Cardano (ADA) is the foundation of trust in the crypto sector, for its founder

Speaking at the Cardano Summit 2023 in Dubai, Cardano co-founder and CEO of IOG (Input Output Global), Charles Hoskinson, called Cardano (ADA) the “foundation of trust” for the entire crypto industry.

During the keynote, Hoskinson summarised Cardano’s journey from inception to today and described his vision for the future of the project, community governance and innovative technologies within the Cardano ecosystem.

Cardano Summit 2023 and the importance of the ecosystem and ADA in the crypto sector

The Cardano Summit 2023 took place from 2 to 4 November in Dubai, United Arab Emirates. 

Over the three days, dozens of sessions were held with speakers such as the CEO of the Cardano Foundation, Frederik Gregaard, Dr Marwan Al Zarouni of the Dubai Blockchain Centre, the founder and CEO of EMURGO, Ken Kodama, University Professor Massimo Morini, and of course Charles Hoskinson himself, as well as dozens of other important names in the Cardano ecosystem. 

However, the statements made by Hoskinson during the final keynote entitled ‘Looking Ahead to 2024 and Beyond’ were particularly striking. 

Hoskinson’s aim was to describe the status quo and give an indication of the project’s future development.

Cardano as a foundation of trust 

Hoskinson pointed out that the Cardano project started as a very small project with a big vision, and while noting that it is still in its infancy, he described what has been achieved in the last seven years as “pretty remarkable”. 

In fact, seven years is a long time for a crypto project. Just think of what Binance, for example, has been able to achieve in the last six. 

Moreover, from this perspective, if the Cardano project is still in its early stages after all this time, one has to wonder whether the speed at which it is progressing is good or not. Ethereum, for example, is only two years older and much more has been done. 

But Hoskinson was particularly focused on the resilience and reliability of Cardano, which has been running continuously for five years.

He said: 

“The fact that Cardano has never failed in 5 years, it’s always been running 24 hours a day 7 days a week, it’s become effectively the root of trust of the entire cryptocurrency space there is no engine better-there is no code better than what we’ve re we’ve written.”

Trust in the crypto sector

With this in mind, it seems a stretch to claim that the mere fact that Cardano has been running continuously for five years makes it the foundation of trust in the crypto sector. 

In fact, from this point of view, it is bitcoin that dominates, with well over five years of continuous operation. The last interruption was ten years ago, when not only had the Cardano project not been launched, but Ethereum did not even exist.

Moreover, after everything that happened in 2022, especially the sudden implosion of the Earth/Moon ecosystem and the failure of FTX, it was certainly not Cardano that restored the lost trust, but Bitcoin and Ethereum. 

In fact, to be fair, Cardano does not seem to be at the root of anything in the crypto sector, except of course the Cardano project itself. For example, if Cardano hypothetically went the way of Terra, very little would change for Bitcoin and Ethereum. 

The parable of Cardano

One can get an idea of Cardano’s parabola by analysing the variation of its TVL in DeFi over time. 

The first DeFi protocols mapped to Cardano date back only to the beginning of last year. The LTV rose rapidly in the first three months from 1.8 to 322 million, only to begin a long decline that ended in January this year at 54 million. 

Since then, a recovery has begun, with the LTV rising back above $100 million in February, $150 million in April and $200 million in October. 

The current level is therefore not much lower than it was in March 2022, although it is still much lower than that of other chains. 

For example, the current LTV of Ethereum is $23 billion, more than a hundred times that of Cardano. It is followed by Tron with almost 8 billion and BSC (Binance Smart Chain) with almost 3. Cardano is clearly outperformed not only by Avalanche, but also by Ethereum’s three main Layer-2s (Arbitrum, Polygon and Optimism). 

Even the fledgling Layer-2 Base outperforms Cardano in terms of LTV. 

Given these figures, it is clear that Cardano can in no way be defined as the foundation of DeFi.

ADA, the Cardano crypto

ADA is still the eighth most capitalised cryptocurrency in the world, and sixth if stablecoins are excluded. 

However, it is only 21% more capitalised than Dogecoin and 66% less than XRP. Ethereum capitalises almost twenty times more and Bitcoin even 55 times more. BNB, the cryptocurrency of BSC, capitalises almost three times more than ADA. 

Looking at the price trend, ADA is currently still 88% below its all-time high of $3.10 reached in September 2021, although it has recovered 45% since the beginning of the year. 

It should be remembered that the price before the last major bull run began was only $0.15, so the current price of $0.35 is more than double that. However, over the course of 2021 it had risen by almost 2,000%, much of which was lost during the last bear market. 

Moreover, the low of the last bear market in ADA was not reached at the end of 2022, as was the case with BTC and ETH, but in September 2023, and it remained at that low until the end of October. In other words, the annual +45% was only achieved in the last three weeks. 

In fact, during 2023 it first rose from $0.24 to $0.42, then fell back to $0.30 and rose again to $0.45 in April, which remains the high for the year. It then fell for the first time to $0.26, then recovered to $0.35 in July and fell back to $0.24 in September. 

So 2023 was a year of high volatility but no real uptrend. 

The future of Cardano

During the Summit, Charles Hoskinson unveiled a new framework called ‘Partner Chains’, which would achieve a revolutionary change in the way new blockchains are launched and managed. 

It is an innovation based on Cardano, but will be used to create new, optimised partner blockchains.

One of the first partner blockchains to be launched with Partner Chains will be Midnight, which will focus on privacy. 

As of 3 November 2023, Cardano boasts 148 launched projects, 9 million native tokens and 1,295 projects in development, with 77.6 million transactions processed.

In theory, then, Cardano’s future looks promising, although it is likely to evolve somewhat away from the world of decentralised finance. 

148 projects launched in seven years is not a lot, but 1,295 projects still being processed could indicate an acceleration in the project’s evolutionary process.