Back to the list

Cardano (ADA) May Need Urgent Restructuring If This Happens

source-logo  u.today 19 October 2023 16:00, UTC

Cardano (ADA) as a proof-of-stake (PoS) protocol is quickly becoming unattractive as an investment asset due to its falling profitability. Data from the crypto analytics platform IntoTheBlock (ITB) pegs the number of wallet addresses in loss on the Cardano blockchain at 94.13%, the second poorest in the top 15 of capitalized coins after Polygon.

This outlook implies that as many as 4.19 million addresses on Cardano are in losses. This figure leaves only 174.84K addresses in gains, which pales when compared to its top rivals like Solana (SOL) and Ethereum (ETH).

Cardano is an actively developing blockchain network and has hit a number of impressive milestones based on its total developer Commits on GitHub. This impressive activity has not translated into actual growth for the coin, judging by its on-chain profitability and price action.

At the time of writing, Cardano is changing hands at a price of $0.2458, up by 0.17% in the past 24 hours. This mild growth is a facade as ADA is still down by more than 92% from its all-time high (ATH), and while Bitcoin is up by more than 70% year-to-date (YTD), Cardano has printed a 0.74% loss in the same time span.

Potential remedy: Burning?

Judging by use case, Cardano is outstanding and can compete with its peers. However, the attractiveness of the token, fueled by slowing demand, has dropped since the start of the year. This calls for a potential restructuring of its tokenomics that can help turn the coin into a deflationary one.

Cardano's current circulating supply is pegged at 35.218 billion ADA, a figure that compares with just 21 million for Bitcoin. With reducing demand, it becomes logical to explore burning, a feature that many other protocols like Shiba Inu, Ethereum and Binance Coin (BNB), among others, are exploring to date.