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Cardano, a blockchain platform powered by its native ADA coin, just racked up gains of over 30 percent during the course of the past week, with a host of bullish factors coalescing to constitute a compelling investment thesis for the nascent crypto project.
As a refresher, Cardano is an open-source and decentralized blockchain platform that is managed by a non-profit foundation. Crucially, all platform updates are implemented after being thoroughly vetted by academics and researchers, ensuring an optimal development cadence. Cardano calls its native ADA coin the “first third-generation” cryptocurrency, having the ability to solve the scalability and interoperability dilemma associated with previous-gen coins, including Bitcoin and Ethereum.
So, how does Cardano operate on a fundamental level? Well, the blockchain is expected to transition to a 2-layer structure where the first or primary layer utilizes a Proof of Stake authenticating mechanism that is powered by the Ouroboros algorithm and where a collection of nodes is manned by a “leader” who validates and then incorporates transactions into the Cardano blockchain. While this mechanism ensures security and decentralization, it comes at the cost of relatively slow transaction throughput.
This is where Cardano’s second layer comes into play. Termed Hydra for the mythical Greek serpentine monster, the layer is expected to go live in the next few months. Under the proposed structure, funds or even smart contracts can be transferred to a Hydra head, where a series of transactions are conducted between individuals without involving the primary blockchain. Instead, all parties maintain isomorphic state channels that allow parallel processing of transactions and smart contracts off-chain without altering the code of those smart contracts when they are migrated to the second layer. Once a batch of transactions has been processed, the Hydra head is closed, and the end state is incorporated into the Cardano blockchain. Of course, multiple Hydra heads can be opened simultaneously, thereby considerably ramping up the overall transaction processing speed. According to one theoretical estimate, Hydra would allow Cardano to process around 1 million transactions per second, with each Hydra head capable of processing 1,000 transactions per second.
Cardano’s ADA Coin is Benefitting From a Multitude of Bullish Factors
This brings us to the crux of the matter. One week back, Cardano was trading at $1.14. Right now, it is trading at the $1.50 price level, equating to gains of over 31 percent. While many analysts have been quick to identify the launch of SundaeSwap – the first Decentralized Finance (DeFi) exchange to list on the Cardano blockchain – this Thursday as the primary catalyst, the reality is composed of a multitude of bullish factors that have now coalesced.
First, as is being implemented by other Decentralized Exchanges (DEXs), SundaeSwap will use smart contracts to match trades between users. It will also revert a portion of the trading fees to investors who provide liquidity to the exchange. Moreover, users can also earn SUNDAE rewards in the first six months of the DEX’s launch.
In another bullish endorsement, Ethereum’s co-founder Vitalik Buterin recently conducted a poll where Cardano’s ADA coin was voted as the most favored coin to conduct around 80 percent of all global financial transactions by 2035.
— Most₳f₳ (@MostafaCoin) January 14, 2022
This ties directly into Cardano’s emerging credentials of an “Ethereum Killer” that many of the project’s most ardent bulls vehemently believe in.
In another shocking development, Cardano led the race in 2021 when it came to attracting most development contributions from GitHub.
All the forges are burning hot and bright. Cardano is the 2021 leader in development.
Cardano is going for number 1.
— Most₳f₳ (@MostafaCoin) January 1, 2022
Finally, Cardano’s ecosystem of supporting dApps and projects continues to grow at a rapid pace. As per a tabulation by CardanoCube, the blockchain now supports 16 DEXs, 24 different wallets, 18 different DeFi applications, 27 crypto marketplaces, as well as a large number of other dApps and NFT-related initiatives.
Most focused cryptos among retail
(live estimates past 4h)
Follow crypto popularity https://t.co/ZAlldqTXHr
— Breakout Point (@BreakoutPoint) January 18, 2022
It is hardly surprising, therefore, that Cardano has emerged as a favorite of the retail trading crowd, currently featuring in the top most popular crypto projects.