In the midst of the bull run of 2020 to 2021, ADA, the token native to Cardano, reached a peak of $3 in August. However, this moment was short-lived as developers introduced smart contracts during the same period, marking the beginning of the Goguen phase after the successful implementation of the Alonzo hard fork. Since then, ADA has witnessed a significant decline, dropping by more than 90% over the years. Currently trading at $0.32, with immediate support around $0.30, it is evident that the activation of smart contracts may have negatively impacted the coin’s valuation.
The activation of smart contracts on Cardano was seen as a crucial milestone, allowing developers to deploy dApps and compete with Ethereum and other blockchain platforms supporting smart contracts. This transition was long overdue, with Cardano developers facing criticism for delays and high development costs. With the introduction of Plutus scripts, users now have the ability to create complex smart contracts and run decentralized applications on the network, all payable in ADA.
Growth of the Cardano Ecosystem
Despite the challenges faced by ADA in terms of its valuation, the Cardano ecosystem has continued to expand, as evidenced by the total value locked in DeFi protocols on the platform. Post-Alonzo activation, DeFi protocols on Cardano now manage over $177 million in assets, showcasing the potential for growth and development within the network. While this figure may be lower compared to Ethereum and other established chains, developers have capitalized on smart contracts to build solutions and contribute to the ecosystem.
As Cardano progresses through its development phases, from Basho to Voltaire, the focus is now shifting towards decentralized governance. In the upcoming Voltaire phase, ADA holders will have enhanced utility, allowing them to vote on proposals and actively participate in improving the network. Additionally, a treasury will be established to fund projects on Cardano, creating a sustainable ecosystem for innovation and development.
Despite the promising potential of Cardano and the advancements in its technology, ADA remains under significant selling pressure. If buyers do not intervene, prices could potentially drop to lows of around $0.22 in 2023. However, if ADA manages to surpass the $0.50 mark, bullish momentum could push the coin towards its previous highs in March 2024. The disconnect between ADA’s current valuation and the expectations of coin holders post-Goguen remains a concern, highlighting the need for continued growth and adoption within the Cardano ecosystem.
While the activation of smart contracts on Cardano has faced challenges in terms of ADA’s valuation, the platform’s continued development and expansion signal a promising future for the network. As Cardano moves towards decentralized governance and further enhancements in its technology, the potential for growth and innovation within the ecosystem remains high. It is essential for stakeholders to closely monitor market trends and actively participate in the evolution of Cardano to ensure its long-term success.
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