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How to Build a Cardano Smart Contract?

Cardano blockchain is known as the ‘Ethereum Killer’ as it significantly curbs the problems associated with Ethereum, such as high gas fees, low scalability, and less transaction speed and throughput. Since September 2021, developers can create smart contracts because of Cardano’s new Alonzo Hard Fork.

Smart contracts creation helped it enter into a direct battle with Ethereum. Cardano enhances its functionality by incorporating Plutus scripts which are simple for all users.

But, before we discuss Cardano smart contracts and their functioning, it is essential to learn about smart contracts and understand the basics of Cardano. So, let’s get started!

Why should you choose Cardano blockchain?

As we already know, Cardano is touted to be an Ethereum Killer as it has some use cases that aim to be better than the former blockchain. Cardano’s architecture comes into two layers: Cardano Computation Layer for creating smart contracts and Cardano Settlement Layer (CSL) for ADA transfers. While Ethereum handles ETH transactions and smart contracts on the same layer, Cardano makes it more efficient by splitting the activities into different layers.

Cardano’s development is supported by a research-based framework, incorporating peer-reviewed insights with evidence-based methods. It has created a strong foundation and made progress toward the future of the blockchain network and the Ada token.

Cardano is a proof-of-stake blockchain where users don’t mine tokens. Instead, they follow a block validation process by staking the native token to make the blockchain more energy efficient, cost-effective, and scalable. But, Ethereum is a proof-of-work blockchain that will transition to proof-of-stake after ‘the merge,’ due in September 2022.

Since we already know how the Cardano blockchain draws inspiration from Ethereum, let us get down to the details of Cardano smart contracts.

What are Smart Contracts?

A smart contract is a piece of code written by developers that executes itself upon meeting the pre-defined conditions. They help bind buyer and seller into the agreement written into lines of code. The best part about smart contracts is the lack of middlemen or third parties that deliver transparency to the users.

The execution of the smart contract lies with the code, and the transactions are trackable and irreversible. Smart contracts function without central authority, legal system, or external enforcement mechanism. 

What are Cardano smart contracts?

Cardano smart contracts (or ADA smart contracts) have similar functions to ETH contracts. They act as virtual agreements between two or more parties and execute themself after meeting the prerequisite conditions.

ADA smart contracts are free from intermediaries and execute faster than real-world contracts. Since the data is on a decentralized network, they are stored permanently, and no one can tamper with them. 

Programming languages for developing Cardano smart contract 

Three programming languages come into play to build the ADA smart contracts: Marlowe, Plutus, and Haskell. Let us learn about them.

  1. Marlowe: It enables users to create blockchain applications targeted explicitly at financial transactions. Marlowe provides better security, termination guarantee, and correctness of behavior. Apart from this, the smart contracts written in Marlowe have a defined duration, set time length, and preserving value. 
  2. Plutus: This language enables the development of apps that communicate with the Cardano blockchain. Plutus is the language behind developing safe apps, acquiring new assets, and constructing smart contracts. Also, Plutus allows the construction of smart contracts and creates fresh tokens in a minimal environment.
  3. Glow: This language helps to create decentralized applications (DApps) on the blockchain. Glow enables developers to code secure DApps ensuring that the smart contracts operate safely in the adversarial environment.

How to create Cardano smart contracts?

Developers follow the below eight steps for creating a smart contract on the Cardano blockchain. These are: Pay, Close, Values, Observations, and Actions, Oracles, If, When, Let, and Assert. The steps below will help you understand the working of each step.

Pay: As the name suggests, the ‘pay’ arrangement transfers a specific token value from the payee’s account to another account in the contract. Partial payment is made after the warning if there are insufficient funds in the account. 

Close: It specifies the cancellation or termination of the contract. The close function enables reimbursement of accounts with a positive balance. The process gets repeated for each account, but all accounts are reimbursed in a single transaction. 

Values, observations, and actions: Actions are the events that occur throughout the execution phase. It can be anything ranging from money deposits to finding an oracle value. Values depict the numerals that change over time, such as slot number, balance, etc. Last, observations are Boolean values obtained through comparing values and merging using the Boolean operators. 

Oracles: Oracles are specifically for the developers using Marlowe on the Cardano blockchain. They are modeled as decisions made by a participant with a specialized Oracle role, “Kraken.”

If: If obs cont1 cont2 is performed when the conditional is true and continues as cont1 or cont2, based on the Boolean value of the observation obs.

When: It is a contract triggered by activities that could or could not occur at any time. It depicts the cases in the contract that describe what happens after the occurrence of specific actions. 

Let: The let id Val cont function enables the contract to name a value with an identifier. The function saves it with the name id after evaluating the expression value. The technique allows us to capture and preserve volatile data, along with helping us to utilize abbreviations such as the current slot number at a specific moment in contract execution to be used later in contract execution.

Assert: The last stage guarantees that the property holds at every point in the smart contract. The static analysis will fail if the execution results belong to a false assertion.

Finally, we have covered the eight stages of Cardano smart contract development. Cardano is coming at par with other smart contract platforms like Ethereum. Before winding up, let us now look at some of the compelling use cases of Cardano. 

What are some use cases of the Cardano blockchain?

ADA smart contracts have their use cases in almost every industry, be it gaming, real estate, legal, or finance. Let us look at some of them. 

To verify creds and identity

Cardano has created three products: Atala Prism, Atala Scan, and Atala Trace, for verifying credentials and identity. While Atala Prism is an identity management tool that provides access to specific services, the other two products help to trace a product’s journey through a supply chain. Based on the use case, Cardano is assisting a university in verifying credentials more efficiently, cost-effectively, and in a trustless manner than the current system. 

Supply chain tracking 

Cardano’s smart contract capabilities are gaining rapid traction among companies. New Balance has contracted Cardano to use these applications to track the authenticity of its footwear throughout its supply chain.

Since the information cannot be altered and provides a tamper-proof record, companies are looking over blockchain for public accessibility and information verification. 


Gaming is a lot bigger and better after the advent of blockchain technology. Players now have the option to join the eSports team without taking the lengthy physical paperwork processes. Also, ADA smart contracts are programmed to contain essential information such as details of players, the number of tournaments won, etc., with the payouts automatically generated when conditions are met. 

Final Thoughts

Cardano blockchain has quickly climbed the ladder and stands at the 6th position in the list of cryptocurrencies by market capitalization. Developers are using ADA smart contracts to create valuable products that help in bringing positive global change.

ADA smart contracts provide complete visibility to all the parties involved and execute depending on the predefined conditions. However, creating a smart contract from scratch could be difficult, especially when you are new to the development phase. 

Why choose Prolitus for developing Cardano smart contract?

Prolitus has a professional team of blockchain developers with hundreds of hours of experience developing ADA smart contracts. Our experts understand the logic behind creating the smart contract to produce results that stand the test of time and tide.

The Prolitus team creates the best blend of your ideas based on your target audience. Get in touch with our team for your smart contract development!

Frequently Asked Questions (FAQs)

Q1. What is the Cardano smart contract?

Ans. Cardano smart contracts (or ADA smart contracts) have similar functions to ETH contracts. They act as virtual agreements between two or more parties and execute themself after meeting the prerequisite conditions.

Q2. Can you build smart contracts on Cardano?

Ans. Yes, you can build smart contracts on Cardano. Plutus, Marlowe, and Glow are some programming languages for writing smart contracts on the Cardano blockchain. But, Plutus requires prior knowledge of Haskell programming.

Q3. How can Cardano be used to build an NFT marketplace?

Ans. Cardano can help develop the NFT Marketplace with advanced technologies and integrations. It has outstanding features and capabilities and a customer-centric approach to help create a user-friendly platform regulating seamless trade and creation of NFTs.

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