Cardano (ADA)

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Field

Content

General information

S.1

CASP Name

BB TRADE ESTONIA OÜ

S.2

Relevant legal entity identifier

984500L05A5D0E66Q610

S.3

Blockchain network name

Cardano

S.4

Name of the crypto-asset

ADA

S.5

Consensus Mechanism

Proof of Stake (PoS)

S.6

Incentive Mechanisms and Applicable Fees

Cardano operates on a robust Proof of Stake (PoS) consensus mechanism called Ouroboros. In this system, stake pool operators (SPOs) run validator nodes, and ADA token holders delegate their stake to these pools to participate in block production and validation.

Incentives:

Stake Pool Operators (SPOs): Earn rewards in ADA for successfully forging blocks and securing the network. Their probability of being selected to produce a block is proportional to the total stake delegated to their pool. Rewards cover operational costs and provide profit.

Delegators: ADA holders can delegate their tokens to a stake pool without locking their funds. They earn a portion of the staking rewards, providing passive income and contributing to the network's decentralization and security. Rewards are distributed at the end of each epoch (a 5-day cycle).

Slashing: While Cardano's Ouroboros protocol has a strong security model, it uses economic disincentives for malicious behavior or prolonged downtime of stake pools, though direct "slashing" (loss of stake) is designed to be minimal to encourage participation. 

Fees: Transaction fees on Cardano are paid in ADA and are generally low and predictable. They are calculated based on a fixed cost plus a fee per byte of transaction data. Fees do not go directly to individual block producers but are pooled and then distributed to all pools that created blocks during an epoch. This structure aims to prevent economic attacks like DDoS attempts and ensure the long-term sustainability of the network.

S.7

Beginning of the period to which the disclosure relates

2024-01-01

S.8

End of the period to which the disclosure relates

2024-12-31

Mandatory key indicator on energy consumption

S.9

Energy consumption

704,910 kWh per calendar year

S.10

Energy consumption sources and methodologies

The energy consumption of the Cardano network primarily stems from the electricity used by its stake pool operator (SPO) nodes and supporting relay nodes that secure and maintain the blockchain. As a PoS network (Ouroboros), it entirely avoids energy-intensive mining. Methodologies for estimation, as per CCRI's assessment, involve:

Node count: Identifying the number of active nodes in the Cardano network (e.g., ~3,147 nodes as per a May 2024 report).

Representative node power demand: Estimating the power consumption of a typical stake pool node, considering its base power demand (at zero transaction throughput) and marginal power demand per transaction/TPS.

Network-wide aggregation: Multiplying the estimated node power by the total number of nodes.

Cardano's energy efficiency is a key design principle of the Ouroboros protocol.

Supplementary key indicators on energy and GHG emissions

S.11

Renewable energy consumption

~31%

S.12

Energy intensity 

~0.000168 kWh per transaction

S.13

Scope 1 DLT GHG emissions – Controlled

0 t CO2eq per calendar year

S.14

Scope 2 DLT GHG emissions – Purchased

250.73 t CO2eq per calendar year

S.15

GHG intensity 

~0.000060 kg CO2eq per transaction

S.16

Key energy sources and methodologies

The energy sources for Cardano's stake pool operators (SPOs) reflect the diverse electricity grid mixes of their global distribution. These include a combination of conventional sources (e.g., natural gas, coal) and renewable/sustainable sources (e.g., hydro, solar, wind, nuclear), depending on the geographic location of the SPOs. Methodologies, as applied by CCRI, involve:

Geographic identification: Determining the locations of the active stake pools.

Location-specific emission factors: Applying relevant carbon intensity factors for electricity consumption based on the identified locations. The inherent energy efficiency of the Ouroboros PoS protocol means that the overall energy demand is already very low.

S.17

Key GHG sources and methodologies

The predominant source of Greenhouse Gas (GHG) emissions for Cardano is Scope 2 (indirect emissions from purchased electricity). Methodologies for estimating these emissions, as detailed in the CCRI report, involve: 

Energy consumption * Location-specific Emission Factor: Multiplying the estimated total electricity consumption of the Cardano network (S.8) by the carbon intensity (grams of CO2 equivalent per kWh) of the electricity mix in the regions where stake pools operate. 

Comprehensive assessment: The methodology also considers other impacts like waste generation (e.g., WEEE) from hardware. The Cardano Foundation actively works to align with regulatory requirements like MiCA, providing a transparent assessment of its environmental footprint.