Is ADA Still Worth Buying in 2022?
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Cardano and, by default, its native cryptocurrency, ADA, has earned itself a fairly negative reputation within the crypto space since its launch in 2017. Fans of Charles Hoskinson – founder of Cardano – claim that fear, uncertainty, and doubt (FUD), spread by those uninterested in seeing the protocol succeed, has deterred new investors from buying ADA and getting fully on board with the project.
The recent negative price movement in the decentralized finance (DeFi) industry led to Bitcoin falling to an uncomfortably low level – $25,401 per coin, as of 12th May 2022 – dragging altcoins, ADA included, with it. With its cryptocurrency reaching levels not witnessed since the beginning of last year, and with some strong opinions about Cardano floating around, is ADA still worth buying in 2022?
What is Cardano?
Cardano is a decentralized proof-of-stake blockchain platform designed to improve on some of the faults experienced by existing blockchains. Charles Hoskinson, co-founder of Ethereum, began development on the protocol in 2015, eventually launching it in 2017.
Cardano is considered a third-generation blockchain. First-generation blockchains, such as Bitcoin, failed to provide a satisfactory environment for complicated deal settlements and decentralized application (DApp) development. Second-generation blockchains, such as Ethereum, provided users with the ability to write and execute smart contracts and develop DApps, but struggled when it came to scalability.
Cardano, a third-generation blockchain, combines the positive aspects of previous generations, while focusing on scalability, interoperability – the ability to exchange data between different blockchains – and sustainability.
The Cardano roadmap is split into five distinct stages: Byron, Shelley, Goguen, Basho and Voltaire. The Byron era focused on laying the foundation for Cardano to succeed, allowing users to buy and sell ADA, and implementing the delivery of the Daedalus wallet. The Shelley era looked to improve on decentralization within the Cardano network, marking the transition towards the majority of nodes – devices connected to a blockchain that communicate and transfer information with one another – being run by network participants. This period in Cardano’s roadmap also saw the implementation of a rewards system that incentivized users to stake their ADA and participate in the network. The Goguen era introduced smart contracts to the network, along with Plutus, the protocol’s smart contract platform, which allowed developers to write and create applications that interact with the blockchain, enabling greater interoperability. The Basho and Voltaire eras focus on scaling and governance, respectively, allowing the Cardano network to grow and become truly self-sufficient.
What is ADA?
ADA, named after Ada Lovelace, a 19th-century mathematician widely recognized as the first computer programmer, is the native token of Cardano. Cardano operates using a proof-of-stake (PoS) consensus mechanism, a system that looks to reduce the amount of computational work required by proof-of-work blockchains, such as Bitcoin. Coin holders, in this case ADA, offer their tokens as collateral for the chance to validate blocks on the blockchain, and the network randomly selects a validator to mine the next block.
ADA holders can delegate their tokens to a stake pool to earn rewards for themselves or the stake pool itself. ADA can also be used as a governance token, with holders able to vote on proposals regarding the maintenance and improvement of the network. As Cardano’s network grows, with new decentralized exchanges (DEXs), launchpads, wallets and other DeFi protocols being created every month, ADA will continue to be utilized across the ecosystem. Cardano non-fungible tokens (NFTs), only purchasable with ADA, are also becoming increasingly popular, and there has been considerable growth in the utilization of the cryptocurrency at online crypto casinos and other digital gaming platforms.
ADA price
Along with the rest of the crypto market, ADA’s price has plummeted in recent weeks and months. Since reaching an all-time high of $3.09 per coin at the beginning of September 2021, ADA’s price has continued to fall, eventually reaching the $0.40 level that hasn’t been experienced since February 2021.
Much like the majority of altcoins, ADA’s price movement often correlates with Bitcoin’s, and as extraneous events (the Russia-Ukraine conflict, COVID-19 and general happenings within the finance space) have occurred, Bitcoin’s price has fallen to reflect this.
Cardano is often jokingly referred to as a stablecoin because, historically, its price has not replicated the dramatic increases seen by other tokens. That being said, ADA’s price is not averse to some impressive price movements, with the cryptocurrency skyrocketing from $0.21 per coin at the end of 2020 to almost $3.10 only nine months later.
Keeping in mind the improvements and recent changes made to the Cardano blockchain, could ADA be the next cryptocurrency to experience meteoric growth this year.
Reasons to buy ADA
Despite plenty of arguments to the contrary, the Cardano ecosystem continues to grow substantially. As of May 2022, there is well over $135m of total value locked into the ecosystem, with $67m locked into Minswap – a decentralized exchange – alone.
Between the implementation of smart contracts in September and the end of January 2022, over 1,000 smart contracts were created on top of the Cardano network, and at one point in March, there were over 500 smart contracts being developed, indicating exponential growth across the Cardano ecosystem.
Some of the most popular projects built (or being built) on Cardano include:
Decentralized Exchanges: AdaSwap, ADAX, SundaeSwap, MuesliSwap and Minswap
Wallets: Daedalus, GeroWallet, AdaLite and Yoroi
DeFi Protocols: Atomic Swap, Vy Finance, Coinlink and CarDAO
Marketplaces: CNFT.IO, CNFTSwap, Cardahub and KubeCoin
Launchpads: Cardashift, Genius X, Rarety.io and Cardence
The ecosystem also includes metaverse and gaming applications, lending and borrowing protocols, stablecoins, payment protocols, and community and DAO projects.
Cardano currently has a 250 transaction per second (TPS) speed, which is already significantly faster than Ethereum. Additionally, the Hydra scaling solution, due to be delivered perhaps as soon as June this year, should increase the network’s speed considerably. Hydra is a layer-2 scaling solution that will improve the underlying performance of the blockchain and support growth and adoption through increased capacity.
Summary
Although it has a relatively negative reputation within the crypto space, Cardano has been built with longevity, security, decentralization and scalability in mind. Unlike Solana, arguably Cardano’s fiercest competitor, Cardano has never experienced downtime or outages, proving that it’s a potentially more reliable option for investors. With the market having taken a recent downturn, could this be the bottom for cryptocurrency, and if so, is this the best time to invest in ADA?
