The ada token: definition and functionality

Ada (from 19th-century English writer and mathematician Ada Lovelace) is Cardano's native digital currency. It is the sole means to pay for transactions on the Cardano blockchain. Formal ledger rules determine the effects of these ledger transactions, yielding an immutable and independently verifiable record that tracks the movement of ada and other assets over time. Transactions are authorized using secure cryptographic keys that are owned by the ada holder.

As described below, ada holders can opt to stake their ada holding in order to participate in the Ouroboros proof-of-stake consensus mechanism, which determines how transactions are included in successive Cardano blocks. They receive rewards for this in proportion to the stake that has been delegated. In addition, ada allows holders to:

• participate in governance activities, including voting on Catalyst ecosystem proposals

• pay for the costs of creating and transferring assets such as Non-Fungible Tokens (NFTs)

• pay for the costs of using smart contracts

• pay for the costs of recording data on the blockchain

• transfer ada tokens to other users

1 ada is divided into 1,000,000 lovelace.