Genius Articles

What is Cardano’s Vasil hard fork upgrade, and what does it mean for ADA? | Genius Academy

Written by Guneet Kaur | Sep 22, 2022 7:16:30 PM

The ADA coin powers the open-source Cardano blockchain platform, which is used to host decentralized systems and applications worldwide. Charles Hoskinson launched the Cardano ecosystem in 2015, after co-founding Ethereum. 


In September 2021, the Cardano Foundation successfully launched the Alonzo Hard Fork, enabling smart contracts. Moving forward in the Basho Era and are now releasing the Vasil Hard Fork.


The Cardano Foundation wanted to exercise prudence and conduct all necessary tests before releasing the Vasil hard fork upgrade, which was initially scheduled to go live in late June 2022 via the Vasil Hard Fork Combinator (HFC) event.


This article will discuss the Vasil hard fork upgrade and its impact on Cardano.

 

What is the purpose of Cardano’s hard fork?

Usually, when blockchain network users split the chain, two different networks or protocols are created, and a process is known as a hard fork. However, this is not true for Cardano, the hard Fork Combinator makes the new protocol compatible with the old one. The Cardano hard fork is more of an update and intends to enhance Web3 developers' ability to create decentralized applications (dApps) on the Cardano blockchain and significantly increase network scalability. That said, Cardano’s hard fork is different from ETH-ETC or BTC-BCH forks in that the only requirement for a hard fork is the number of nodes updating. If the threshold is met, Cardano “hard forks.”


Plutus, Cardano's smart contract platform, will also be updated in this release. In addition, developers can create more robust and effective blockchain-based apps thanks to these developments. In the words of Charles Hoskinson, "The Vasil hard fork was the hardest update we've ever had to do."


Vasil St. Dabov, a respected member of the Bulgarian community who served as the Cardano Chief Blockchain Advisor until passing away in December 2021, is honored by having the upgrade bear his name. Also, coincidently, 22nd September marks the independence day of Bulgaria.

 

Upcoming changes to Cardano via the Vasil hard fork upgrade

The Vasil hard fork will bring about the following significant network upgrades:

 

Crypto primitives

Cardano uses crypto primitives as the foundation for other, more sophisticated functionalities. With this release, various adjustments have been made to the Verifiable Random Function's (VRF) timetable for selecting the next block's minter. Cardano will only need to use it once per network hop in the future, enhancing efficiency and synchronization time without compromising security.

 

Plutus Version 2.0

Plutus 2.0 has been launched and features upgrades in the following four crucial areas:

  • Reference scripts CIP-33: The HFC event will implement an improvement proposal to see reference scripts attached to outputs. The same scripts will also be referred to during transaction validation rather than requiring the spending transaction to do so. With this enhancement, pre-recorded scripts that can be referred to by other transactions are now possible on-chain. The transaction size will be reduced as a result, making it simpler for other transactions to refer to it.

  • Reference inputs CIP-31: A reference input is a transaction input linked to a specific transaction output as normal. However, rather than spending the output, it only references it. This enhancement enables script input to be referenced without being consumed, enhancing concurrency by allowing several scripts to access the same input.

  • Inline datums CIP-32: Datums are pieces of information attached to outputs. However, presently in Cardano, what’s attached are hashes of Datums with further demands that the transaction provides the actual datum, inconveniencing users. By eliminating the requirement for hashes, this enhancement will make the process of referencing inputs simpler.

  • Redeemers in transaction information: Scripts will be able to cooperate by employing common redeemers as a result of this improvement.

 

The table below summarizes the improvements:

* The results are gained from currently deployed mainnet using the node v.1.34.1.

** The results are gained from testing Vasil functionality on the preview testnet using the node 1.35.3.

Source: Twitter

 

Script collateral

A two-step validation procedure will start when a Plutus Smart contract is executed. The script is run offline in the first stage before being run on-chain in the second. However, users must include a charge to pay the cost of executing the script because scripts cannot execute on-chain without collateral. The collateral will be forfeited if the script cannot be executed. With the new enhancement, a failing script will only lose the minimum amount of collateral and not the entire amount put forth as a safety net.

 

Diffusion pipelining

There has been a considerable spike in user activity since Cardano's smart contracts via the Alonzo hard fork were enabled in September last year. Average transaction sizes increased concurrently as a result of code-carrying script transactions. Cardano seeks to use diffusion pipelining to boost the system's existing transaction throughput in order to meet this increased demand.


Block propagation durations are accelerated via diffusion pipelining, which further increases throughput. In essence, it simplifies the procedure for communicating details about recently produced blocks among network users. Blocks should be able to be shared (propagated) throughout the network within five seconds of being created, according to this upgrade. Diffusion pipelining does this by propagating blocks before their complete validation, thereby combining the time required for diffusion with that required for validation.


Additionally, pipelining ensures that the propagation of the block header that references the hash of a preceding block is accurate. Even without full block confirmation, the information in the following block includes the block's body, which is crucial for DDoS assault resistance. Diffusion pipelining creates significant room for block size expansion and Plutus script upgrades, making the whole environment more scalable.

 

Will the Vasil upgrade affect ADA price?

Input Output Hong Kong (IOHK), the company that created Cardano, posted an update on Twitter on Wednesday stating that 13 cryptocurrency exchanges, representing more than 87% of Cardano's (ADA) liquidity, had certified their readiness for the hard fork within the previous 48 hours. All three criteria required to deploy the eagerly anticipated Vasil upgrade have been satisfied, with less than 24 hours left in the countdown for Cardano's most ambitious upgrade.


According to market intelligence platform Santiment, social media talk about ADA has increased by 35.16% over the past seven days starting Monday due to news of the upgrade, coming in third after Ripple and Ethereum. Despite this optimism, Cardano will need to gain momentum over the coming days. Before entering or leaving the market, investors should analyze their risk-return portfolio. As Cardano is one of the strongest competitors in the fight for layer-1 scaling solutions, its increased scalability, and cheap cost may ultimately prove to be a significant crypto asset in the future.

 

Disclaimer:

The article should not be construed as a financial recommendation for any particular cryptocurrency. The cryptocurrency market is full of unexpected twists and overvalued assets. So before you buy something, do your own research.