions. A Cardano smart contract has data related to the eSports team. It may include the total time played, the number of matches won, the scores gained, and more.


    Cardano smart contract development can easily automate the mortgage system and streamline the real estate process. They properly execute financial transactions simplifying the process for lenders and borrowers. 

    Supply Chain Tracking

    Cardano smart contract solutions make the tracing and verification of products in the supply chain transparent. You can also use them for releasing payments and recording ledger entries. 

    Cross-Border Payments

    Cross-border payments through banks require two transactions between two banking systems. Cardano can overcome this problem with a letter of credit (LoC) that smoothen international payments. They enhance the liquidity of financial assets. 

    Verification of Credentials and Identity

    Cardano smart contracts can aid in the authentication of credentials and identity more cost-effectively and efficiently than traditional systems.

    Also, Read | Emerging Use Cases of Smart Contracts on Blockchain Technology

    Looking for a Cardano Smart Contract Development Service Provider

    Cardano smart contract solutions give numerous benefits in various sectors. They offer reliable blockchain solutions for your projects. If you want to start your blockchain journey, then contact our smart contract developers to avail of our development services.

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