Cardano Expanding Ecosystem With EVM-Compatible Sidechains

Cardano Expanding Ecosystem With EVM-Compatible Sidechains

Cardano is releasing a software toolkit later this month that will allow developers to build EVM-compatible sidechains to improve interoperability and decentralisation. Developers can choose their own consensus mechanism and other application specific features, while leveraging security offered by the Cardano network. 

Input Output Global (IOG), the company behind the development of Cardano (ADA) blockchain, is working on a software toolkit that will help build custom sidechains to make the Cardano ecosystem more decentralised and interoperable. A specialist team of engineers at the firm have already constructed a ‘proof-of-concept’ public testnet for an Ethereum Virtual Machine (EVM) compatible side chain that will be available to developers later this month.

A sidechain is a separate blockchain that runs independent of the mainnet, also known as the parent blockchain, but is connected to it by a two-way interoperable bridge. The networks are specifically designed to process transactions more efficiently on the mainnet, while having separate block parameters and consensus algorithms that rely on the security of the parent blockchain. For example, Polygon (MATIC) and Polkdadot (DOT) are sidechains that can process faster and cheaper transactions on the Ethereum blockchain.

According to IOG, the open-source toolkit will enable developers to leverage Cardano’s “industry-leading” security and infrastructure to build application-specific sidechains powered by consensus mechanisms of their choice. Cardano first demonstrated its EVM-compatible application at the IO ScotFest held in Edinburgh in November 2022. On January 12, the company released an official documentation for the software toolkit. 

Cardano’s toolkit is made up of three main components: Main chain Plutus scripts, a chain follower and the sidechain module. 

Main chain Plutus scripts are scripts that run on the Cardano mainnet to enable secure cross-chain transactions and token movements by utilising minting policies that support the sidechain’s native token. A chain follower will track data and events on the parent blockchain to govern the sidechain, and the sidechain module will interpret the mainnet’s data and implement necessary ledger adaptations to the sidechain. 

IOG claims its toolkit is designed to empower decentralised application (DApp) developers, stake pool operators (SPO) and DApp users by giving them the ability to move data and assets between the main chain and the custom sidechain; support various consensus mechanisms, ledger rules and scripting languages; secure launches and other small chains; and allow experiments, incubation and research for the networks. 

The project is part of Cardano’s Basho phase, which is focused on achieving increased scalability, programmability and interoperability for the blockchain ecosystem. IOG believes that the development of sidechains will pave the way for mass adoption of Cardano by enabling much higher throughput without compromising on decentralisation or security of the network. The company will release a public testnet for its EVM-compatible sidechain later this month allowing the Cardano community to deploy DApps, create smart contracts, and transfer tokens between testnets. 

However, the toolkit that is set to be released is not the final version, as IOG will continue to work on improving areas like token-bridge experience, rewards mechanisms for stake pool operators (SPO) and the security model for the sidechains. In preparation for the next step in its development, Cardano deployed a more basic version of an Ethereum-compatible sidechain for testing purposes in July 2022 before its blockchain was upgraded. 

Last September, Cardano underwent its most significant hard fork – the Vasil upgrade – which improved efficiency of deploying smart contracts on the protocol while enabling decentralised applications to run at lower costs. The upgrade also saw non-fungible tokens (NFT) released on the third-generation proof-of-stake (PoS) blockchain. 

At the time of writing, ADA, the native token of Cardano, is trading at $0.34 – up by 11.1% in the last 24 hours.

Also Check: Global Crypto Market Regains $1 Trillion Valuation As Bitcoin Crosses $20,000 Mark

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