5. ADA is a zombie chain maintained by bragging

Cardano is a blockchain platform project that uses a proof-of-stake (POS) consensus mechanism to issue the token ADA. On September 4, 2023, the market value of ADA ranked 7th on the Coinmarketcap, with a market value of US$9 billion.

Cardano is often described as the “Ethereum killer” because it aims to have cheaper transaction fees than Ethereum, be more scalable, and have higher transaction speeds. If their development speed is not as slow as a snail and they can make it quickly, they may be able to occupy a place. But now, this has become their bragging in the early years because after Ethereum 2.0, most of what they wanted to achieve was realized by Ethereum, and it was better.

Cardano claims to have written academic papers on the consensus algorithm Ouroboros and all Cardano technology products, implemented a peer review process, and had an independent review by the academic community. The author is ignorant and did not find their review process. For the academic community, they mentioned the International Cryptography Society, but the author has not seen the relevant review report, nor have I seen the detailed progress of the cooperation with several famous universities they mentioned.

Professor Philip Wadler, whom they mentioned, did the work for them. He is a fellow of the Royal Society of Edinburgh and co-founded the blockchain intelligent programming language “Plutus.” Wadler contributed to the Cardano paper, including Extended Balance Ledger (EUTXO) and System F; provides essential elements of the theoretical basis of languages ​​such as “Haskell,” and contributed to blocks Chain smart contract. Wadler’s language is a domain-specific language (DSL) or application-level language. In various fields (such as finance, business, and medicine), there are languages designed for the scope of knowledge in specific areas. Still, this language can only be limited to the description of application logic in its field and cannot be said to be of a high academic level. Ethereum’s Solidity language is an example. In fact, the Plutus and Bitcoin script are equally effective. It should be said that they have some features in technical design, but as a user, they can hardly feel it. The only thing users can feel is that the mortgage of the currency is well designed, and the user’s mortgage rate reaches about 70%, while Ethereum has a requirement of 32 Ethereum, and the user’s mortgage rate is only about 20%.

Cardano’s development process was carried out in five phases starting in 2015:

1. Byron protocol core;

2. Shelley’s progressive decentralization;

3. Goguen is suitable for the development of multiple assets and smart contracts;

4. Basho scalability and side chain authorization;

5. Voltaire Governance and Voting.

Cardano co-founder Charles Hoskinson claimed on YouTube that the plan mentioned above may be completed by 2020, but it is still in the fourth stage by 2023. The evaluation of the technical level must include the ability to realize the project. Without realizing the project, it is a castle in the air. Such rhetoric, also including saying that more than 1,000 Ethereum smart contracts will be transferred to them, has not been realized. Although Cardano has made a conversion tool, and the conversion is not difficult, the market still does not buy it.

I’m also confused about their academic level. For example, they say that they are distributed thinking but do not have the incentives of ecological projects commonly used in distributed development and only rely on their centralized development; Cardano says that is peer-reviewed codes, but they go to use the test network, which shows that their peer-reviewed level cannot replace market reviews, code review is a common practice in blockchain projects, what is the difference between them and other blockchain projects? On the one hand, zero-knowledge proof is required, and on the other hand, real-name authentication is required; such things are understandable, but they do not have the consistency of academic thinking, and it is not as good as Ethereum’s insistence on the concept, showing strong pragmatism. Bragging has consequences; let’s see how it plays out in the market.

Cardano market performance analysis

Cardano is composed of three teams. The Swiss-based foundation focuses on promoting the application of Cardano, as well as organizing community and publicity promotion; the global input and output team (IOG, formerly IOHK) leads technology research and development; Emurgo In Japan undertook early fundraising and was responsible for regional business application development. It is the problem with Cardano. It is a centralized development, but there is no centralized unified organization, which has caused great flaws in management and great internal friction.

The growth data of user addresses shows that the rapid increase of users occurs when there is a technological breakthrough. Among the three organizations, the foundation stalled, and Emurgo Implemented some functions because, apart from technology, Cardano has made little progress in the promoted application projects. Emurgo’s contribution is to coordinate marketing and hype when technological breakthroughs occur. It can be seen from Figure 1 (https://cn.investing.com/crypto/cardano/chart):

Figure 1

All early investors made money from the opening at $0.00246 on December 9, 2017, to $0.997 on January 6, 2018. Then, the scandal broke out, and the coin price plummeted. ADA coin mortgage was launched in July 2020. The coin price started to speculate from the low of $0.0241 in March to $0.1463 on August 9, a month later. It achieved favorable shipments and then fell, perfectly completing a round of speculation. The second round of hype was the launch of the mainnet smart contract, which reached a historical high of $3.099 on September 2, 2021. The smart contract was less effective than expected, and the coin price fell to $0.2575 on September 4, 2023.

Cardano’s numbers are dispiriting.

The value evaluation of the cryptocurrency platform is based on the number of projects applied on the platform and the size of the projects. One indicator to measure platform application is the total locked-up volume (TVL): Cardano’s total locked-up volume on September 3, 2023, was US$159 million, about 0.65% of Ethereum. It also doesn’t have the well-known distributed finance (DeFi) projects and stablecoins that Charles Hoskinson expected to go to it. The following data is taken from https://cexplorer.io/:

On September 3, 2023, its largest application, Minswap-Batch Order, was 18,739 people; Minswap Liquidity Pool was 18,499 people.

NFT applications (jpg. store · n/a) are 18,724 people.

On September 2, 2003, the number of transactions (TX Count) was 44,866. This number matches the number of active users.

Active accounts appear in “Epoch” 315; a Cardano epoch is 5 days long. Epoch 315 corresponds to the highest coin price in 2021, and the number of active accounts is 258,000. The current epoch is 432, and the active accounts are 56,000. Its block generation time is 20 seconds, and each block is recorded with more than 10-20 transactions and less with none.

It has been two years since the mainnet smart contract was launched. Such data is very inconsistent with Hoskinson’s 970,000 followers on Twitter.

Lessons from Cardano

1. Users cannot be bullied. They have made great efforts in community and market promotion and have a good market reputation and a learned image. Vitalik, the spokesperson of Ethereum, has 4.98 million Twitter followers, and Changpeng Zhao, the spokesperson of Binance, has 8.6 million Twitter followers, which is far smaller than the hundred million users of their projects. Hoskinson has 970,000 Twitter followers but only has more than 4 million accounts. Many accounts are generated due to the ADA coin mortgage policy to take care of small accounts, and the actual number is less than 4 million. How does it compare to Ethereum?

Since 2021, Cardano has launched its proud fourth-stage second-layer expansion solution Hydra; the integration of Lace wallet and Atala decentralized identity (Atala PRISM); and the stablecoin Djed issued by an unknown company, etc., but none of them caused waves. Figure 1 shows a line at $0.25, with a massive hold-up. Without rebirth, it will not go out of the rising market. The 2.0 merger of Ethereum has not achieved an increase, so what is the rise of Cardano, which has no product innovation at all? Bitcoin has a four-year halving. As long as the logic is not broken, if Bitcoins are trapped, they can be released, so in the long run, there is no Bitcoin trapped in the market. Only coins that are trending up can rise. Ethereum and Cardano have the problem of lack of fixed rising logic, but Ethereum and Bitcoin have the same trend; they are in sync with the general trend, while Cardano is trending downward and is out of sync with the general trend. We looked at the data of Cardano, is it like the data of a 9 billion project? The data is not deceiving; how will the downward trend change? Invisible. Being able to stand in this position is already a blessing. The more times you cry “Wolf,” the no one will believe you.

2. Technological innovation is important but cannot compete with product innovation. The vast majority of users do not understand technology and do not care about technology, but they can judge whether a product is useful. Cardano’s selling point is that it has good technology, is lofty and impressive, and sound technology must be transformed into good products. But which of the first cryptocurrency application products was made by them? Smart contracts are the first of Ethereum; the ICO wave is the first of Ethereum; distributed finance (DiFi) is the first of Ethereum; NFT is the first of Ethereum, and similarly, stablecoins are also the first to be popularized on Ethereum.

Technology is just a tool to form a product. What is the product that Ethereum cannot and Cardano can create? All products follow Ethereum, but cryptocurrencies respect product innovation as a market rule.

3. No matter how good your technology is, you must be at the right time. Hoskinson’s idea is perfect, but they ultimately do not understand the importance of market competition. The market has its rhythm. When their products come out, the market enters a garbage period.

How do

Cardano’s reputation was blown, utterly defeated as the “Ethereum killer,” making people laugh at it as a zombie chain. In “Part Three” of this series, the author introduced Justin Sun’s turnaround through stablecoins and gave Ripple an idea in “Part Four,” hoping that Ripple’s XRP would be converted into a stablecoin and embark on the road to turnaround. The central idea is to hope that cryptocurrency will break through the original framework and move toward real commercial applications. Opportunities exist.

The zombies wake up in spring. Cardano has two commercial application teams, which have a good foundation. Don’t just speculate in coins and lose your face; do some down-to-earth work. Once the breakthrough is achieved, spring is here.

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