Article Republished from: LBank
Preface
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 offers developers and users a powerful environment for building 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 competition in areas such as smart contracts, DeFi, and NFTs.
This article will take you deep into the latest developments, key data, and network features of Cardano, exploring the use cases of ADA and its role in the broader crypto economy. Whether you are a developer, investor, or blockchain 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 ultimate goal—the future of the Voltaire era.
Introduction to Cardano
Cardano is a layer 1 PoS network launched in 2017. Its goal is to provide security, scalability, and functionality for decentralized applications and systems built on its network. In addition to community support from developers, node operators, and projects, Cardano is also supported by organizations like Input Output Global (IOG), the Cardano Foundation, and EMURGO. These organizations collectively drive the development, adoption, and fundraising of the network, leading Cardano toward 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. Following the Alonzo hard fork in 2021, Cardano began supporting smart contracts and started competing in more traditional crypto markets such as DeFi and NFTs.
Key Data
Profitability Data
ADA is the native asset of Cardano, serving as the main medium of exchange for network transactions. It has four main network-level use cases:
(i) Settling Network Transaction Fees: ADA is used to pay for transaction fees on the Cardano network.
(ii) Registering Stake Pools: Users can use ADA to register a stake pool, participate in network consensus, and become Stake Pool Operators (SPOs).
(iii) Staking: Whether as a stake pool operator or a delegator, staking ADA helps secure the network and earn token rewards.
(iv) Rewarding Voters and Funding Projects: In Project Catalyst, ADA is used to reward voters and fund projects.
The maximum supply of ADA is 45 billion tokens, and its circulating supply will experience inflation until this maximum is reached. After the end of each epoch, 0.3% of the ADA reserves (unreleased ADA) will be allocated to SPOs as rewards. This "inflation" approaches zero as reserves are consumed and circulating supply nears 45 billion.
The annualized real staking yield considers value dilution due to inflation. In the third quarter, the annualized real staking yield was 0.6%, but this may vary among different stake pools.
In the third quarter, the price of ADA decreased by 4.8% to $0.37. Accordingly, the total market capitalization of ADA declined by 6.9% quarter-over-quarter 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 ranking in total circulating market capitalization fell from 10th to 11th place in the third quarter.
On Cardano, every transaction requires a network transaction fee for processing transactions and paying storage costs. Fee calculations include a minimum fee plus a variable fee based on transaction size. Revenue (in USD) decreased by 31.2% quarter-over-quarter to $510,000, while revenue (in ADA) decreased by 14.2% to 1.4 million ADA. This difference was due to the decline in ADA's price throughout the quarter.
Currently, 20% of Cardano's transaction fees go to the treasury. The treasury balance (in ADA) decreased by 1.2% quarter-over-quarter to 1.55 billion ADA, but the dollar value of the treasury increased by 3% to $622.92 million.
Daily Active Data
In the third quarter, Cardano's average daily transaction volume decreased by 15.9% quarter-over-quarter to 43,200, while the average daily active address count (DAAs) also declined 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% quarter-over-quarter to 0.54.
The ratio of transactions to active addresses (txs/DAAs) decreased by 1.7% quarter-over-quarter to 1.59. An increase in this ratio usually indicates that activity is more evenly distributed among users; conversely, a decrease in the ratio suggests an increase in 'heavy users.'
Total staking volume (ADA) and the staking rate of ADA both decreased by 0.3% and 4.1%, respectively, quarter-over-quarter. Due to the decline in ADA prices, total staking volume (in USD) decreased by 5.1% to $8.5 billion. Total staking volume (in USD) represents the economic security of the network.
Governance, Forks
In April 2024, Cardano announced the Chang hard fork, a two-phase network upgrade aimed at achieving on-chain governance and completing the core goals of Cardano's final roadmap phase. Voltaire moves toward Cardano's self-sustainability through on-chain voting and off-chain mechanisms and institutions like the member-based organization Intersect.
Phase One: Begins after the launch of the Chang hard fork on September 1, 2024. This phase opens a technology-guided period, setting the stage for decentralized voting and governance actions.
Temporary Cardano Constitution: Used to fill the gap until a true constitution is iterated through the Cardano Constitution Workshop and approved at the Cardano Constitution Conference in Buenos Aires, Argentina, in December 2024.
Interim Constitutional Committee (ICC): Composed of seven members, three of whom are elected by vote. In the first phase, the ICC has veto power over certain on-chain governance actions.
Phase Two: Will see Cardano's on-chain governance 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 through the introduction of new user roles and delegated 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 the second phase, DReps, SPOs, and the Constitutional 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 jointly held all seven governance (genesis) keys. Governable actions include matters related to the Constitutional 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 use this testnet to launch new infrastructure (such as wallets and voting browsers), and SPOs can test voting and proposals, with details about DReps also discussed here.
SanchoNet and the broader Voltaire promotion campaign 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 bring together ADA token holders under a shared vision to achieve 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 budgeting processes, and has been operating a funding program, rewarding projects related to governance and development, such as education and DRep platforms.
DeFi
In the third quarter, Cardano's Total Value Locked (TVL) in DeFi grew by 13.3% quarter-over-quarter to $231.6 million, while the diversity score in DeFi increased 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 increase of 4.4%, reaching $58.6 million.
Liqwid's TVL surged by 77.2% to $47.1 million, surpassing Indigo, which saw a 19.7% decline in TVL to $38.4 million.
Smaller protocols like Splash Protocol and SundaeSwap saw increases of 76% and 26%, reaching $16.9 million and $16 million, respectively.
Indigo is a synthetic asset issuer that provides iUSD, iBTC, and iETH. One week after the end of the third quarter, Indigo completed an upgrade to V2.1. This upgrade introduced algorithmic interest rates, splitting interest between the treasury and INDY stakers, along with several other improvements.
Splash is a decentralized exchange (DEX) launched in July, having raised 17.2 million ADA through an 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 and witnessed the creation of over 2,230 tokens and a trading volume of 4.5 million (ADA) on its first day.
SundaeSwap continued its momentum from the second quarter, launching a V3 upgrade that introduced a dynamic fee model and increased transaction capacity. The launch included a 90-day fee waiver, which expired in August, and a proposal to increase fees was passed in September. SundaeSwap's revenue is distributed to SUNDAE token holders, SundaeSwap's treasury, Sundae Labs, and others.
ADA Token Unlocking
Recently, Cardano (ADA) will unlock tokens this week. Approximately 16.84 million ADA tokens are expected to be unlocked, accounting for 0.05% of the current circulation.
Future Outlook
Cardano launched in 2017 as a layer 1 PoS network aimed at providing 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 supporting 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, increasing the diversity of the DeFi ecosystem, and growing TVL, Cardano is expected to continue solidifying its position in the blockchain industry and drive further development of its ecosystem through ongoing technological innovation and community governance.
