Cardano ADA has taken a massive hit recently, so let's talk about what happened, what I'm doing about it, and what I expect to happen in the future. The first item I'd want to examine is eToro's delisting of Cardano, which we'll break down.
The eToro incident
So, a few weeks ago, eToro issued a press release indicating that trading of ADA and TRX on their platform would be restricted for US consumers. If you're unfamiliar with eToro, it's a cryptocurrency exchange.
I was startled when I read this because it had been my belief and what I had read in the past that IOHK, the foundation behind Cardano, was extremely strict in following existing regulations and guaranteeing a good launch of their coin so that difficulties like this would not arise in the future.
For example, in the United States, it's difficult to say if an ICO should pass the Howey Test or not, or if it's an investment security that should be regulated further by the SEC.
Looking into this further, I couldn't discover anything that raised any warning signals regarding Cardano following its delisting from eToro, but after reading the press release, there were a few points to consider.
What we need to consider
So, first and foremost, this refers to users in the United States who are part of a rather tiny exchange. In fact, eToro isn't even on this list of the major cryptocurrency exchanges. Bitstamp, on the other hand, is on the list.
This is notable because ADA was only recently listed for trade. As a result, I've always found it fascinating how negative news spreads so much further than good news. This exchange, for example, is 10 times larger, but you don't hear anything about it. - There's currently nothing we've received no regulatory event, no subpoenas, no nothing from any regulatory body,' says Charles Hoskinson.
What caused this to happen?
So, why did eToro remove ADA from its US platform? We can't be certain 100 percent. One cause could be the cost of doing business. Because eToro is based in the United Kingdom, trading in the United States is costly and difficult.
As a result, the exchange may decide to de-list coins for US customers, but this can't be the only reason why Cardano has dropped more than 50% from its all-time high. As a result, we need to investigate this further.
Consider the following Cardano metrics.
 |
| pic credit: coin metrics |
Let's begin by looking at some statistics. The daily amount traded of a cryptocurrency, excluding wash trades, is known as real volume. As a result, it's similar to the real dollar amount transacted. Similar to transaction volume, it looks that the current genuine volume is just a wee bit greater than it was pre-Cardano hype surge.
When we look at fresh Cardano addresses, though, it's a different scenario. You might be surprised to learn that the number of wallets holding at least $100 in ADA has risen continuously over the previous few weeks, with only minor fluctuations. And, regardless of the dollar level, the total number of wallet addresses has continually climbed, recently surpassing 3 million.
Another measure I like to look at is the number of daily comments on the crypto subreddit. And I prefer these measures because they prevent me from being biased. I'm invested in Cardano, but I don't want my Cardano analysis to be skewed in any way.
If the investment is a bad one, I want to get out of it as soon as possible. So, daily comments on a subreddit. It's not ideal data, but it points us in the correct direction in terms of where the project's excitement lies.
What is the future of the ADA excitement?
We can observe that subreddit engagement is declining and has now reached new lows. If you squint your eyes and go back far enough on the above chart, you'll notice that prior upticks have also resulted in new baselines.
And the tremendous amount of enthusiasm around Cardano towards the end of the summer was just the most visible example of this new baseline being established because the community had never seen so many new members.
When I look at this graph, I'd prefer to see a beautiful continuous rise, but unfortunately, this happens whenever something becomes insanely famous. Cardano, after all, was everywhere. Something that popular can only be popular for a limited amount of time.
Also Read: Cryptocurrencies Future Scope & How do you fundamentally analyze a cryptocurrency?
Why are people so unhappy with Cardano?
So, once again, we ask, "Why is this happening?" Why is there such a drop in volume and engagement? The only explanation I can think of is the misunderstanding around the 'Alonzo' Hard Fork in September.
There was a lot of buzz surrounding this Hard Fork, and with good cause. Proof-of-stake smart contracts are significant. But I don't think there were enough folks who gave a genuine perspective on what that implies.
I believe there was a concept that smart contracts would be enabled. They'd just turn the lever, and we'd have a functioning Dex, on-chain financing, and crypto gaming all ready to go, all with Cardano's insanely low transaction fees.
I warned about this, even stating that the deployment of smart contracts should be viewed as the start, not the end. It was at this point that applications could truly begin to be developed, which takes time. Unfortunately, people's attention wanes over time. They grow tired of it. Now, months later, we're on the verge of releasing a few select projects. But there's still a long way to go.
It's still early in this space, and it's also early in Cardano's career. In fact, I don't believe there is a single general-purpose blockchain or large-scale dApp that we can consider fully developed. They're all in beta in the crypto world. All of them are being worked on. So, in my opinion, Cardano was harmed by its own publicity.
Cardano's transaction per second issue
What about the Cardano transaction per the second problem? I occasionally see it said that Cardano is limited to eight transactions per second, making it worse than Ethereum. And the point is that if Cardano is so slow, how can it be the network of the future?
So, let's take a look at it. Cardano currently has roughly 8.1 transactions per second, however, this can be expanded to around 40 to 60 if the network requires it. That's not even taking into account the upcoming Hydra upgrade.
So, this is how we acquire it. Cardano's current maximum block size in bytes is 73,728. On Cardano, a block is created every 20 seconds, and the average transaction is 450 bytes, so 73,728 divided by 20, divided by 450 is 8.192 transactions per second.
Also Read: 6 best crypto currencies to invest in for the future 2022
Cardano speed limit
In this case, we don't know the exact upper bound limitations. IOHK has conducted extensive research on transactions per second, and we can see that 40 to 60 transactions per second appears to be extremely feasible.
The reason it's lower right now is that the network doesn't require it yet, and increasing it would only add to the network's costs. And none of this takes into account Cardano's layer-2 solution, the Hydro update.
According to conservative estimates, this update will occur at a rate of 2500 transactions per second, with other predictions reaching 1 million transactions per second. As a result of all of this, I don't see any difficulties with Cardano's transaction speed.
Where is Cardano headed?
So, where is Cardano going next? To be honest, I'm quite pleased with myself. Let's take a look at some of the recent positive news that has been overlooked. Cardano recently achieved a milestone of 20 million transactions. This occurred four years after the launch and prior to any Dexes activity.
Once Dexes are online, that transaction total will skyrocket, making 20 million seem insignificant. What's more impressive is that Cardano has had almost no downtime in those four years. In the last year, I only found one incident of around an hour of downtime in April. Then there's Cardano's ecosystem, which, as I indicated, is currently in development.
Updated Cardano ecosystem
 |
| pic credit: Cardano.org |
The ecosystem map shows all of the many projects being constructed, such as loan platforms, launchpads, dexes, and payments. In the following months, most of these will be useable. And, in my opinion, if we see project after project debut and transaction volume increase on Cardano, the price will have no choice but to rise.
But when will this take place? I wouldn't bet on it in a month or even two months, but I believe we'll see a lot of robust, functional dApps running on Cardano in three to six months.
Bottom Line
And, in the end, if you want crypto that will double in a month, you should avoid Cardano. This may be a project worth remaining in if you want to be a member of an ecosystem that takes a more methodical and scientific approach to the issue of decentralization. So, I hope this has given you a better picture of where Cardano stands, the difficulties that have arisen, and some good news about this blockchain.
Disclaimer: I am not a financial advisor. This is not financial advice. This article is only treated for educational purposes only.