Cardano’s Rumored Smart Contract Issues And Limitations Thoroughly Debunked

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Key Takeaways

  • Cardano smart contracts testnet faced challenges on launch of first decentralized exchange (DEX) application, MinSwap.
  • Problem has been attributed to Cardano’s novel eUTXO approach to smart contracts implementation that is facing concurrency issues.
  • Several solutions are claimed to have been arrived at. 
  • Supporters of Cardano counter criticisms of the blockchain and expect better outcomes in future.
  • Cardano continues with the planned public launch of smart contracts on September 12.

The Cardano (ADA) blockchain has come a long way in its journey to launching smart contract capabilities. The smart contracts platform which has been in the works for over 5 years launched its Alonzo testnet in August.

However, the launch of smart contract applications on the testnet has revealed some sticky challenges for the platform that have made it a subject for criticism.

The first decentralized finance application to launch on the testnet, MinSwap, ran into what it described as severe scaling issues that caused the developers behind it to announce that it would temporarily shut down to solve the problems. The outcome has raised concerns about Cardano’s capability to run smart contracts.

The source of the problem has been narrowed and identified to be emanating from the fact that Cardano’s smart contracts solution uses what is called the eUTXO protocol to implement smart contracts. eUTXO which stands for extended unspent transaction output is a novel solution arrived at by combining features of protocols used by both Bitcoin and Ethereum.

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Cardano sought to combine Bitcoin’s UTXO model with Ethereum’s ability to handle smart contracts into an Extended UTXO (EUTXO) accounting model. Cardano’s ledger model extends the UTXO model to support multi-assets and smart contracts without compromising the core advantages of a UTXO model.

However, the complaints have been that the model does not support concurrency which refers to the ability for multiple different agents to interact with the same smart contract at the same time. The Cardano team of developers has clarified that contrary to the opinion that initially made the rounds that Cardano’s smart contracts feature only allowed for one transaction per block, it handles multiple transactions very well.

Already, several DEX exchange developers that plan to launch on the Cardano blockchain have stated that they have found solutions to the problems encountered, although none have published their solution.

This is why several proponents have come to the defense of Cardano against their critics. Cryptocurrency firm Weiss Crypto has countered the popular media opinion that the platform was facing multiple scalability issues by stating that there are no scalability issues and there is nothing smart contracts platforms can do that Cardano cannot do.

They call the popular opinion on Cardano a “naive, disingenuous, or outright cynical” stance. This is because, with every novel approach, there are bound to be challenges as the industry still tries to figure out the way forward. For context, he stated that Ethereum took several years to achieve the same feat and was almost brought to its knees by the problems posed by smart contracts.

The firm however praised Cardano’s boldness in striking out from the norm and expects that while the launch date will not be too exciting, the future is bright for the blockchain.

Significantly, the challenges and criticisms have not deterred the network in any way. It is going along in a business as usual fashion and has announced that it will launch its public smart contracts testnet on September 12, bringing the much-anticipated upgrade to all users.