Cardano Alonzo Hard Fork: What Does the Upgrade Bring?

Cardano’s Alonzo upgrade brings the network closer to its full capabilities. Cardano is thus preparing to enter the decentralized application space as soon as the smart contracts are introduced. The following takes a closer look at which other functions and news the Cardano Alonzo Hard Fork brings.

Implementation of Smart Contract Functionality

The Alonzo hard fork is an important upgrade to the Cardano network that provides for the long-awaited implementation of smart contract functionality. Smart contracts are pieces of computer code that are executed automatically as soon as certain predefined conditions are met. After the Alonzo update, anyone can create and deploy their own smart contracts on the Cardano blockchain, paving the way for native decentralized applications (dapps).

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The Alonzo system update, which is expected to be fully rolled out in the third quarter, marks the end of Cardano’s Shelley era and the beginning of the Goguen phase. Although there is no fixed date for the end of the Alonzo Hard Fork, developers across the network have been working hard on testnets and adhering to a defined roadmap with specific milestones.

The Epochs of Cardano at a Glance

The Cardano development roadmap is divided into five main phases or “eras”, each focusing on expanding the functionality of the network.

• Byron: Establishment of Cardano’s foundation code, allowing users to exchange the cryptocurrency ADA, named after the revolutionary programmer Ada Lovelace, and mine it with its Proof-of-Stake consensus algorithm.
• Shelley: Focuses on decentralizing the network and ensuring that the nodes or individual computers are operated by a heterogeneous group of network participants and not by a small, centralized group of users.
• Goguen: This phase introduces smart contract capabilities to the network, allowing developers to build decentralized applications on Cardano
• Basho: Improves the underlying performance of the Cardano network to be able to process more transactions. This era also introduces sidechains, which allow a network to scale with multiple blockchains.
• Voltaire: Adds a treasury system for self-sustaining governance. Users can stake their funds to influence the future development of the network.

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Phases of Alonzo at a Glance

The Alonzo hard fork is divided into three color-coded main phases: Blue, White and Purple. Each phase essentially adds more users to the testnet and identifies bugs that may need to be fixed:

• In the Blue phase, invalidation errors and other simple fixes were found and optimized.
• In the White phase, more features were added and the capabilities of the network were tested.
• Subsequently, a fully public testnet and thousands of participants are included in the network in the Purple phase. By the end of this phase, more complex smart contracts are also to be enabled within the Cardano network.

Final Phase of the Shelley Era

Cardano is currently in the final phase of the Shelley era. This development phase added a variety of new features to Cardano. Since its introduction on July 29, 2020, Shelley has introduced two major hard forks: Allegra and Mary.

• Allegra introduced a token lock mechanism that allows users to lock Cardano tokens in preparation for on-chain voting.
• Mary, on the other hand, introduced token support for Cardano’s Native Tokens (CNTs). These native tokens are similar to Ethereum’s ERC token standards and allow users to create and deploy their own tokens on the Cardano blockchain, including non-fungible tokens (NFTs).

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Cardano works with its own “Hard Fork Combinator” – a system that combines two different protocols (like Byron and Shelley) into a single ledger to ensure a smooth transition between phases.

Background: The Cardano developers noticed with hard forks the problem that after the agreement on a hard fork there would still be a considerable part of the community that did not switch to the new version. This may be because they disagree with the changes or simply because they have not bothered to upgrade.

In both cases, the Combinator allows nodes to run multiple versions simultaneously, meaning that transitions are seamless and updates are smooth.

New: Dapps in the Cardano Network

The Goguen era following Shelley, named after the famous computer scientist Joseph Goguen, will for the first time enable the development of Dapps in the Cardano network due to the new smart contract functions of Alonzo. Smart contracts are the essential components of Dapps that enable them to operate without intermediary entities.

In this phase, a smart contract creation platform called The Plutus Platform is to be released, which will enable both technical and non-technical users to create Dapps.

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Plutus uses the native Cardano programming language Haskell. Plutus and Haskell use the same code base for off- and on-chain development. This means that the coding is identical at its core, so there will be no complications with programming languages when developing smart contracts. In the blockchain sector, the code often does not fully correspond to the developer’s intention and as a result, e.g. faulty apps or crypto hacks worth millions occur.

With Haskell, the intention can better match the code, because the language, although complex, is designed for precision. For less technical enthusiasts, there is Marlowe, a new domain-specific language that allows any user to create and test their own smart contracts without requiring advanced programming functions.

Growing Projects and Opportunities of the Network

With simpler smart contract production and further development on Cardano, the potential projects and opportunities of the network are also growing. For example, hundreds of Ethereum projects could be redeployed, repeated and even improved in the Cardano network. Projects that require faster transaction speeds will greatly benefit from the low transaction costs on Cardano. Together with Alonzo, more than 65 projects are already scheduled to be released, including Synthesis, Miniswap, Stasis and CardWallet.

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The emergence of simpler Dapp-Building will bring more projects that will eventually compete with many real financial institutions, aiming to replace them with fairer systems and grant their users economic freedom.

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