The Cardano project had the wind in its sails until the Alonzo update, which brought the first bricks to build smart contracts on this blockchain network. The price of ADA even briefly reached $3 between late August and early September. But beyond the promising innovations, Cardano also has a darker side…
The Alonzo fork and its smart contracts, a disappointment?
At the beginning of July 2021, Cardano’s native token, ADA, saw its price climb to new heights never reached before. In fact, this was the auspicious moment that Grayscale Investments chose to announce that it was adding ADA to its investment crypto-funds.
It must be said that the cryptosphere was eager to discover the potential of smart contracts, finally implemented on Cardano through its Alonzo update. Unfortunately, not everything went as hoped by many, and smart contracts are still very rare on the blockchain founded by Charles Hoskinson.
A recent detailed report by Grayscale on Cardano’s strengths and weaknesses highlights some of its shortcomings. And we find precisely its weakness in terms of development of decentralized applications (dApps), due to the late deployment (and still under construction) of its smart contracts.
For as this analysis reminds us, Cardano seeks to differentiate itself from other blockchains by emphasizing “an approach of doing things right the first time. This, using a development model based on “academic research, peer review, and security through formal verification.”
But this vision, which can be considered laudable at its core, is also paradoxically “its greatest weakness,” because according to Grayscale’s experts, it has generated compared to its competitors:
- a lack of history on the capabilities of its smart contracts ;
- a lack of proof that its dApps are working properly;
- a maturing ecosystem of third-party developers;
- the lack of widespread dApps on the main network mechanically leads to lower transaction fee revenues, as dApp-related transactions are still few and far between.
All is not bleak for Cardano’s future
Aside from that, Grayscale also details the qualities (current or upcoming) that have led Cardano to be the 3rd most capitalized cryptocurrency, behind Bitcoin (BTC) and Ethereum (ETH).
Since implementing proof-of-stake and staking in late July 2020, the network has seen the equivalent of $1.6 trillion in total transaction value on its blockchain.
The network is already processing over 115,000 transactions per day, representing a +1200% increase in usage since the start of 2021, and reportedly now has approximately 2.8 million monthly active users.
Finally, while there are still very few dApps actually running on the main network today, thousands of applications are under development, some of which are ready to be launched with future evolutions/improvements of smart contracts on Cardano.
Thus, even if the blockchain imagined by Charles Hoskinson still has a lot to prove to start competing with Ethereum, many development partnerships are being forged. This heralds as many projects that are just waiting to break out on Cardano, such as the implementation of Chainlink’s oracles, or even the algorithmic stablecoin of the US dollar designed by COTI.