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Cardano’s ‘Hydra’ Upgrade Seeks to Improve Blockchain Scalability While Use Cases Like DeFi

cryptoknowmics.com 20 September 2021 02:06, UTC
Reading time: ~2 m

Following the update of Cardano's mainnet last week, Input Output Hong Kong (IOHK) has announced that it is working on a layer-2 upgrade Hydra to improve the blockchain scalability.

Cardano's Upgrade Attempts To Improve Blockchain Scalability

According to David Orr of IOHK, while they expect to improve Cardano fees to balance user prices, stake pool operator incentives, and network security, they will most likely be too high for “real-world use cases,” which Hydra plans to solve.

“Hydra is a layer-2 scalability solution that aims to solve these problems by offering a more efficient way of processing transactions off-chain for a subset of users while using the main chain as a secure settlement layer...

Hydra increases throughput while minimizing delay, incurring little-to-no cost, and significantly reducing storage requirements.”

According to Orr, Hydra can lower the barrier to entry for customers who want to build goods on the Cardano network, such as wallets or applications.

Hydra Has The Potential To Reduce Transaction Times On Cardano's Blockchain To Less Than One Second

According to IOHK, Hydra may make transactions on Cardano's blockchain take less than one second to execute.

“Terms like ‘one million TPS (transactions per second)' have been used in the past. It's a big number, and although it's still an idealistic aim, the ultimate goal of any system is the capacity to scale up in response to demand... In theory, by increasing the number of Hydra heads in the system, the system as a whole may reach arbitrarily high throughput.”

According to CoinGecko, ADA is now trading at $2.38 at the time of writing.

Flexibility Is Required For Expansion

The primary objective of Hydra is to provide a cutting-edge layer 2 scaling solution for Cardano, a third-generation, UTXO-based blockchain that can handle smart contracts.

Hydra will save expenses while boosting throughput and security.

Hydra mimics the functionality of the main chain while minimizing user friction while enabling layer 2 to maintain its charge/cost structure and time restrictions.

Any effective ecosystem strives to meet the requirements of all users. This ecosystem is intended to meet the demands of individual customers, companies, professionals, and a growing number of dApps and developers.

Cardano will launch on a new adventure as a smart contract platform with the Alonzo hard fork, allowing technologies like Hydra to substantially improve Cardano's blockchain scalability and hence its adoption.

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