As a researcher who has closely observed the cryptocurrency market over the past few years, I have to admit that Cardano’s decline from the top 10 by market capitalization isn’t entirely unexpected. Having followed its development and progress since its inception, I can see how it has struggled to keep pace with its competitors, particularly Ethereum and Solana.
Initially ranking among the top 10 cryptocurrencies based on market cap, Cardano has since dropped from its position.
If you’ve been keeping an eye on Cardano (ADA), you might already know that it’s encountering some tough times given the growing competition and slow uptake in usage.
JUST IN 🔴$ADA (@Cardano) has dropped out of the top ten cryptocurrencies by market cap. — Crypto Briefing (@Crypto_Briefing) August 19, 2024
The reason for Cardano’s decrease could be linked to its heavy dependence on external elements which weakens its decentralized structure, less activity on the network compared to contemporaries such as Ethereum (ETH) and Solana (SOL), and its struggle to match the speed and activity of more dynamic competitors.
In September 2021, the value of Cardano reached an all-time high of $3.09, but as of now, it’s being traded at approximately $0.33. Back then, its market capitalization almost touched the $100 billion mark, whereas currently, it hovers around $12 billion, just below that figure.
As a crypto investor, I regularly use market capitalization as a tool for comparing the scale and significance of various digital currencies in the market. Typically, cryptos with larger market caps are perceived to be more mature and stable compared to their smaller-cap counterparts, which might exhibit greater volatility.
What went wrong with Cardano?
Due to intense competition with Ethereum and the emergence of Layer 2 technologies, Cardano has found it challenging to gain substantial adoption, as these advancements have lessened its distinctive benefits. Although there’s been a surge in development efforts, several projects within its ecosystem haven’t prospered, resulting in low user interaction and excessive reliance on the ADA token.
The ability for Cardano to execute smart contracts has been subject to criticism because it depends on elements outside the blockchain, a setup that goes against the core ideals of complete decentralization.
Developers have pointed out potential issues such as users’ funds getting stuck during interruptions and the difficulties of managing tailored solutions. Although Cardano boasts robust technology and smart contract functionalities, its on-chain transactions are relatively limited when compared to similar networks, resulting in a decrease in its market value.
Over time, less busy networks have surpassed Cardano, which has affected both its growth and its standing within the cryptocurrency market.
Cardano developments
Lately, Intersect has encouraged decentralized app projects operating on the Cardano blockchain to speed up their preparations for the imminent Chang Upgrade #1.
The upcoming update, which includes on-chain governance, is essential for taking Cardano closer to a completely decentralized setup. Over 80% of Cardano’s stake pool operators have already upgraded to the most recent validator node, but exchanges and decentralized applications need to do the same in order to keep pace.
Cardano’s falling status might suggest that investors are losing faith in it due to decreased trading activity and waning market attention. Yet, there’s still hope for a comeback if Cardano manages to strengthen its ecosystem and rekindle its pace.
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2024-08-19 17:13