{"id":12455,"date":"2024-09-06T06:52:43","date_gmt":"2024-09-06T06:52:43","guid":{"rendered":"https:\/\/www.btse.com\/blog\/?p=12455"},"modified":"2024-09-06T06:52:43","modified_gmt":"2024-09-06T06:52:43","slug":"cardanos-chang-hard-fork","status":"publish","type":"post","link":"https:\/\/www.btse.com\/blog\/cardanos-chang-hard-fork\/","title":{"rendered":"Implications of Cardano\u2019s Chang Hard Fork: Is ADA a Buy?"},"content":{"rendered":"

Cardano recently<\/span> marked<\/span><\/a> a significant milestone with the initiation of its first step for the \u201cVoltaire\u201d era with the Chang Hard Fork Upgrade that went live on September 1, 2024.\u00a0<\/span><\/span><\/p>\n

This upgrade is a highly-anticipated move that will finally bring in the final pieces of the decentralization puzzle for the Cardano<\/a> project. In case you missed it, here<\/a> is our deep dive on this token.<\/span><\/p>\n

But is Cardano (ADA<\/a>) a buy? The token is down 46% YTD and trading at October 2023 levels. To better understand what\u2019s going on, let\u2019s first recap what Cardano is and what the Chang Hard Fork entails.<\/span><\/p>\n

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Cardano Origins<\/b><\/span><\/h2>\n

Launched in 2017 by Input Output Hong Kong (IOHK), <\/span>Cardano<\/span><\/a> is a third-generation layer 1 blockchain system that utilizes the Ouroboros proof-of-stake protocol, and an extended UTXO model for smart contracts. Charles Hoskinson was a co-founder of Ethereum before branching out to start Cardano. It prides itself on being the first blockchain that was based on <\/span>scientific-backed research <\/span><\/a>that have been accepted at major cryptographic conferences.\u00a0<\/span><\/span><\/p>\n

As a recap, Cardano has previously went through four stages of previous hard forks; \u201cByron\u201d established the foundation, \u201cShelley\u201d introduced early stages of decentralization, \u201cGoguen\u201d added smart contract compatibility, and \u201cBasho\u201d enabled better scaling.\u00a0<\/span><\/p>\n

\u201c<\/span>Voltaire<\/span><\/a>\u201d is the final step of the current roadmap, with a focus on governance. The Hard Fork codename “Chang” is a<\/span> <\/span>tribute<\/span><\/a> to the late Phil Chang of Input | Output, who made significant contributions to Cardano\u2019s governance and plans for Voltaire.\u00a0<\/span><\/span><\/p>\n

Cardano emphasizes community involvement with various types of individuals: ADA holders, stake pool operators, developers, and more. Community-based interaction includes allowing stakeholders to vote on changes and fund projects, in this case through the <\/span>Project Catalyst Proposals<\/span><\/a> if one is an ADA holder.\u00a0<\/span><\/span><\/p>\n

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Cardano\u2019s Voltaire Stage<\/b><\/span><\/h2>\n

However, older Shelley governance designs have had their downsides, such as being unable to provide room for active on-chain participation of ADA holders, as explained <\/span>here<\/span><\/a>. Ultimately, while implemented changes to the Cardano chain have been influenced by discussions with selected community participants, the process has been mainly executed by founding entities.\u00a0<\/span><\/span><\/span><\/p>\n

This<\/span> upgrade<\/span><\/a> will be split into two stages; The initiation of the<\/span> <\/span>Conway Era<\/span><\/a>, aka Chang 1, is the first. Cardano calls this the \u201cbootstrapping\u201d stage, and releases the initial setup of decentralized governance features of <\/span>CIP-1694<\/span><\/a>. The Interim Constitutional Committee, or ICC, was introduced with on-chain veto voting power. Individuals will register to be<\/span><\/span> delegate representatives<\/span><\/a> (dReps) and campaign to be elected, and ADA holders will delegate their voting power to them.\u00a0<\/span><\/span><\/p>\n

The second stage, aka <\/span>Chang 2<\/span><\/a>, is to occur approximately 18 epochs (90 days) after the first stage, with estimates of possibly in <\/span>early 2025<\/span><\/a>. With the help of<\/span> Intersect<\/span><\/a>, a member-based organization for the Cardano ecosystem, they will oversee and facilitate self-governing initiatives for the ecosystem; all entities mentioned above can then vote on governance actions in this stage, with results concluding with treasury withdrawals.<\/span><\/span><\/p>\n

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Implications for Cardano Developers & Users<\/b><\/span><\/h2>\n

The next stage of decentralization for Cardano has arrived, with the <\/span>Genesis Keys<\/span><\/a> (cryptographic keys crucial in early stages of blockchain development) destroyed and original governing entities no longer in control; this upgrade introduces a new era of on-chain governance, enabling ADA token holders to directly influence network decisions.<\/span><\/span><\/p>\n

What makes this \u201cChang\u201d Hard Fork different, is that it provides a new governance model and introduces <\/span>PlutusV3<\/span><\/a>, which is a new ledger language with better performance, throughput, smart contract size, and platform capabilities for developers.\u00a0<\/span><\/span><\/p>\n

But perhaps most importantly, this new structure has the original founding entities relinquishing their power, and a new era is being ushered in, with any Cardano user being allowed to submit a proposal for governance action.\u00a0<\/span><\/p>\n

\u201cThis will mark the first step towards a minimum-viable community-run governance structure outlined in CIP-1694, meaning that the Cardano community will be responsible for maintaining and shaping the blockchain network\u201d,<\/span> <\/span>explained<\/span><\/a> Emurgo earlier in July.\u00a0<\/span><\/span><\/p>\n

Now, three user-driven governance bodies; Constitutional Committee, Delegate Representatives (dReps), and Stake Pool Operators (SPOs) will take charge of the decentralized ecosystem.\u00a0 In short, everyone can now be involved, with power in the hands of the many.<\/span><\/p>\n

Furthermore, the Chang Hard Fork upgrade includes <\/span>technical enhancements<\/span><\/a> aimed at boosting scalability, stability, and security. Stake pool operations will be improved with better management refined fee calculations. New primitives via Plutus3 will be introduced, which helps with ZKproofs, improved compatibility with the Ethereum chain, and more.\u00a0<\/span><\/span><\/p>\n

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Is Cardano (ADA) a Buy?<\/b><\/span><\/h2>\n

As ADA is currently down 46% YTD and trading at October 2023 levels, this could be a good opportunity to buy in for the long haul.\u00a0<\/span><\/p>\n

Hours<\/span><\/a> after the Chang Hard Fork initiation on September 1st, ADA rose by 2.45%, and surged 3.23% from its weekly low on September 2nd. This<\/span> <\/span>analyst<\/span><\/a> predicts a rally soon, based on a historical comparison of technical patterns, with another drawing <\/span>comparisons<\/span><\/a> with Solana trends.\u00a0<\/span><\/span><\/p>\n

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Quick Recap:<\/b><\/span><\/h2>\n