What is the scale of the ADA surge last year? On August 31, 2021, the price and market cap of ADA stood at $2.78 and $90.8 billion respectively. Exactly one year ago, the figures were only $0.116 and $3.002 billion. In 12 months, the price of ADA has soared by nearly 2,400%, and its market cap has risen by more than 3,000%. In August, Cardano announced that it will launch smart contracts on September 12. Since then, the ADA price has shot up by 160% in one month, making it the third most valued token.
What is ADA? What is behind its recent surge?
ADA is a native token of Cardano. Like Ethereum, Cardano aims to be a public chain infrastructure carrying massive commercial applications. In terms of seniority, ADA is one of the earliest tokens ever launched. However, it is shrouded in controversy. ADA has many advantages, including:
1) ADA is backed by a first-class tech team.
The key figures of ADA are Charles Hoskinson and Aggelos Kiayias. Trained in cryptographic algorithms, Charles is one of the earliest BTC miners. In the early months of 2013, he became a blockchain entrepreneur. Later that year, he joined Ethereum. Like Jeremy Wood, another core member of the Cardano team, Charles is also among the earliest founding members of Ethereum. Aggelos is the chair in Cyber Security and Privacy and director of the Blockchain Technology Laboratory at the University of Edinburgh. He is also the Chief Scientist at blockchain technology company IOHK and Associate Professor of Cryptography and Security at the University of Athens. In terms of technical capacity, the Cardano team is almost unmatched.
2) Driven by its ambitious vision, Cardano has made a well-rounded plan.
As a first-hand witness to the development of Ethereum, Charles Hoskinson believes that for smart contract public chains like Ethereum, challenges in terms of scalability, cross-chain interoperability, and energy consumption are inevitable, and he thought the better approach to address these challenges is to design a new platform from scratch. This is why, from the very beginning, the Cardano team made a comprehensive and visionary plan for its project. Cardano aims to achieve its vision of the “third-generation blockchain” in 5 stages:
Byron: Cardano’s first layer;
Shelly: This stage aims to turn Cardano into a fully decentralized autonomous system;
Goguen: This stage brings a unique computational layer and enables smart contracts of finance and transaction;
Basho: This stage focuses on performance and scalability.
Voltaire: This stage focuses on sustainability and self-sovereign identity (SSI);
It has been predicted that once Cardano completes all the five stages, it might surpass Ethereum.
3) Cardano shares close ties with the academic community and is on good terms with governmental and regulatory agencies (Japan in particular).
Unlike other blockchains, the technology-focused Cardano team maintains close cooperation with several leading universities. In addition to the transparent development process, Cardano has also invited peers from the academic community to review its code. Such a rigorous technical approach has made the Cardano network more secure. Unlike other blockchain projects living in constant fear of government “crack-downs”, Cardano has been able to grow in an enabling environment, thanks to its good relations with governments.
If Cardano really has all these merits, what makes it controversial?
Despite its ambitious visions, Cardano has been constantly criticized for its slow tech development. Established in 2015, Cardano was once considered a “dead duck” as it has been unable to launch smart contract functions or enable DAPP development for as long as 6 years. In the past 6 years, we have not seen any applications on this public chain infrastructure. On the other hand, Ethereum, also a public chain infrastructure, has thrived. From 1CO in 2017 to DeFi and NFT booms in 2020, on-chain applications of Ethereum have left a mark in every corner. Furthermore, Polkadot, a new public chain, has also demonstrated excellent track records. The success of Ethereum and Polkadot has overshadowed Cardano.
Apart from this, in 2018, Cardano’s commercial arm (Emurgo) suffered from the scandal of “misappropriation of funds”. In the same year, Cardano marched into the African market. It cooperated with the Ethiopian government, improved the country’s education system, and developed digital student identities for the education sector to record academic performance. It is noteworthy that these digital identities can also provide day-to-day services for students after they graduate. Meanwhile, Cardano developed anti-counterfeiting and supply chain products to serve the needs of local agriculture, transportation, and retail, providing consumers with certified agricultural products that can be traced from field to table. These are all excellent measures, but Cardano has also been criticized for “making empty promises”.
This is why some say ADA’s slow tech development in response to the surging market price is almost philosophical.
So, what are the reasons behind ADA’s boom?
Obviously, the most direct reason is Cardano’s announcement to launch “smart contract” functions. Smart contracts are vital for public chains because they have become the key to the successful application of a blockchain. Whether Cardano can stand out among public chain infrastructures depends on the launch of smart contracts at the Goguen stage. This missing piece of Cardano is finally about to be filled. Amid the market excitement that followed, ADA saw massive investments that drove a shocking price surge, which is the primary reason for its impressive market worth.
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