Cardano’s Next Upgrade to Introduce Smart Contract Support

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In Brief
  • Cardano’s next upgrade Alonzo will introduce smart contract support to the blockchain.

  • Alonzo will use the Plutus platform to establish the infrastructure and tools for smart contract development.

  • Plutus will enable more complex minting policies for NFTs, increasing their growth on Cardano.

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Cardano’s next upgrade Alonzo will introduce smart contract support to the blockchain. Alonzo will use the Plutus platform to establish the infrastructure and tools for smart contract development.



Last week, Cardano (ADA) founder Charles Hoskinson laid out the roadmap for his blockchain’s development until 2025. He mentioned that with the final Voltaire update, the Cardano ecosystem would operate as a self-sufficient system.

Before that happens, several steps need to take place first. The next update expected is the Alonzo upgrade. This will introduce smart contract support to the blockchain.



The Plutus platform

In an IOHK blog post, the development of Alonzo was described utilizing the Plutus platform. The platform will provide a native smart contract language for the Cardano blockchain.

According to the post, Plutus requires understanding three concepts. The first is the Extended UTXO. Next is the Plutus Core, the on-chain part of Plutus. Finally, there is the Plutus Application Framework (PAF). PAF is the off-chain part of Plutus that enables interaction with smart contracts. 

Like Bitcoin (BTC), Cardano uses the unspent (U) transaction (TX) output (O) accounting model (UTXO). According to the post:

“EUTXO extends the UTXO model by allowing output addresses to contain complex logic to decide which transactions can unlock them, and by adding custom data to all outputs.”

This way, the validity of a transaction can be checked off-chain, before the transaction is sent to the blockchain.

To implement EUTXO, it is necessary to clearly define the terms script and data, which is what Plutus Core provides. Plutus Core scripts will be executed by nodes during transaction validation “live” on the chain.

However, the writer of a Plutus application also needs to consider the off-chain part that builds and submits transactions. PAF then provides easy access to services Plutus applications commonly use.

NFTs on Cardano

The content of the post is rather technical. However, it did give an example of what these components will be able to enable for Cardano. The Mary hard fork introduced in February, introduced native tokens to the blockchain. Theoretically, users can now make NFTs on Cardano, albeit rather awkwardly.

With the deployment of the Plutus platform, users will ostensibly be able to write minting policies. As the post explains, “during minting or burning, the Plutus Core policy script will be executed in the context of the minting or burning transaction, and the script will have to approve or forbid the action.”

By creating more complex minting policies, this should apparently further the growth of NFTs on Cardano. 


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Nick is a data scientist who teaches economics and communication in Budapest, Hungary, where he received a BA in Political Science and Economics and an MSc in Business Analytics from CEU. He has been writing about cryptocurrency and blockchain technology since 2018, and is intrigued by its potential economic and political usage. He can best be described as an optimistic center-left skeptic.

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