Cardano Down 90% Since September 2021, Did Smart Contracts ‘Kill’ ADA?

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As a seasoned crypto investor with a keen eye for blockchain technology and its potential, I’ve seen my fair share of bull markets and bearish trends. The rise and fall of ADA, Cardano’s native token, is one such rollercoaster ride that has piqued my interest.

During the height of the 2020-2021 bull market, the native token of Cardano, ADA, reached $3 in August. Notably, developers initiated smart contract functionality towards the apex of this cycle following the successful Alonzo hard fork, marking the beginning of the Goguen phase.

Did Alonzo And Smart Contracts Kill ADA?

Conversely, as per observations made by analysts from Atomic Wallet, Cardano (ADA) has been experiencing a steady decline since the mentioned period, falling by approximately 90% in total value up until now. Currently, ADA is being traded at roughly $0.32. Notably, it’s finding immediate support around $0.30, which serves as a significant psychological level.

Despite traders’ current optimism, the recent three-year trend might imply that the deployment of smart contracts on Cardano could have negatively impacted its value. The dramatic price drops, exacerbated by the 2022 cryptocurrency winter, have left investors who bought in August 2021 with assets that resemble mud rather than valuable coins.


 

It’s uncertain if ADA will regain its footing in the upcoming weeks and recoup its losses from 2022. However, it is certain that the activation of the Alonzo hard fork and the commencement of the Goguen era was a significant milestone for Cardano. This transition held importance because prior to September 2021, developers were unable to deploy dApps on Cardano, which limited its ability to challenge Ethereum and other platforms that support smart contracts.

For a considerable amount of time, starting from the creation of its first block, Cardano’s developers have faced allegations of prolonging the development process while investing vast sums into it. However, following the Alonzo upgrade, users are now able to construct intricate smart contracts using Plutus scripts and deploy decentralized applications (dApps). Just like other digital ledgers, all transaction fees are to be settled in ADA, Cardano’s native cryptocurrency.

As a seasoned analyst, I’ve observed the steady expansion of Cardano’s ecosystem, particularly focusing on the Total Value Locked (TVL). According to DeFiLlama, since the activation of Alonzo, there are now more than $177 million worth of assets being managed by Decentralized Finance (DeFi) protocols operating on this platform.

On the Solana network, while the number of developers might be smaller than on Ethereum or BNB Chain, they still leveraged smart contract technology to construct their solutions.

Cardano Transitioning To Voltaire: Will Things Change?

As an analyst, I find it concerning that the current market value of ADA does not align with the expectations of its holders following the Goguen update. This disconnect becomes more pronounced as Cardano progresses through the Basho stage and approaches the Voltaire phase, marking the final step in the platform’s development.

Voltaire, as part of Cardano’s development, aims to establish a decentralized governance structure. This means that ADA holders will have increased functionality, such as the ability to cast votes on proposals and contribute to network improvements directly. Furthermore, there is a designated treasury for financing projects developed within the Cardano ecosystem. The Chang hard fork is currently underway, with approximately one-third of all stake pool operators (SPOs) prepared for this update so far.

Currently, ADA is experiencing significant selling pressure and may drop down to the lows from 2023 around $0.22 if buyers don’t intervene. However, if the prices climb above $0.50, the bullish sentiment could drive ADA towards its highs from March 2024.

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2024-08-20 03:40