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A Beginner’s Guide to ADA

Published on: Nov 7, 2023
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In Brief

Explore ADA: the Cardano blockchain's asset for secure, scalable dApps. Learn about staking rewards, sustainable crypto, and latest partnerships.

A Beginner’s Guide to ADA

ADA is the native cryptocurrency of Cardano, which was created as a Proof-of-Stake blockchain that aims to be an efficient, scalable, and secure platform for running smart contracts.

The ADA token is central to helping Cardano achieve its vision of becoming a hub for decentralized applications (dApps) that delivers more advanced features than any existing protocol. The cryptocurrency is used to cover transaction fees, run smart contracts, pay node operators, and as a governance token within the Cardano ecosystem.

ADA has a limited supply of 45 billion tokens, which are released over time as part of the systematic token release process in the protocol's PoS staking reward system. Since its launch, ADA has grown to become one of the top cryptocurrencies in terms of market capitalization, and like other cryptocurrencies, it can be securely stored in a crypto wallet like Trust Wallet.


Before we dive into this beginner’s guide, remember that you can swap ADA, manage, and even earn rewards when you stake ADA using Trust Wallet. You can also sell ADA and do things like check its price.

Get the current ADA price using Trust Wallet

There are so many ways to explore ADA with Trust Wallet, and one of the ways is to check up on the current ADA price anytime you want. Here’s how:


With all this in mind, read on to get a better understanding of the technological backbone of ADA and its role in Cardano.

Technological Backbone of ADA

The Cardano blockchain is powered by its own unique Proof-of-Stake (PoS) consensus mechanism known as Ouroboros. Ouroboros was created to demonstrate that a PoS protocol could be provably secure. The use of Ouroboros as Cardano’s underlying protocol helps to guarantee the efficiency, scalability, and security of the Cardano blockchain.

The Ouroboros protocol was developed to replace the high energy-consuming Proof-of-Work (PoW) consensus mechanism used by first-generation blockchains like Bitcoin. Ouroboros reduces energy expenditure by eliminating the need for enormous computing resources that PoW algorithms use, making Cardano more sustainable and environmentally friendly compared to PoW chains.

In addition, the blockchain has a unique multi-layer architecture that separates the computational layer from the settlement layer. This separation in design gives Cardano greater scalability and flexibility, allowing it to handle various applications. Moreover, it enhances its security, making it a suitable platform for developing complex dApps.

Developers can create complex dApps on the Cardano blockchain by utilizing ADA smart contracts. Blockchain-powered smart contracts are self-executing code that allows for the automation of agreements and transactions, providing the infrastructure for the development of decentralized applications.

The ADA token is used to run smart contracts on the Cardano blockchain.

So, how exactly does Ouroboros work?

The Ouroboros protocol assigns network control to various stake pools. Each slot on Cardano is assigned a stake pool that acts as the slot leader and is rewarded if it successfully adds a block to the chain.

This is where ADA comes into the picture.

The token is designed to function as a secure exchange of value within the Ouroboros protocol. In addition, ADA holders can choose to delegate their stake to a designated stake pool. This delegation helps to increase a stake pool's likelihood of being chosen as the slot leader, thereby sharing in the rewards distribution.

Given its robust tech infrastructure and a key focus on governance and sustainability, the Cardano blockchain is revolutionizing the blockchain space. With its ADA token, the Cardano network is poised to usher in a new era of blockchain interoperability and security.

Understanding ADA's Role in Cardano

The ADA token plays a vital role in the Cardano ecosystem.

Like other cryptocurrencies, people can send and receive ADA to each other near-instantly without intermediaries and at a low cost. Moreover, ADA smart contracts cannot be deployed on Cardano’s computing platforms without the ADA token. For an ADA smart contract to self-execute, developers must pay transaction fees in ADA.

Besides running smart contracts, ADA is also staked on Cardano as part of the network’s consensus protocol.

Staking in Cardano's network regulates a node's ability to create blocks on the Cardano blockchain. A stake represents the interest a pool participant has and is guaranteed with pledged ADA tokens.

ADA holders who stake or pledge their ADA tokens to secure the Cardano network can earn rewards through transaction fees, which are distributed based on the amount of ADA tokens pledged.

People can join certain staking pools and work jointly to create new blocks, update the Cardano ledger, and earn rewards in exchange.

Using the PoS mechanism, ADA holders can stake a token for the chance to become validators. Users can then participate in the validation and staking process by either becoming a stake pool operator or a stake pool owner. Stake pools in Cardano are trusted server nodes that are used to validate transactions.

Besides its most evident crucial use cases, Cardano has also secured key partnerships this year that could potentially help drive ADA’s growth.

For instance, in May 2023, Cardano partnered with Acredius, a Swiss-based fintech company, to ‘bring the power of blockchain to fintech.’ In this partnership, Acredius will utilize the Cardano ecosystem to deploy smart contracts, supporting the growth of SMEs.

Another recent and key partnership for Cardano is between its parent company, Emurgo, and the Institute of Blockchain Singapore (IBS), which is meant to advance education about Cardano. Both partnerships are expected to help guide the growth and adoption of ADA.

What makes ADA different from other cryptocurrencies?

ADA is not just a digital currency but also a governance token that gives holders a say in the Cardano network's future. It's integral to running the network's smart contracts and transactions, with a unique consensus mechanism, Ouroboros, which aims to be more sustainable than traditional Proof-of-Work systems.

Frequently asked questions

Can I earn rewards by holding ADA, and how?

Yes, by staking your ADA in the network's consensus process, you can earn rewards. ADA staking involves delegating your tokens to a stake pool, where they help secure the network, and in return, you receive a share of the network's transaction fees as rewards.

What is the role of ADA in Cardano's smart contracts?

ADA is the fuel for Cardano's smart contracts, which are self-executing contracts with the terms of the agreement directly written into code. They automate transactions and other specific actions on the Cardano blockchain, requiring ADA to implement.

How does Cardano ensure the sustainability of its blockchain with ADA?

Cardano's Ouroboros protocol reduces energy use by eliminating the competition-based mining of Proof-of-Work systems. This makes the process of adding new blocks to the blockchain more energy-efficient, which is part of Cardano's broader goal for sustainability.

What recent partnerships has Cardano secured, and what do they mean for ADA?

Cardano has formed strategic partnerships with entities like Acredius and the Institute of Blockchain Singapore to integrate blockchain technology into fintech and education. These collaborations aim to expand ADA's utility and could potentially drive its growth in market value and adoption.


The ADA cryptocurrency is essential to the Cardano ecosystem as it facilitates the network's mission to build a decentralized world. The ADA token also empowers developers to build complex dApps and incorporate smart contracts atop the Cardano blockchain.

ADA has so far managed to grow in terms of its market capitalization since its launch, establishing itself as one of the leading smart contract platform tokens in the crypto asset market. We can only wait to see what unfolds for the cryptocurrency as it keeps hitting the milestones in its roadmap.

Remember, you can buy, hold, sell, and swap your ADA tokens along with over 10+ million digital assets in Trust Wallet. With Trust Wallet, you can explore and experience dApps in the Web3 ecosystem securely thanks to the Trust Wallet Security Scanner.

Get the Trust Wallet Chrome Extension today to manage your crypto assets, including ADA.

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Note: Any cited numbers, figures, or illustrations are reported at the time of writing, and are subject to change.

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