Cardano (CCC:ADA-USD) is one of the world’s largest cryptocurrencies by market capitalization. In fact, ADA is currently the #6 largest coin out there and it hit #3 at one point in 2021.
However, despite its considerable success, Cardano has fallen into a bear market. The price of ADA fell from more than $3 per coin at its peak to just $1.20 today. That’s a nearly two-thirds decline in the space of a few months.
While other crypto leaders like Bitcoin (CCC:BTC-USD) and Ethereum (CCC:ETH-USD) have also slumped, Cardano’s loss was considerably larger than that of its peers.
Cardano’s Intended Use Case
Arguably, this came in big part due to slow adoption of Cardano. For a year now, it has felt like Cardano was on the verge of broad adoption. In particular, when Cardano overcame the skeptics and launched its smart contracts, it felt like ADA was finally ready to take off.
Instead, Cardano’s momentum slowed. ADA failed to pick up a mass influx of developers or users. Instead, Solana (CCC:SOL-USD) stole the show with its rapid and ultra-low fee network.
Cardano’s backers were completely right that the world wanted an alternative to proof-of-work coins such as Ethereum. Transaction fees are so high on Ethereum that it stifles the marketplace for all but the highest-cost non fungible tokens (NFTs) and other such on-chain applications. If things such as micropayments and crypto-based gaming currencies are going to take off, transaction fees need to be much much lower.
Cardano could be an ideal solution for that. Its revolutionary proof-of-stake algorithm massively reduces the amount of computing power necessary to run the network. This lowers overhead and allows users to send each other ADA for a tiny fraction of the expense of a similar transaction on BTC or ETH.
Cardano Fights Back Against Solana
There’s a perception that while Cardano is developing high-quality solutions, it is taking too long to get things to market. Rival networks, such as Solana, have clear flaws in terms of how stable and robust their networks are. But an imperfect solution that works today can be better than a perfect one that takes eons to launch in the first place.
Solana has taken massive market share for NFTs and other such art because it is already operational and offers rock-bottom fees. Sure, Solana has had network outage issues. But they have always been resolved and the core product is good and reliable enough for most uses.
Cardano is now stepping up its game. A new decentralized exchange (DEX) called SundaeSwap is set to launch on Cardano shortly. If it gains significant trading volume, this could give Cardano a vital tool in its effort to take back its role as the chief rival to Ethereum.
SundaeSwap is set to launch Jan. 20 and will offer an initial stake offering (ISO) and yield farming among other immediate applications. Cardano has always promised sophisticated technology with low transaction fees. Now, it’s time to see this play out in real financial transactions. Skeptics say Cardano’s network will not have enough capacity to handle all the transactions that SundaeSwap will generate. If that bearish talking point is disproven, however, ADA could fly.
The Verdict on Cardano
Everything around ADA remains a question of execution. Cardano has a great brand and a charismatic leader in Charles Hoskinson. ADA is one of the few cryptos that soared and plunged in 2017 and came out of it stronger today. In the crypto world, surviving a cycle or two gives a lot of credibility about the long-term future of a project. On paper, all the pieces are there to make Cardano one of the central pillars of the cryptocurrency ecosystem in future years.
As always, however, the promise remains more appealing than the actual product offered to consumers so far. That said, Cardano has live projects, such as SundaeSwap, that could finally convert that potential into reality.
If Cardano gets the user experience right, the price of ADA could shoot right back up to $3. This is one of the most appealing dip-buy set-ups in the cryptocurrency space. It just comes down to whether Cardano can deliver the product necessary to get users and developers to adopt its ecosystem.
On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a sizable New York City-based hedge fund. You can reach him on Twitter at @irbezek.
