Cardano will launch its Alonzo hardfork on September 12, but there are questions about what the ecosystem will look like once smart contracts launch. What will happen in Cardano after Alonzo is launched? Cardano’s DeFi ecosystem can only thrive in a few months after the Alonzo hardfork. Cryptocoin. com we are looking for the answer to this question.
Cardano after Alonzo
According to various sources, functional Plutus dApps such as decentralized exchanges will not be ready to go live immediately after Alonzo’s launch. Several projects at Cardano say they are still developing scaling solutions to solve the concurrency problems of blockchain. Cardano’s Alonzo hardfork, which brings smart contract functionality to the network, will be released on September 12. However, it may take several months for DeFi to arrive on the mainnet due to a lack of tools and concurrency issues. Several Cardano projects say they are developing scaling solutions that will allow it to run on the network.
Cardano will launch smart contracts this weekend as part of the long-awaited Alonzo update, but it may take months for DeFi protocols to start working on the network. On Tuesday, Input Output successfully submitted a proposal for the latest version of Cardano’s Alonzo update that will trigger the hardfork defragmenter. The offer was confirmation that Cardano’s core developers were ready to fork and upgrade the Alonzo Purple testnet on September 12. The event is highly anticipated among Cardano fans, especially as it will bring smart contracts written in the Plutus programming language to the Cardano mainnet.
Need some time
The upgrade sets the stage for decentralized applications known as dApps to be published on the network. Charles Hoskinson had previously stated that Cardano would become a hub for DeFi and NFTs, but it turned out that it will take some time before DeFi protocols go live on the network after Alonzo launches. According to Hoskinson and other sources affiliated with Cardano, functional Plutus dApps such as decentralized exchanges will be added at a later stage. Decentralized exchanges, also known as DEXs, are a critical component of DeFi. One of the main reasons for the delay is Cardano’s EUTXO-based protocol design, which presents scaling issues for dApps.
The decentralized exchange Minswap launched on the testnet last week and immediately ran into problems. Users were unable to swap due to a transaction bottleneck and the project had to shut down the testnet. It is thought that other dApps may experience similar problems. Three key dApps built on Cardano, Sundaeswap, Maladex and OccamFi, he said, are conceptualizing solutions that can overcome the challenges posed by Cardano’s EUTXO model. A variety of scaling solutions have been proposed, from aggregation of multiple transactions to Layer 2 protocols and side-chains. However, there seems to be a delay between the release of the Alonzo mainnet and the launch of such solutions.
Types of problems
Even Cardano’s founder said in a video stream Wednesday that there are many “open questions” about what the network will look like after the hardfork. “Templates, genealogies, and dApps should be created like any other ecosystem,” he told audiences. Apart from concurrency issues, Cardano does not yet offer a variety of wallets or tools for integrating dApps. They are expected to appear with the Plutus Application Backend updates, which will be released after Alonzo. In the same video stream, Hoskinson said the only dApps to be released on day one would be “a few toy smart contracts.”
Apart from a few simple dApps, Cardano users will be able to trade NFTs, which is currently one of the hottest niches in crypto. While the ecosystem is significantly smaller than those on competing networks like Solana and Ethereum, Cardano already has NFTs as they do not require smart contracts. Still, the Cardano community is optimistic for the coming months. Positive sentiment prevailed after Cardano invested in more than 160 projects through the Catalyst innovation fund. Cardano currently has a market cap of almost $80 billion, while the budget of the project also has over $1 billion to finance the development. Cardano appears to have the resources to build a rich ecosystem of DeFi apps – it just needs more time for that to happen.