In the midst of the 2020 to 2021 bull run, the native token of Cardano, ADA, surged to $3 in August. However, this peak was short-lived as developers activated smart contracts at the peak of the cycle post the Alonzo hard fork, marking the beginning of the Goguen phase. Despite initial optimism, ADA has since spiraled into a continuous downtrend, plummeting by over 90% over the years, currently trading at $0.32.
The activation of smart contracts on Cardano could be seen as a double-edged sword. While it opened up opportunities for developers to create complex smart contracts and dApps using Plutus scripts, it also resulted in a drastic devaluation of ADA. The current low valuation of ADA raises concerns among coin holders who expected a surge in value post the Goguen era.
The Growth of Cardano’s Ecosystem
Despite the plummeting prices of ADA, the Cardano ecosystem has continued to expand post the activation of smart contracts. DeFi protocols on Cardano currently manage over $177 million in assets, showcasing a growing interest in the network. However, this growth has not been reflected in the valuation of ADA, leading to a disconnect between expectations and reality.
As Cardano progresses towards the Basho stage and eventually Voltaire, the final phase of its development, the focus shifts towards governance and decentralization. With Voltaire, ADA holders will have more utility, being able to vote on proposals and contribute to network improvements directly. However, the current selling pressure on ADA poses a threat, potentially pushing prices down to 2023 lows if buyers do not intervene.
The activation of smart contracts on Cardano marked a significant milestone for the network, enabling developers to create decentralized applications and complex smart contracts. However, the devaluation of ADA following this activation has raised concerns among coin holders. As Cardano progresses towards decentralization with the Voltaire phase, the future remains uncertain for ADA, with potential price fluctuations based on market dynamics and investor sentiment.
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