Is Cardano Dead? Examining the Project's Potential in 2023 - A Deep Dive Analysis

Salomon Kisters

Jun 6, 2023

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The bear market in the cryptocurrency industry usually leads to the death of multiple crypto projects each cycle. Only the projects with established fundamentals make it to the next bull run.

However, when a cryptocurrency like Cardano drops over 90% in price, it worries every investor, no matter how strong the fundamentals are.

As a result, people begin to wonder whether the project, in this case, Cardano, is dead or not. This article will dive deep into the Cardano project to answer this question and analyze the potential it may hold for the coming years.

What is Cardano?

For those new to the crypto space, it is crucial to have a basic-level understanding of what Cardano really is before we move forward to discuss its future potential.

Launched in 2017, Cardano is the brainchild of Charles Hoskinson, who previously worked with Vitalik Buterin to create Ethereum. Cardano is an open-sourced and decentralized blockchain platform that is designed to facilitate peer-to-peer transactions as well as the development of DApps (decentralized applications). Some important tenets of the Cardano project include sustainability, scalability, decentralization, interoperability, transparency, and ecosystem efficiency.

Cardano uses a unique cutting-edge proof-of-stake consensus mechanism called Ouroborus Praos. This protocol allows Cardano to process and validate a large number of transactions in a short period while using only a fraction of the energy consumed by blockchains like Bitcoin, making it one of the greenest crypto projects in the market.

The three main organizations behind the Cardano project are the Cardano Foundation, IOHK (Input Output Hong Kong), and Emurgo. The first is a non-profit based in Switzerland and is responsible for overseeing the development of the blockchain and its ecosystem. IOHK is an engineering company and plays the main role in designing and building the Cardano network. Lastly, Emurgo is a for-profit organization that enables commercial opportunities in the Cardano ecosystem by working with venture capitalists and several other companies worldwide.

What Makes Cardano Special?

As of May 2023, Cardano is the seventh-largest cryptocurrency in the market, with a market capitalization of over $13.4 billion. It sits above some of the biggest industry giants, such as Litecoin, Solana, Polygon, and Dogecoin.

Moreover, Cardano has been widely hailed as the first third-generation cryptocurrency. It claims to solve the blockchain trilemma, a problem that plagues the first and second generations of cryptocurrency, i.e., Bitcoin and Ethereum, respectively. Blockchain trilemma refers to the inability of blockchains to ensure decentralization, scalability, and security of the ecosystem simultaneously.

Probably the most interesting factor that sets Cardano apart from the rest of the blockchain projects in the industry is the fact the company never published a whitepaper, which is more or less a tradition in the crypto space. Instead, Cardano is the first crypto platform to adopt a data-driven and academic approach for its development.

The developers of the Cardano project regularly publish papers regarding future plans and development. These papers are then studied and reviewed by experts, computer scientists, and engineers from all around the world before being implemented. This approach certainly makes Cardano a one-of-its-kind blockchain whose development is backed by strong research.

Cardano Fundamental Analysis

Experts believe the most effective way to predict a cryptocurrency’s future is by analyzing its fundamentals. If a blockchain and cryptocurrency project has a strong development foundation, it is more likely to perform positively over the long run. Cardano has been praised as a blockchain platform with one of the best-built frameworks in the industry.

Network Development

As aforementioned, Cardano was created to provide a platform for the development of decentralized applications and DeFi services. Smart contracts were fully implemented on the Cardano blockchain on September 12, 2021, through Alonza hard fork. This marked the beginning of the Cardano network, which has been growing ever since.

Thanks to Cardano’s incredible adaptability and versatility, it hosts a series of different applications on its platform. These include DEXs, DeFi protocols, stablecoins, NFT programs, wallets, data trackers, launchpads, and more. According to IOHK, there are about 1,100 DApps currently being built in the Cardano ecosystem.

A report suggests that NFT-related programs populate 40% of the Cardano ecosystem, while marketplaces take up around 4%. However, considering its growth, Cardano may soon completely take over its peer blockchain projects like Polygon and Solana.

Total Value Locked

Total value locked or, simply, TVL is another popular metric used to analyze the stability and fundamental strength of a blockchain platform. TVL refers to the total value of all the assets built or staked on a particular decentralized platform. Generally speaking, the higher the TVL, the more trustable the platform is considered.

Recently the TVL of the Cardano network skyrocketed with a surge of more than 250% in 2023 alone. It has increased from $48 million at the start of the year to a whopping $170 million. As per statistics from DeFiLama, about $52 million worth of digital assets are locked on Minswap alone. It is followed by Indigo, WingRiders, and Liqwid with $28 million, $18 million, and $16 million locked, respectively.

Staking Addresses

Staking addresses refer to individual participants who are part of one or more ADA staking pools. And when it comes to the total number of staking addresses, the Cardano network beats some of the biggest blockchain ecosystems in the market, including Ethereum – the second-largest blockchain by market capitalization.

The news was announced recently by Charles Hoskinson through a tweet in April 2023. He revealed that the Cardano’s addresses participating in staking (1,234,810) surpassed those in the Ethereum network (88,400) by a huge margin. Moreover, data from Staking Reward also shows that 68% of the total circulating supply of ADA is staked on the blockchain, which is four times higher than that of Ethereum (15%).

Whale Transactions

A lot of expert traders pay close attention to whale activity in the crypto space. A significant upshift in the whale transactions volume on any blockchain is normally indicative of a price boost in the near future, as the market sentiment is almost always directly proportional to the whale activity.

Interestingly, Cardano has experienced a notable increase in whale transactions since the beginning of 2023. Cardano’s price is up about 60% year-to-date, currently being traded at around $0.39. On-chain data shows that a major portion of this price boost is due to the whale accumulation of ADA during recent months. Some reports suggest that about 405.85 million ADA has been bought by various whales in 2023 alone.

Vasil Hard Fork

Having gone through the major fundamental metrics for Cardano, let’s now talk about development upgrades going on in the ecosystem. Arguably the most important recent event in the development of the Cardano blockchain has been the Vasil hard fork. Implemented on September 22, 2022, after being delayed from June 29, the Vasil hard fork is a part of the Basho phase of the Cardano roadmap, which is focused on scaling the network.

Contrary to the misconception, the Vasil hard fork is not a single big upgrade to the system but a collection of several significant upgrades, including changing the programming language to Plutus, changes in the consensus protocol, and a few other things. The main objective of this hard fork was to improve Cardano’s functionality, interoperability, scalability, and performance.

The Vasil hard fork has been well-received by the Cardano community, which has long-awaited this upgrade. The hard fork not only improves network scalability and transaction procedure but also opens new opportunities for developers to build DApps.

Recent Price History

Like most of the cryptocurrency market, Cardano spent most of the 2018-19 period in crypto winters. The ADA token began catching attention in 2020 when its price started increasing from $0.03 to $0.2, moving to the end of the year.

During 2021, ADA really came into the spotlight, gaining the interest of retail investors and institutions alike. This year, its price surged by 1,500% to hit an all-time high of $3.10 on September 2, 2021. However, after that, the price took a blow and had been in a constant downhill due to the wider crypto bear market pressures and other geopolitical reasons.

The cryptocurrency entered 2022 with an average price of $1.3 and continued to fall by a further 81% drop (92% from the all-time high) to hit a local low of $0.24 on December 29. However, ADA has had significant positive price action since then, raising over 60% within four months.

Conclusion

Despite the massive price drop during 2021-22, all the on-chain metrics, fundamental analysis, and the recent upward price trend suggest that Cardano has a long way to go. The project is known for its methodological developmental strategy.

Several experts are confident in the project and believe it has a solid potential to grow in the coming years. The recent fundamental upgrades and collaborations also indicate an improvement in demand moving forward, hence, boosting its pric

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