Smart contracts are one of the highlights of the blockchain and web3 landscape. Digital agreements embedded in code can enable automatic execution of contracts without trusted intermediaries. Ethereum has long been the preferred blockchain platform for smart contract development. With the arrival of new players like Cardano, smart contracts must undergo innovative changes. The use of Cardano in smart contract development saw explosive growth in 2024. The number of smart contracts on the network increased tenfold in one year, demonstrating its growing ability to support different types of dApps. Let’s explore Cardano’s role in transforming conventional approaches to creating smart contracts.
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Definition of smart contracts on Cardano
Smart contracts work differently on Cardano because the blockchain uses the UTXO or Unspent Transaction Output model. Smart contracts on Cardano help validate the transfer of UTXOs locked in a contract’s address. Users can lock UTXOs to their script’s address and can only spend UTXOs if the script supports the transaction. You can also describe Cardano smart contracts as simple programs or validation scripts that allow users to define custom logic. Each Cardano node automatically runs the scripts upon transaction validation. One of the strengths of smart contracts on Cardano is immutability, as you cannot change them after deployment on the blockchain.
Introducing new changes in smart contract design
One of the strengths of smart contracts on Cardano is the fundamental change in their design. While the number of smart contracts on Cardano increased significantly in a year, experts believed this showed the maturity of the blockchain platform. Developers praised Cardano for introducing better scalability prospects, an energy-efficient consensus mechanism, and robust security features. The exponential growth of smart contracts deployed on Cardano suggests that it has become a major challenger in DeFi and dApp development.
You can notice the evolution of smart contracts with the Cardano blockchain when you learn about their design. Cardano smart contracts have two distinct components, on-chain and off-chain components. The on-chain component is the validator script or code that defines the logic of the smart contract. The validator script helps validate each transaction containing a value locked by the script and its compliance with the contract rules. Cardano has created special tools and programming languages to create validation scripts, presenting a completely different approach.
The off-chain component is also a script or application that can help you generate transactions that follow contract rules. You can create the off-chain component in almost any language. It is important to know that smart contracts on Cardano must depend on the data associated with a UTXO. The contract uses the data as part of the “state” of the contract instance in future transactions. Without any data about the UTXO in a contract address, the UTXO will remain locked forever.
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Technical aspects of smart contracts on Cardano
Smart contracts are simple programs or pieces of code when you look at them from a theoretical point of view. In the case of Cardano, you might think of smart contracts as validation scripts that specify the rules that Cardano nodes will apply when validating transactions. The smart contract history overview will help you understand how Cardano modified smart contracts with validator scripts. You should know that the validator script has permission to read the data of the locked UTXO that you want to move and the context of the transaction.
The unique design of validation scripts 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 the validator scripts. Cardano validation scripts use three pieces of information, such as data, context, and redeemer, as arguments.
The data represents the data associated with the output that will be locked by the script and it helps carry the state.
Redeemer is the data element associated with the spend entry and typically helps provide spender input to the script.
Context in validation scripts refers to data that represents information about the expense transaction. This helps in doing checks on approaches to sending output.
The unique design of smart contracts on Cardano also provides the benefit of creating multi-step contract workflows. It represents a new phase in smart contract transformation by adding additional steps to the basic workflow. You can use multi-step contract workflows to create contracts that require multiple steps. One example of a multi-step contract workflow involves a contract that requires three different people to agree on the authority needed to claim the value locked in an instance. With the ability to create contracts in multiple stages, Cardano has definitely reached 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 has evolved into a multi-functional environment and now supports the creation and deployment of smart contracts with different programming languages. You can find several answers to the question “What language does Cardano use for smart contracts?” » because Cardano uses five programming languages. The five programming languages for smart contracts highlight Cardano’s efforts to drive transformative changes for smart contract development.
Plutus is the ideal platform for developing and executing smart contracts. It is a comprehensive platform for building complete applications that can interact with the Cardano blockchain. Smart contracts written in Plutus include parts that run on the blockchain and those that run on the user’s machine. Plutus draws on research into modern programming languages to deliver a fully secure, full-stack programming environment. The Plutus smart contract programming language is inspired by Haskell as it is one of the leading functional programming languages.
Plu-ts represents the smart contract programming language integrated into Typescript on Cardano. It also offers a transaction creation library for interacting with smart contracts on Cardano.
Cardano’s impact in smart contract programming also highlights the Aiken programming language. It is a programming language as well as a set of tools that simplifies the experience of smart contract developers. Aiken is only useful for writing on-chain validation scripts. You can think of Aiken as the Solidity programming language 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 is inspired by the most popular programming language, Python.
You can understand Cardano’s role in the evolutionary transformation of smart contracts through an understanding of Marlowe. It is a domain-specific language, specifically designed for the financial contracts domain. Developers can use Marlowe to create and execute financial contracts using traditional coding approaches or through visualizations. Financial institutions can leverage Marlowe to create and implement custom applications for their customers. Additionally, Marlowe’s integration into Haskell, JavaScript, and Typescript provide the flexibility to choose different editors based on your skills and preferences.
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Parallels between Cardano Evolution and Smart Contract Evolution
The Goguen era in the Cardano blockchain roadmap introduced smart contract functionality and enabled the development of dApps on Cardano. One of the biggest highlights of the Goguen era, which marks a major turning point in the evolution of smart contracts, is the introduction of Plutus. The smart contract development language has introduced the benefits of functional programming to the field of smart contract creation. Plutus not only marks a major milestone in the evolution of Cardano, but also introduced support for both on-chain and off-chain components in the smart contract code.
Another smart contract programming language from Cardano, Marlowe, enables the creation and implementation of financial contracts. Domain-specific language introduces the ability to create new smart contract programming languages focused 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
Examining the design of Cardano smart contracts shows that the Cardano blockchain has taken a head start in the evolution of smart contracts. First of all, you should note the presence of on-chain and off-chain components in smart contracts on Cardano. On the other hand, you should also notice that Cardano has introduced five different programming languages for smart contracts. The most notable programming languages for smart contracts on Cardano are Plutus and Marlowe. Plutus provides support for on-chain and off-chain components in smart contract code while Marlow allows non-programmers to create smart contracts. Learn more about Cardano’s development roadmap to discover unique insights into how Cardano has transformed smart contracts.
