The Fate of ADA: Has Cardano Met Its Demise?
Can Cardano, once hailed as the blockchain of the future, rebound from its significant decline, or has ADA’s journey from promise to disappointment signaled the end of its ambitious aspirations?
Table of Contents
How it all began
The current state of Cardano’s ecosystem
Why is Cardano falling behind?
What is the public sentiment?
What do the data and experts say?
The road ahead
How it all began
Cardano (ADA) started with lofty ambitions. Created by Charles Hoskinson, one of Ethereum’s (ETH) co-founders, it aimed to address the scalability, sustainability, and interoperability issues that plagued earlier blockchains like Bitcoin (BTC) and Ethereum. With its proof-of-stake (PoS) system called Ouroboros, Cardano promised a greener and more secure blockchain.
Cardano’s journey had some significant milestones. The Alonzo upgrade in September 2021 introduced smart contracts to the network, and the Vasil hard fork in 2022 aimed to enhance scalability. These upgrades positioned Cardano as a potential heavyweight in the decentralized finance (DeFi) arena, with non-fungible tokens (NFTs) and decentralized exchanges (DEXs) in its arsenal.
However, despite these advancements, Cardano has struggled to maintain its momentum. ADA reached its peak price of $3.10 in September 2021, but as of May 29, it is trading around $0.46, marking an 85% decline.
This decline has led to speculations, including from popular crypto influencer Ben Armstrong, also known as BitBoy Crypto. In an April 6 video, Armstrong compared Cardano’s performance with other networks, noting that they are gaining recognition while ADA lags behind. He attributed this to better price action and liquidity on other chains, making them more attractive to users and institutional investors. According to Armstrong, “ADA is getting left out.”
In response, Cardano founder Charles Hoskinson expressed disappointment but wished Armstrong well.
What is the current state of Cardano’s ecosystem?
To understand Cardano’s position, let’s compare it with its notable competitors: Ethereum, Binance Smart Chain (BSC), and Solana (SOL) over the last 30 days as of May 29.
Dapp development and adoption
Cardano’s decentralized application (dApp) ecosystem is expanding, with 54 active dApps and 132 smart contracts. However, these numbers are modest compared to Ethereum’s 4,589 dApps and over 177,000 smart contracts, as well as Binance Smart Chain’s 5,329 dApps and over 79,000 smart contracts. Solana also outpaces Cardano with 269 dApps and 1,820 smart contracts. The limited number of dApps and smart contracts on Cardano impacts its appeal to developers and users.
Total value locked (TVL) and market cap to TVL ratio analysis
Cardano’s TVL stands at $255.57 million as of May 29, much lower than Ethereum’s $65.255 billion, Binance Smart Chain’s $5.52 billion, and Solana’s $4.84 billion. This reflects Cardano’s struggle to attract substantial DeFi activity.
The market cap to TVL ratio further highlights Cardano’s position. Cardano’s ratio is at 62.45, significantly higher than Ethereum’s 6.95, BSC’s 16.63, and Solana’s 16.09. This suggests that Cardano’s market valuation may be higher than its actual DeFi usage, hinting at speculative investments driving up its market cap without corresponding growth in DeFi applications and user activity.
User engagement and NFT activity
Cardano’s user activity, measured by unique active wallets (UAW), stands at 40,030. This pales in comparison to Solana’s 5.32 million UAW, Binance Smart Chain’s 4.09 million UAW, and Ethereum’s 2.76 million UAW. High user activity on Ethereum and Binance Smart Chain can be attributed to their extensive ecosystems, offering a wide range of DeFi applications and NFTs, providing users with diverse engagement opportunities.
In terms of NFTs, Cardano’s volume is $1.68 million, lower than Ethereum’s $442.91 million and Solana’s $73.21 million. The low NFT volume on Cardano points to limited marketplace activity and user interest in trading and creating NFTs on the platform.
Transaction and volume comparison
Cardano processed approximately 409,300 transactions, while Ethereum managed 7.39 million, Binance Smart Chain 21.86 million, and Solana a staggering 235.11 million. Examining the overall dApp volume, Ethereum dominates with $208.21 billion, followed by Binance Smart Chain with $21.71 billion and Solana with $3.55 billion. Cardano’s dApp volume of $173.32 million is relatively small, indicating fewer financial activities and interactions within its ecosystem.
Why is Cardano falling behind?
Cardano’s ecosystem faces several critical challenges that have contributed to its lagging position compared to its main competitors. Let’s explore these challenges one by one.
Development delays and execution issues
Cardano has been criticized for its slow and methodical approach to development. While this ensures high-quality output, it delays the deployment of key features. For example, Cardano introduced smart contract functionality only in September 2021, despite launching years ahead of competitors like BNB Chain, Solana, and Polygon (MATIC). This late arrival to the smart contract scene hampers Cardano’s ability to attract and retain users, hindering its growth.
Inadequate marketing and community engagement
Cardano’s marketing efforts and community engagement have been less effective compared to its competitors. The online communities dedicated to Cardano are often less active, with fewer discussions about new and innovative projects. In contrast, vibrant communities like Solana’s foster lively and engaging ecosystems. Effective marketing is crucial for attracting and retaining users, an area where Cardano needs improvement.
Competition from robust ecosystems
Cardano competes against well-established ecosystems that have already captured a significant market share. Ethereum, for example, leads in terms of developer activity and project launches. The popularity of Ethereum’s programming language, Solidity, has resulted in a thriving ecosystem with a wide array of decentralized applications. Other competitors like Binance Smart Chain, Avalanche, and Polygon have gained traction by supporting the Ethereum Virtual Machine (EVM), lowering the entry barriers for new projects. Cardano is still working on supporting EVM, and until then, developers need to learn new programming languages, increasing the barrier for migration to Cardano.
Limited real-world use cases
Despite its technological progress, Cardano has struggled to showcase real-world use cases that can drive large-scale adoption. Ethereum, on the other hand, has numerous high-profile projects and collaborations demonstrating its versatility and utility in various industries.
What is the public sentiment?
The sentiment around Cardano on Reddit reflects a mix of optimism and frustration among long-time holders and new observers. Some users express concern about the absence of real-life use cases and direction for Cardano, while others highlight ongoing developments within the ecosystem. Skepticism persists among those disappointed by Cardano’s slow progress and low liquidity on decentralized exchanges.
What do the data and experts say?
An analysis by AlphaQuest revealed that nearly two-thirds of cryptocurrency projects have died. Among the top 10 ecosystems with the most defunct coins, Cardano ranks prominently, with 74% of its projects becoming inactive or ceasing to exist. This high failure rate indicates systemic issues like inadequate liquidity, low trading volumes, and insufficient developer engagement. Institutional confidence in Cardano has also been shaken, as evidenced by Grayscale’s decision to remove Cardano from its Digital Large Cap Fund.
The road ahead
While the data suggests that Cardano is falling behind its competitors, it is premature to declare it “dead.” Cardano’s community could still spark a renaissance. Only time will tell if Cardano can rise from its decline and redefine its path or fade into obscurity as another ambitious project that couldn’t keep up. The story of Cardano is far from over.
