Foreword
Since its launch in 2017, Cardano (ADA) has grown into a PoS network aimed at pushing the limits of blockchain technology. As a platform dedicated to security, scalability, and functionality, Cardano is not just a cryptocurrency but provides a robust environment for developers and users to build decentralized applications and systems. Through close collaboration with organizations like Input Output Global (IOG), the Cardano Foundation, and EMURGO, Cardano has taken significant steps on its roadmap, entering the competitive arena of smart contracts, DeFi, and NFTs.
This article will guide you through the latest developments, key data, and network characteristics of Cardano, exploring the use cases of ADA and its role in the broader crypto economy. Whether you are a developer, investor, or blockchain technology enthusiast, this article will provide you with comprehensive insights into the Cardano ecosystem, from governance innovations to financial health, and the dynamic growth of DeFi, looking forward to Cardano's journey towards its ultimate goal—the Voltaire era.
Introduction to Cardano
Cardano is a layer 1 network launched in 2017. It aims to provide security, scalability, and functionality for decentralized applications and systems built on its network. In addition to developer, node operator, and project community support, Cardano is also supported by organizations such as Input Output Global (IOG), the Cardano Foundation, and EMURGO. These organizations collectively drive the development, adoption, and funding of the network, leading Cardano towards the final phase of its roadmap—the Voltaire era.
Compared to other smart contract networks, Cardano adopts a unique approach to development. The Ouroboros consensus mechanism allows for staking delegation, while the extended eUTXO accounting model facilitates the transfer of native tokens, scalability, and decentralization.
With a loyal group of users and developers, Cardano has proven its resilience. After the Alonzo hard fork in 2021, which enabled smart contracts, Cardano began to compete in more traditional crypto markets such as DeFi and NFTs.
Key Data
Profit Data
ADA is the native asset of Cardano, serving as the primary medium of exchange for network transactions. It has four main use cases at the network level:
(i) Transaction Fees on Settlement Network: ADA is used to pay for transaction fees on the Cardano network.
(ii) Registering Staking Pools: Users can use ADA to register a staking pool, participate in network consensus, and become staking pool operators (SPOs).
(iii) Staking: Whether as a staking pool operator or a delegator, staking ADA helps secure the network and earn token rewards.
(iv) Rewarding Voters and Funding Projects: ADA is used to reward voters and fund projects in Project Catalyst.
The maximum supply of ADA is 45 billion, and its circulating supply will experience inflation until this maximum is reached. After each epoch ends every five days, 0.3% of the ADA reserve (non-circulating ADA) is allocated to SPOs as rewards. This 'inflation' tends to zero as reserves are consumed and the circulating supply approaches 45 billion.
The annualized real staking yield accounts for value dilution due to inflation. In the third quarter, the annualized real staking yield was 0.6%, but this may vary across different staking pools.
In the third quarter, the price of ADA decreased by 4.8%, reaching $0.37. Correspondingly, the total market capitalization of ADA decreased by 6.9% month-on-month to $13 billion, with the slight difference in total market capitalization due to a 2.2% decrease in circulating supply. Due to the price drop, ADA's circulating market capitalization ranking fell from 10th to 11th place in the third quarter.
On Cardano, each transaction requires a network transaction fee, which is used to process transactions and pay for storage costs. The fee calculation includes a minimum fee plus a variable fee based on transaction size. Revenue (in USD) decreased by 31.2% month-on-month to $510,000, while revenue (in ADA) decreased by 14.2% to 1.4 million ADA. This difference is due to the decline in ADA prices throughout the quarter.
Currently, 20% of Cardano's transaction fees go to the treasury. The treasury balance (in ADA) decreased by 1.2% month-on-month to 1.55 billion ADA, but the treasury's USD value increased by 3% to $622.92 million.
Daily Active Data
In the third quarter, Cardano's average daily transaction volume decreased by 15.9% month-on-month to 43,200 transactions, while the average number of daily active addresses (DAAs) also decreased by 14.5% to 27,200. Cardano's average transaction fee remained unchanged at $0.13. However, the average transaction fee (in ADA) decreased by 17.9% month-on-month to 0.54.
The ratio of transactions to active addresses (txs/DAAs) decreased by 1.7% month-on-month to 1.59. An increase in this ratio typically indicates a more even distribution of activity among users; conversely, a decrease suggests an increase in 'heavy users'.
Total staking volume (ADA) and the staking rate of ADA decreased month-on-month by 0.3% and 4.1%, respectively. Due to the decline in ADA prices, the total staking volume (in USD) decreased by 5.1% to $8.5 billion. The total staking volume (in USD) represents the economic security of the network.
Governance, Forks
In April 2024, Cardano announced the Chang hard fork, a network upgrade occurring in two phases aimed at achieving on-chain governance and completing the core objectives of Cardano's final roadmap phase. Voltaire moves towards Cardano's self-sustainability through on-chain voting and off-chain mechanisms and organizations like the member-based organization Intersect.
Phase One: Commencing after the Chang hard fork begins on September 1, 2024. This phase opens a technology-guided period, setting the stage for decentralized voting and governance actions.
Temporary Cardano Constitution: To fill the gap until a true constitution is iterated through the Cardano Constitution Workshop and approved at the Cardano Constitutional Convention in December 2024 in Buenos Aires, Argentina.
Interim Constitution Committee (ICC): Composed of seven members, three of whom are elected by voters. In Phase One, the ICC has veto power over certain on-chain governance actions.
Phase Two: Will see on-chain governance of Cardano fully online as the Cardano Constitution is completed and approved. This phase will empower ADA token holders to guide technical changes and treasury withdrawals, partially via the introduction of new user roles, delegating representatives. ADA token holders will be able to delegate governance power to DReps and SPOs, who can vote on governance proposals on their behalf.
Registering as a DRep: Now open, requiring a one-time deposit of 500 ADA.
After the completion of Phase Two, DReps, SPOs, and the Constitution Committee will manage all areas of the network through on-chain voting and treasury systems based on CIP-1694. This will transfer responsibility from IOG, the Cardano Foundation, and EMURGO, which historically held all seven governance (genesis) keys collectively. Governable actions include matters related to the Constitution Committee, parameter changes, constitutional updates, hard fork launches, protocol parameter changes, and treasury withdrawals.
Intersect & SanchoNet
Testing related to CIP-1694 continues on SanchoNet, a test network launched in the third quarter of 2023, designed as a sandbox to test and build the processes and tools for Cardano's on-chain governance. Developers utilize this testnet to launch new infrastructure (such as wallets and voting browsers), SPOs can test voting and proposals, and details regarding DReps can also be discussed here.
SanchoNet and the broader Voltaire promotion initiative are led by Intersect, a member-based organization serving the Cardano ecosystem, combining the strengths of community members, SPOs, and project teams. Intersect was established to gather ADA token holders around a shared vision for a more transparent, collaborative, and innovative Cardano ecosystem.
Intersect maintains over 60 code repositories, including the complete Cardano Haskell code, and promotes Cardano's open-source approach through various standing committees and working groups. Additionally, Intersect is committed to creating an open product roadmap, annual budget processes, and has been operating a grant program that rewards projects for development related to governance, such as education and the DRep platform.
DeFi
In the third quarter, Cardano's total value locked in DeFi (TVL, in USD) increased by 13.3% month-on-month to $231.6 million, while the DeFi diversity score rose by 12.5% to 9. There were many changes in the TVL of various protocols in the third quarter.
Minswap's TVL saw a slight month-on-month increase of 4.4%, reaching $58.6 million.
Liqwid's TVL surged by 77.2% to $47.1 million, surpassing Indigo, whose TVL decreased by 19.7% month-on-month to $38.4 million.
Smaller protocols like Splash Protocol and SundaeSwap grew by 76% and 26%, reaching $16.9 million and $16 million, respectively.
Indigo is a synthetic asset issuer, providing iUSD, iBTC, and iETH. A week after the end of the third quarter, Indigo completed its upgrade to V2.1. This upgrade introduced algorithmic interest rates that share interest income between the treasury and INDY stakers, along with other improvements.
Splash is a decentralized exchange (DEX) launched in July, having raised 17.2 million ADA through a SPLASH token sale in May. Splash is also committed to developing snek.fun, a protocol similar to pump.fun on Solana, allowing users to easily launch and trade tokens. The application launched in September, witnessing the creation of over 2,230 tokens and a trading volume of 4.5 million ADA on its first day.
SundaeSwap continues the momentum from the second quarter, launching the V3 upgrade, which introduces a dynamic fee model and increases transaction capacity. The launch included a 90-day fee waiver that expired in August, with a proposal to increase fees passed in September. SundaeSwap's revenue is distributed among SUNDAE token holders, the SundaeSwap treasury, and Sundae Labs.
Unlocking Ada Tokens
Recently, Cardano (ADA) will undergo a token unlock this week. Approximately 16.84 million ADA tokens are expected to be unlocked, accounting for 0.05% of the existing circulating supply.
Future Prospects
Cardano launched in 2017 as a layer 1 PoS network, aiming to provide a secure, scalable, and feature-rich platform to support decentralized applications and systems. Through its unique Ouroboros consensus mechanism and extended eUTXO model, Cardano has demonstrated competitiveness in the fields of smart contracts, DeFi, and NFTs.
With the implementation of the Alonzo hard fork in 2021, Cardano entered a new stage of development after enabling smart contracts. In the future, Cardano will achieve complete on-chain governance and self-sustainability through the Chang hard fork, ushering in the Voltaire era. By introducing new governance mechanisms, enhancing the diversity of the DeFi ecosystem, and driving TVL growth, Cardano aims to continue solidifying its position in the blockchain industry and promoting the further development of its ecosystem through ongoing technological innovation and community governance.
