Cardano Network Continues To Draw Attention Despite Limited Practical Uptake

August 19, 2021 04:00 PM
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CRYPTO MOVERS AND PRICES

 

Results in the Top 10 were mixed this morning with BTC spot volumes just below their 30-day average. Solana (SOL) was down about 8% after adding roughly USD 9 billion to its market cap in the last 7 days.

Crypto Story of the Day

Last week, Cardano (ADA) reached a market cap of USD 70.3 billion, about USD 3.4 billion less than the asset’s all-time high valuation achieved in May. The network has enjoyed outsized attention as it plans to introduce smart contracts on September 12.

ADA’s rally over the past week— which added roughly USD 9 billion to its valuation during the period— has come on the back of expectations regarding the enabling of smart contracts on the network. At the beginning of the month, IOHK, the principal firm working on the network, announced it had launched the “purple” testnet, which, among other goals, aims to test smart contract functionality.

On Tuesday, IOHK revealed September 12 as the target date for the Alonzo upgrade, which will introduce smart contract functionality. The Alonzo upgrade represents the last of 3 upgrades which together constituted the “Goguen” phase of the network's development road map (thus far, Cardano has completed the Byron and Shelley phases).

Upon completing the Goguen phase, which was focused on establishing smart contracts, Cardano enters the “Basho” phase, aimed at achieving scaling. The network’s final “Voltaire” phase aims to “provide the final pieces” required for the Cardano network to become “a self-sustaining system.” As such, Cardano has 2 phases ahead of it before it can become “a self-sustaining system,” or reach technical maturity.

Cardano has seen limited practical uptake. In a technical update earlier this month, Nigel Hemsley, the Head of Delivery and Projects at IOHK, references “partners that continue to make progress on their dapps.” It isn’t clear what projects are currently developing applications for Cardano.

In April, IOHK revealed a partnership with the Government of Ethiopia which aims to develop Atala PRISM, a “decentralized identity solution” built on the Cardano blockchain. Cardano’s creator Charles Hoskinson said the project is going to launch “sometime in September or October” in an interview with Bloomberg earlier this month.

ADA enjoys outsized attention from cryptocurrency enthusiasts. For example, the Cardano forum on Reddit has over 566,000 members, compared to the Ethereum forum’s 1 million. At the start of the year, the number of Cardano forum members totaled around 94,000. In the general cryptocurrency Reddit forum, mentions of ADA or Cardano have outpaced those of ETH or Ethereum in proportion to the 2 assets’ market caps.

In May, when ADA achieved record highs of USD 73 billion, we wrote that the asset has seen virtually zero practical uptake. The network is also years away from full technical maturity and its ability to successfully implement the technical roadmap ahead of itself is not certain.

As numerous DeFi hacks illustrate, however, even after milestones on the roadmap are achieved, blockchain tech remains experimental and its application in practice comes with considerable risk. Furthermore, keeping in mind that Cardano is in the 3rd of 5 phases, the network’s capabilities have never been tested as “a self-sustaining system.”

ADA continues to benefit from the narrative-driven investing typical in crypto markets.

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