Smart contracts are one of the most prominent highlights of the blockchain and web3 landscape. The digital agreements embedded in code can enable automatic enforcement of contracts without trusted intermediaries. Ethereum has been the favorite blockchain platform for smart contract development for quite a long time. With the arrival of new players like Cardano, smart contracts have to go through some innovative changes. The use of Cardano in smart contracts development has witnessed explosive growth in 2024. The number of smart contracts on the network increased by ten times in a year thereby showcasing proof of its growing capabilities to support different types of dApps. Let us learn about the role of Cardano in transforming conventional approaches for creation of smart contracts.
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Definition of Smart Contracts on Cardano
Smart contracts work differently on Cardano as the blockchain uses the UTXO or Unspent Transaction Output model. The smart contracts on Cardano help in validating the transfer of UTXOs locked in a contract’s address. Users can lock UTXOs at the address of their script and can spend the UTXOs only if the script supports the transaction. You can also describe Cardano smart contracts as simple programs or validator scripts that allow users to define custom logic. Each Cardano node executes the scripts automatically during transaction validation. One of the notable highlights of smart contracts on Cardano is immutability as you cannot change them after deploying on the blockchain.
Introducing New Changes in Smart Contract Design
One of the foremost highlights about smart contracts on Cardano is the fundamental change in their design. As the number of smart contracts on Cardano increased by a huge margin within a year, experts believed that it showed the maturity of the blockchain platform. Developers have praised Cardano for introducing better prospects for scalability, an energy-efficient consensus mechanism and robust security features. The exponential growth in smart contracts deployed on Cardano suggests that it has become a strong challenger in DeFi and dApp development.
You can notice the evolution of smart contracts with Cardano blockchain when you learn about their design. Smart contracts in Cardano have two distinct components, the on-chain and off-chain components. The on-chain component is the validator script or the code that defines the logic for the smart contract. The validator script helps in validation of each transaction containing value locked by the script and its compliance with contract rules. Cardano has created special tools and programming languages for creating validator scripts, thereby showcasing a completely different approach.
The off-chain component is also a script or an application that can help you in generating transactions that follow the contract rules. You can create the off-chain component in almost any language. It is important to know that smart contracts on Cardano have to depend on the datum associated with a UTXO. The contract uses the datum as a part of the contract instance ‘state’ in future transactions. Without any datum on the UTXO in a contract address, the UTXO will remain locked forever.
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Technical Aspects of the Smart Contracts on Cardano
Smart contracts are simple programs or pieces of code when you look at them from a theoretical perspective. In the case of Cardano, you may think that smart contracts are the validator scripts which specify rules that Cardano nodes will enforce when they validate transactions. The overview of smart contracts history will help you understand how Cardano has changed smart contracts with the validator scripts. You must know that the validator script has the permission to read the datum of the locked UTXO you want to move and the transaction context.
The special feature of validator script design in Cardano supports the development of some complex contracts. Another notable highlight in the technical aspects of smart contracts on Cardano is the information used as arguments in validator scripts. The validator scripts in Cardano use three pieces of information, such as datum, context and redeemer as arguments.
Datum represents the data associated with the output that will be locked by the script and it helps in carrying state.
Redeemer is the piece of data associated with the spending input and generally helps in providing an input from the spender to the script.
The context in validator scripts refers to the data which represents information about the spending transaction. It helps in making verifications about the approaches for sending an output.
The unique design of smart contracts on Cardano also provides the advantage of creating multi-step contract workflows. It represents a new phase in the transformation of smart contracts by adding more steps to the basic workflow. You can use multi-step contract workflows for creating contracts that need multiple steps. One of the examples of multi-step contract workflow involves a contract that needs three different people to agree on the authority to claim the value locked in an instance. With the facility of creating multi-step contracts, Cardano has definitely created a new milestone in the history of smart contracts.
Multiple Programming Languages for Smart Contracts on Cardano
Another way to determine the impact of Cardano on the evolutionary transformation of smart contracts involves an overview of smart contract programming languages on Cardano. The Cardano blockchain introduced support for smart contract development in 2021. Over time, Cardano evolved into a multi-functional environment and now supports the creation and deployment of smart contracts with different programming languages. You can find multiple answers to ‘What language does Cardano use for smart contracts?’ as Cardano uses five programming languages. The five programming languages for smart contracts showcase the efforts of Cardano in driving transformative changes for smart contract development.
Plutus is the ideal platform for the purpose of smart contract development and execution. It is a comprehensive platform for creating full applications that can interact with Cardano blockchain. Smart contracts written in Plutus include parts that run on the blockchain and the ones that run on user machine. Plutus draws inspiration from research in modern programming languages to offer a completely secure full-stack programming environment. The Plutus smart contract programming language uses Haskell as inspiration since it is one of the leading functional programming languages.
Plu-ts represent the Typescript-embedded smart contract programming language on Cardano. It also offers a transaction creation library to interact with smart contracts on Cardano.
The impact of Cardano in smart contracts programming also sheds light on the Aiken programming language. It is a programming language as well as a collection of tools that simplify the experience of smart contract developers. Aiken is useful for writing on-chain validator scripts only. You can think of Aiken as the programming language Solidity that helps you write smart contract logic.
OpShin is another notable name among the programming languages used for smart contract development on Cardano. You can use OpShin to create generic smart contracts on the Cardano blockchain. It is important to note that OpShin draws inspiration from the most popular programming language, Python.
You can understand the role of Cardano in the evolutionary transformation of smart contracts with an understanding of Marlowe. It is a domain-specific language tailored specifically for the domain of financial contracts. Developers can use Marlowe to create and execute financial contracts with the help of traditional coding approaches or through visualizations. Financial institutions can leverage Marlowe to create and implement custom applications for customers and clients. On top of it, the embedding of Marlowe in Haskell, JavaScript and Typescript offer the flexibility to choose different editors according to your skills and preferences.
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Parallels between Cardano Evolution and Smart Contract Evolution
The Goguen era in the roadmap of Cardano blockchain introduced smart contract functionality and allowed the development of dApps on Cardano. One of the biggest highlights of Goguen era that marks a huge highlight for the evolution of smart contracts is the introduction of Plutus. The smart contract development language introduced the advantages of functional programming in the domain of smart contract creation. Plutus not only marks a major milestone in the evolution of Cardano but also introduced support for on-chain and off-chain components in smart contract code.
Another smart contract programming language by Cardano, Marlowe, allows creation and implementation of financial contracts. The domain-specific language introduces the possibility of creating new smart contract programming languages that focus on specific domains. The best thing about Marlowe is that non-programmers can also use their domain knowledge to create smart contracts from scratch.
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Final Thoughts
The review of the design of Cardano smart contracts showcases that Cardano blockchain has moved one step ahead in smart contract evolution. First of all, you must note the presence of on-chain and off-chain components in smart contracts on Cardano. On the other hand, you must also notice that Cardano has introduced five different programming languages for smart contracts. The most noticeable programming languages for smart contracts on Cardano are Plutus and Marlowe. Plutus ensures support for on-chain and off-chain components in the smart contract code while Marlow allows non-programmers to create smart contracts. Learn more about Cardano development roadmap to discover unique insights on how Cardano has transformed smart contracts.
