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Sep 2022

Cardano’s upgrade: What investors should know

by Lucas Santana, Research Analyst
2 min read
Sep 22, 2022

Cardano’s upgrade: What investors should know

In the wake of Ethereum’s successful transition to Proof-of-Stake last week, Cardano, the third largest smart contract platform by market capitalization, is set to go through a much anticipated upgrade today, September 22, the Vasil hard fork.

 

Figure 1: IOHK Blog, Vasil: what to expect, accessed September 22, 2022.

 

The mechanics of Vasil

 

Vasil implements a suite of improvements to the Cardano blockchain, enriching its smart contract capabilities, increasing the chain’s throughput, and reducing transaction costs, further improving Cardano’s scalability. This is possible due to the activation of a mechanism that simplifies the assignment of Proof-of-Stake operators to block production. This results in faster block validation and overall network syncing times without compromising security. In addition, Vasil introduces diffusion pipelining, which improves block propagation times by streamlining the process of sharing information among network participants. Plutus, Cardano’s scripting language, will also have its version 2 fully deployed, with new built-in functionalities that will reduce overall computational resources needed to execute code on the network. 

 

What this hard fork means for investors

 

Smart contract platforms are one of the strongest investment cases for crypto. Without these platforms, decentralized finance and NFT applications couldn’t exist. We believe this upgrade is a demonstration of the continued effort of alternative platforms to improve their infrastructure and move forward in their roadmaps, intensifying the competition among the major players in this space. After the rise of several Ethereum competitors in the last few years, it’s still disputable whether the future will be single-chain or multi-chain. Nonetheless, this kind of development reinforces the importance of having diversified exposure to crypto that takes into account the nuances of the smart contract sector. Ultimately, this will enable investors to capitalize on the growth in all ecosystems of decentralized applications.

 

For a detailed introduction to the underlying technology behind smart contracts and the investment case for this crypto sector, consider reading our Smart Contracts Primer.

 

 


 

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About Author
Lucas Santana,
Research Analyst
© 2022 Hashdex Asset Management Ltd.
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