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What is Cardano Settlement Layer & Computation Layers?

Updated: Dec 4, 2022


Cardano is a decentralized public blockchain and cryptocurrency project that is focused on providing a more secure and scalable platform for the execution of smart contracts. One of the key features of Cardano is its use of a two-layer system for its settlement and computation layers.


The settlement layer of Cardano is responsible for managing the transfer of the cryptocurrency, called ADA, between users on the network. This layer is based on a proof-of-stake consensus algorithm, which allows users to validate transactions on the network by staking their ADA as collateral. This approach is more energy-efficient than the proof-of-work algorithm used by other cryptocurrencies, such as Bitcoin, and allows for faster transaction times.


The computation layer of Cardano, on the other hand, is responsible for executing smart contracts on the network. This layer is designed to be flexible and modular, allowing for the development of a wide range of applications and services. It is based on a programming language called Plutus, which is specifically designed for writing smart contracts on the Cardano platform.


Together, these two layers form the foundation of the Cardano network, providing a secure and scalable platform for the execution of decentralized applications and the transfer of ADA between users. By using a two-layer system, Cardano is able to offer the benefits of both a settlement layer and a computation layer, making it a versatile platform for a wide range of use cases.


In conclusion, Cardano's settlement and computation layers provide a unique and powerful platform for the execution of decentralized applications and the transfer of cryptocurrency. By using a proof-of-stake consensus algorithm and a flexible computation layer, Cardano is able to offer a secure and scalable solution for a wide range of use cases.

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