Cardano Chang Hard Fork: All You Need to Know

Cardano’s Chang hard fork is scheduled to take place sometime in end July 2024. Discover all you need to know about the next Cardano upgrade, including its impact on scalability, transaction speeds, security protocols, and community-driven governance. Learn how this significant upgrade will transform Cardano into a fully decentralized blockchain.

Cardano (ADA) is a leading Layer-1 blockchain platform known for its focus on security, sustainability, and scalability. It was created by Charles Hoskinson, a co-founder of Ethereum. Cardano aims to provide a more balanced and sustainable ecosystem for cryptocurrencies. One key feature of blockchain technology is the ability to implement significant protocol changes through hard forks.

A hard fork is an essential upgrade that alters the blockchain protocol in a way that creates an incompatibility with the previous version. This often leads to a split in the blockchain, resulting in two separate chains. Hard forks are necessary for implementing major updates and improvements in the blockchain ecosystem.

A hard fork involves a radical change to the blockchain protocol, which requires all nodes or users to upgrade to the latest version. Unlike a soft fork, which is backward-compatible, a hard fork results in a permanent divergence from the previous version of the blockchain.

For example, when Bitcoin underwent a hard fork in 2017, it split into Bitcoin (BTC) and Bitcoin Cash (BCH). The new version implemented changes that the old version did not recognize, creating two distinct chains. This mechanism allows for significant updates and improvements but requires consensus among network participants to avoid fragmentation.

Chang hard fork readiness | Source: CardanoScan

The Chang Hard Fork is a highly anticipated upgrade scheduled for end July 2024. This upgrade marks the beginning of the Voltaire era, a significant phase in Cardano's roadmap aimed at achieving full decentralization. The Voltaire era will enable community-driven governance, shifting control from the development firm Input Output Global (IOG) to the Cardano community.

These changes aim to make Cardano a fully decentralized blockchain, empowering ADA holders to have a direct impact on the network's future. The upgrade will also improve transaction speeds and security, making Cardano more efficient and resilient. The primary objectives of the Chang Hard Fork are to:

Transition Cardano into the Voltaire era, marking the shift to community governance.
Introduce DReps to facilitate decentralized decision-making.
Establish the Cardano Constitution to guide future governance.
Enhance network security and scalability through protocol upgrades.

These improvements are expected to drive greater adoption and innovation within the Cardano ecosystem, making it a leading choice for developers and users alike. By integrating these key features and upgrades, the Chang Hard Fork will position Cardano as a more scalable, secure, and community-oriented blockchain platform:

Advanced Scalability Features: The Chang Hard Fork will significantly enhance Cardano's scalability by upgrading its network infrastructure to handle more transactions efficiently. Cardano aims to increase its transaction throughput significantly. Currently, Cardano processes around 250 transactions per second (TPS), but the upgrades will potentially raise this figure to over 1,000 TPS. This improvement will reduce congestion and lower transaction costs, making it easier for decentralized applications (dApps) to operate smoothly on the network. As a result, more developers and users are likely to be attracted to the Cardano ecosystem.
Enhanced Transaction Speeds: Cardano is set to boost transaction speeds with the Chang Hard Fork. Faster transaction times mean you can send and receive ADA more quickly. This improvement is crucial for applications that require real-time interactions, such as financial services and gaming platforms. By reducing latency, Cardano ensures a better user experience, making the network more competitive with other blockchain platforms. Post-upgrade, Cardano aims to cut transaction times significantly, improving overall network efficiency.
Improved Security Protocols: Security is paramount in any blockchain network, and the Chang Hard Fork introduces robust measures to fortify Cardano against threats. These protocols include advanced cryptographic techniques and enhanced validation processes to secure transactions and smart contracts. For instance, improved security protocols will protect against common attacks like double-spending and ensure the integrity of the blockchain.
Resilience Against Attacks: The upgrade also makes Cardano more resilient against various types of attacks. Enhanced security measures will protect the network from malicious actors aiming to disrupt its operations. This resilience is achieved through better defense mechanisms and more rigorous monitoring of the network's health. Cardano aims to maintain a stable and reliable blockchain, even under potential threats, by implementing these measures. This includes improvements to Cardano’s Ouroboros consensus mechanism, which enhances the network’s ability to handle and recover from attacks.
Community-Driven Governance: One of the most significant aspects of the Chang Hard Fork is the introduction of community-driven governance. This change allows ADA holders to participate directly in decision-making processes through on-chain voting mechanisms. The upgrade includes the deployment of Delegate Representatives (DReps), who will represent the community’s interests. This shift to a decentralized governance model ensures that decisions about the network's future are made by its users, promoting transparency and inclusivity.

Cardano’s decentralized governance model after the Chang upgrade | Source: Cardano Forum

By following these stages, Cardano aims to create a robust and inclusive governance framework that ensures the network's sustainability and resilience:

Introduction of Delegate Representatives (DReps): The Chang Hard Fork introduces Delegate Representatives (DReps) to Cardano’s governance system. DReps are elected by ADA holders to represent the community's interests. Their primary role is to participate in governance by voting on proposals and actions that shape the network. This model ensures that even if you don't have the technical expertise or time to vote on every proposal, your voice can still be heard by delegating your voting power to a DRep you trust. This system encourages greater participation and decentralizes decision-making, making the governance process more inclusive and representative.
Cardano Constitution Convention: The Cardano Constitution Convention is a crucial event in the governance model introduced by the Chang Hard Fork. Scheduled to take place in Buenos Aires, this convention will gather elected representatives from across the globe to draft the initial version of the Cardano Constitution. This constitution will lay the foundational principles for Cardano's governance, ensuring transparency, accountability, and community involvement. The convention marks a significant step towards a decentralized governance model, where the community actively participates in creating and maintaining the network's rules and policies.
The Community Vote: After the constitution is drafted, the next crucial stage is the community vote. All ADA holders will have the opportunity to vote on whether to adopt the proposed constitution. This vote is vital as it ensures that the constitution has the community's support and reflects the collective will of Cardano's users. If ratified, the constitution will become the bedrock of Cardano’s decentralized governance, guiding future decisions and developments. This process underscores Cardano's commitment to a democratic and transparent governance structure, empowering the community to have a direct impact on the network's evolution.

The Chang Hard Fork marks a significant transition for Cardano. After this upgrade, Cardano will move from being managed by Input Output Global (IOG) to being governed by its community. This shift is a step towards full decentralization, where the power of decision-making will lie in the hands of ADA holders. By introducing community-driven governance, Cardano aims to enhance transparency and foster a more inclusive decision-making process.

Potential Benefits of Cardano’s Chang Hard Fork

Increased Participation: By enabling ADA holders to vote on proposals and elect DReps, Cardano encourages more users to take an active role in governance.
Increased Staking Rewards: Improved staking processes can lead to higher participation rates, potentially increasing the overall staking rewards distributed to participants.
Enhanced Security: Decentralized governance can improve security by distributing control across a broader base, reducing the risk of centralized attacks. By allowing staking across multiple pools, users can reduce the risk associated with staking in a single pool, thus enhancing the security of their staked assets.
Transparency: Community governance fosters transparency as all decisions and changes are made through a public voting process.

Challenges of Cardano’s Chang Upgrade

Coordination Complexity: Transitioning to a decentralized model requires effective coordination among a large number of stakeholders, which can be complex and time-consuming.
Voter Apathy: Ensuring active participation from all ADA holders can be challenging. If a significant portion of the community is inactive, it may hinder the effectiveness of governance.
Implementation Risks: As with any major upgrade, there are technical risks associated with the implementation of the Chang Hard Fork. Ensuring a smooth transition is crucial to maintaining network stability.

Here’s a look back at how the ADA price has reacted to previous significant upgrades of the Cardano blockchain:

Analysis of ADA’s Price Surge During the Alonzo Hard Fork in 2021

The Alonzo hard fork in September 2021 was a significant milestone for Cardano, introducing smart contract functionality to the network. This upgrade allowed developers to deploy dApps on Cardano, similar to what is possible on Ethereum. In anticipation of this upgrade, ADA experienced a substantial price surge. Before the hard fork, ADA's price increased by approximately 130%, from $1.35 to an all-time high of $3.10 on September 2, 2021, just ten days before the Alonzo upgrade. This price surge highlighted the market's optimism about Cardano’s new capabilities and its potential to support various DeFi applications and NFTs.

ADA Price Reaction After Vasil Hard Fork in 2022

The Vasil hard fork, named after the late Cardano community member Vasil St. Dabov, went live on September 22, 2022. This upgrade aimed to improve the scalability, efficiency, and block latency speeds of the Cardano network. It introduced several key Cardano Improvement Proposals (CIPs), such as CIP-31, CIP-32, and CIP-33, which enhanced transaction throughput and reduced transaction costs. Despite these improvements, the Vasil hard fork had a mixed impact on ADA's price. While there was a slight rally, with ADA rising about 9% to $0.49 on the announcement of the upgrade date, the overall price movement was subdued due to the bear market conditions.

Comparison with the Anticipated Impact of the Chang Hard Fork on ADA's Price

As Cardano prepares for the Chang hard fork, scheduled for the end of July 2024, market analysts are looking back at the price movements during previous hard forks for clues. The Chang hard fork aims to transition Cardano into the Voltaire era, emphasizing full decentralization and community-driven governance. Given the historical context, many anticipate a similar bullish trend for ADA leading up to this upgrade.

Market intelligence platforms and analysts are optimistic about ADA's potential price movement in the wake of the Chang hard fork. Historical trends suggest that significant upgrades tend to boost ADA's price. For instance, the anticipation of the Alonzo upgrade in 2021 led to a substantial price rally. Similarly, the Chang hard fork is expected to attract considerable market attention and potentially drive ADA’s price higher.

Analysts predict that the Chang hard fork could result in a price surge for ADA, potentially similar to the 130% increase seen before the Alonzo hard fork. This optimism is driven by the enhancements in governance and decentralization that the Chang hard fork promises to deliver. Additionally, the transition to a community-governed model is likely to attract more investors and developers to the Cardano ecosystem, further bolstering ADA's market performance.

Cardano Roadmap | Source: CardanoSpot

Here’s a list of some key upcoming developments in the Cardano roadmap after the Chang hard fork in late July:

Cardano Constitution Workshops: In 2024, Cardano is hosting a series of Constitution Workshops globally to engage the community in crafting the Cardano Constitution. These workshops, coordinated by Intersect, will take place in 50 locations worldwide. The goal is to gather diverse perspectives from the Cardano ecosystem, ensuring the constitution reflects the community's collective vision for governance. By participating in these workshops, you can contribute to the foundational document that will guide Cardano's decentralized governance.
Intersect Project: The Intersect Project plays a crucial role in fostering innovation and collaboration within the Cardano ecosystem. This initiative supports community hosts in facilitating workshops, promoting governance proposals, and enhancing the overall governance framework. Intersect also provides grants to support various community-driven projects, helping to drive Cardano's growth and development. By participating in Intersect activities, you can help shape the future of Cardano and contribute to its sustainable development.
Real-World Tokenization: Cardano is making significant strides in the tokenization of real-world assets. This includes tokenizing assets like real estate, art, and commodities on the Cardano network. For example, NMKR, a platform on Cardano, has already enabled the tokenization of diamonds. This capability allows businesses and creators to efficiently monetize their assets and create new streams of business. Tokenization on Cardano simplifies entering the Web3 space, making it accessible for brands and creators to leverage blockchain technology.

The Chang Hard Fork and other developments in 2024 mark a transformative period for Cardano. This year is pivotal as Cardano transitions to a community-governed blockchain, enhancing its scalability, security, and governance framework.

While the future of Cardano looks promising, it's important to be aware of the risks involved, as its price can be highly volatile during network upgrades. Always do thorough research and consider these factors when making trading decisions.