Cardano Has Value That Investors Can Measure Like a Stock

Cardano (ADA-USD) remains very interesting despite its continued slide. Investors should note that Cardano’s slide isn’t simply a consequence of major players suffering downturns over the past few months.

Cardano crypto logo
Source: RuskaDesign /

Bitcoin (BTC-USD) remains the cryptocurrency bellwether. As it goes, so goes the rest of the market. That said, Cardano’s losses of 57% since November have outpaced Bitcoin’s, which have fallen a relatively modest 39% in the same period.

That comparison doesn’t bode well for the so-called Ethereum (ETH-USD) killer. But there are plenty of reasons to be positive when it comes to Cardano. That said, the so-called measurables investors can use require deeper explanation.

Positives About Cardano

Cryptocurrency remains an opaque investment field for the most part. It often seems that investors spend as much time understanding the lingo surrounding crypto as the projects themselves. That isn’t specifically a positive.

It certainly leads investors to be skeptical if not outright distrustful of crypto. And that’s why I think two specific metrics related to Cardano warrant explanation.

Those two measurables are GitHub commits and TVL, or total value locked. According to FXStreet both of those are in Cardano’s favor.

GitHub Commits

Anybody who is interested can find the code for most crypto projects on GitHub. That’s because they are open source and permissionless. GitHub commits are modifications made to source codes by one or more developers.

So, the more such modifications that occur, the more general interest there is in a given project. Developers are not going to be directing their energy toward modifying projects they don’t believe will ultimately succeed. That’s why the news that 2,544 GitHub commits occurred in early March is such good news. The news comes on the heels of other news that Cardano was the most developed project on GitHub in 2021.

No, the news hasn’t translated to rising ADA-USD prices. But it is a strong long-term indicator. Investors should seek cryptocurrency projects where real work is being accomplished. Based on the GitHub commit numbers, Cardano fits the bill.

Total Value Locked

Total Value Locked is the overall value of crypto assets within a given decentralized protocol (DeFi) protocol. That means the total value of all the coins deposited in staking, lending, and liquidity pools.

Here’s the important thing to note in relation to Cardano:

The market cap of the token may be high or low relative to the TVL of the project. The more extreme the relationship, the more overvalued or undervalued the token may appear.

That fairly expresses what’s happening with Cardano now. Its market capitalization has fallen as its price declined over the past few months. But its TVL hit a new all-time high of $133.39 million recently.

That indicates that Cardano is undervalued at the moment.

Why Should Investors Care About Cardano?

The answer here is that Cardano looks like a great deal by those comparative metrics. In the stock market investors are used to utilizing price to earnings (P/E) ratios and other similar metrics to judge value. In the world of crypto a set of analogous tools is beginning to emerge.

The market cap to TVL ratio I just mentioned functions in a very similar manner to P/E ratio. That raises an important question about Cardano: Will investors care that it is relatively undervalued?

That’s largely a subjective call. It’s the same in the stock market. I could tell you that Stock A has a P/E ratio that’s better than 90% of competitors in its sector. That wouldn’t objectively mean that its price is set to rise.

It depends upon how the market digests that metric. I hope it responds positively because I’m a fan of Cardano. If it doesn’t, at least readers will understand they have a new tool at their disposal in judging cryptos on a relative basis.

On the date of publication, Alex Sirois 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 Publishing Guidelines.

Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.

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