The price of Cardano (ADA) has consistently declined since launching smart contracts, yet its ecosystem is growing stronger than ever, with the number of transactions increasing steadily. What is happening to Cardano, and how will 2022 look like for ADA?
In this article, we will discuss the recent developments of Cardano as well as assess its growth potential in 2022.
A Glimpse into the History
During the last crypto winter in 2018, we had seen how Bitcoin’s price fell by more than 84%, triggering panic throughout the market and causing the vast majority of altcoins to fall in unison. Cardano was no exception.
It wasn’t until mid-2019 that the crypto market began to show signs of recovery, thanks to record investments from traditional institutions and rising trade tensions between the US and China. In 2021, KPMG reported that global crypto investments had skyrocketed 450%. Of course, Cardano also benefits from these massive investment flows. Its Total value locked (TVL) has reached $315 million, with a market valuation of $28.68 billion. It has surpassed Avalanche (AVAX) to claim the 9th position in cryptocurrency market capitalisation.
In my opinion, this impressive growth is largely due to positive market sentiment and investors’ confidence in the Cardano development team.
However, by the end of 2021, while the prices of SOL, LUNA, and AVAX continued to soar, the price of the ADA token dropped from nearly $3 to below $1, raising a lot of concerns for its holders.
Compared to Solana or Terra, Cardano’s ecosystem is still in its infancy. Investors are hesitant to pour money into an in-progress project.
Cardano’s upgrade roadmap consists of different phases. Cardano is currently in the scaling stage, aiming to increase block size to facilitate more transactions.
Cardano Ecosystem Overview
There are currently over 900 projects being built on the Cardano Blockchain, including non-fungible token (NFT) marketplaces, metaverse projects, gaming applications, decentralised exchanges, lending protocols, oracles, and stablecoin issuers.
However, most of these projects are not fully developed and still lack plenty of advanced features.
Since its inception in 2014, Cardano has done an excellent job building a supportive community for all clients. For instance, when SundaeSwap (a decentralised exchange on Cardano) launched its mainnet, other DEX projects showed their support by becoming its first testers and sending in constructive feedback.
However, Cardano had also faced backlash from its community when the ADA price took a hit last year. Many joked around saying that “ADA is a stablecoin” when ADA kept falling to the $1 mark or “Cardano is a ghost chain” when no projects launched their mainnet on the Cardano blockchain. Of course, this is just an exaggeration, but it can negatively impact investors’ perception of Cardano.
Cardano would need to quickly upgrade their ecosystem if it wanted to attract more investment.
In summary, here are some key factors that have been hindering Cardano’s growth:
- Limited investment options.
- Investors are interested in more advanced blockchain projects like Solana or Terra.
- The Cardano ecosystem is still in its infancy.
Cardano and Its Development Plans
The Cardano Blockchain
The Cardano Blockchain is focused on resolving major blockchain issues such as:
- Decentralisation: Cardano has over 3,000 validators to propose and verify new blocks.
- Security: Cardano network has never been down during its eight years of operation ensuring stability for all projects built on its blockchain and the entire network as a whole.
- Scalability: Cardano can support around 257 tps, much faster than Ethereum, which can only handle around 15 transactions per second (tps). However, Cardano is expecting to launch its Layer 2 Hydra solution, a breakthrough that can help Cardano become the fastest system worldwide with more than 1 million TPS.
One minor drawback is that Cardano’s Smart Contracts are written in Plutus, a programming language with a smaller developer community compared to Solidity (EVM blockchains) or Rust (Solana or Near).
Layer 2 Solution Milkomeda
2021 saw the rise of many Ethereum layer two solutions, such as Arbitrum, Polygon (MATIC), StarkEX, Optimism, etc. Cardano also joined the party by developing Milkomeda – a Layer 2 Protocol (Rollups) delivering EVM capabilities to non-EVM blockchains. Future Milkomeda deployments aim to facilitate interoperability between Cardano, Solana, and other L1 blockchains.
Milkomeda will first be implemented on Cardano, bringing EVM support to the ecosystem, as originally planned in the Cardano roadmap.
Project Catalyst, initially an initiative of the Cardano community and Input-Output – its developer studio, has now grown to become the world’s largest decentralised innovation fund. Its goal is to accelerate the ecosystem’s growth by providing resources to new crypto projects.
Every Cardano-centric product at any stage of development, beginning with MVP, is eligible to apply for funding. Cardano (ADA) community activists will back the most promising by securing ADA stakes in favour of that application.
Project Catalyst Fund8 Voting started a few weeks ago, and the amount available from the Cardano Treasury will be $16 million in ADA.
Cardano and VCs
Venture capitalists are ploughing billions into crypto startups, with each ecosystem having its loyal fans. For Avalanche, it’s crypto billionaire Su Zhu (Three Arrows Capital co-founder), while for Solana, it’s Sam Bankman-Fried (CEO of Alameda Research).
The fact that Cardano has also attracted attention from major players like Three Arrows Capital, Alameda Research and Spartan Group shows that Cardano has a lot of potential to grow even stronger.
Cardano in 2022
With Cardano’s ADA coin falling continuously for the past six months, will there be a Cardano Summer in 2022?
Many Cardano enthusiasts, including myself, are looking forwards to Cardano’s next development phase, which might occur any time now. Their Layer-2 solution, Hydra, is expected to resolve issues the network faces like storage and scalability.
Opportunities for Investors
Unlike other major blockchains like Ethereum, Solana or Terra, projects on Cardano raise funds before they are fully developed. Not only does this make sure there’s always funding for all the projects, it also helps Cardano maintain its position as one of the largest blockchains by market capitalisation.
Here are a few examples of Cardano’s leading DEX projects:
- Muesliswap was the first DEX project to go live on mainnet, and it garnered a lot of traction from the community since it hadn’t gone through the audit stage. However, the developer team has partnered with MLabs to audit the MuesliSwap v2 protocol, and they are expecting to add more advanced trading features in 2022.
- SundaeSwap was launched after Muesliswap, but it has quickly risen to be one of the most popular projects on Cardano. Users will be able to swap, stake, lend and even borrow in the blockchain space using the SundaeSwap protocol.
Here are some potential projects on Cardano that I believe investors should check out:
- DEX: SundaeSwap, Minswap, Muesliswap
- Lending: Paribus, Liqwid
- Launchpad: OccamRazer, CardStarter
- Infra: ADA Handle, World Mobile
- NFT: SpaceBudz, Yummi Universe, Clay Nation
- NFT Marketplace: CNFT.io, JPG.Store
- Metaverse: Pavia, Metadams
- RealFi: Empowa, MELD, World Mobile
The cryptocurrency market is constantly changing and evolving. I hope this article can serve as a guideline for those interested in investing in the Cardano ecosystem in 2023.