Cardano’s (ADA) Scalability and Investment Advantages

Cardano’s (ADA) Scalability and Investment Advantages
Cardano (ADA) is one of the largest proof-of-stake platforms that ensure higher power use efficiency compared with traditional proof-of-work platforms. Cardano specializes in providing smart contracts’ functionality, and it may be viewed as one of Ethereum’s competitors. ADA provides users with additional opportunities to participate in its governance and policy improvements. ADA’s current price is $1.04 with the total market capitalization being equal to $34.8 billion, making it the 6th largest crypto project in the market. Its current circulating supply is 33.6 billion with the maximum possible supply of 45 billion. ADA’s price reached its peak of $3.09 at the beginning of September, following the general growth of the crypto market, but it has experienced a steady decline since then.
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Figure 1. Dynamics of ADA’s Prices (USD); Data source – CoinMarketCap
Cardano tries to find the optimal balance between scalability, security, and decentralization. The improvements in scalability are perceived as the major strategic priority for the management for the following year in an attempt to strengthen Cardano’s competitive positions in the market. The following on-chain measures are taken by ADA management to address the existing scalability challenges: the block size increase up to 72 KM; optimizing block propagation times; ensuring memory improvement through ADA stake distribution; and new smart contracts optimization solutions. In addition, such off-chain measures as side chains and isomorphic channels aim at increasing the platform’s productivity in the near future.

ADA’s Investment Opportunities and Risks

The price dynamics of ADA demonstrate one of the highest volatility rates in the crypto market within the past month. In addition to the general instability in the crypto industry and the presence of various opposite market tendencies, investors’ assessment of Cardano’s future market dynamics is highly non-uniform. Some of them emphasize ADA’s innovative smart contracts’ solutions and scalability improvements, while others suggest that such projects as Polkadot and Solana are more dynamic and effective in utilizing the latest technological advances.
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Figure 2. 1-Month Dynamics of ADA Price (USD); Data Source – CoinMarketCap
The major opportunities of investing in ADA in the short run refer to successfully utilizing the short periods of its exponential growth or decline. If the investor properly identifies such moments, considerable returns can be generated within the minimum timeframe. During the past month, there were two such opportunities. The first one was the price increase one during January 10th – January 17th, and the second one was the rapid price decline during January 18th – January 23rd. Currently, the ADA price is within the downward channel, and the direction of ADA’s deviation from it will indicate the following price cycle. In regards to long-term investments, Cardano does not appear to be the optimal choice due to the absence of radical investments and the likely measures taken by its main competitors. In particular, Solana is more effective in reaching the maximum scalability, while Polkadot ensures a positive long-term dynamic by involving the maximum number of full-time developers. Ethereum’s successful transition to Ethereum 2.0 may also threaten Cardano’s market position in the following months. Therefore, ADA’s investments may present only short-term interest for crypto investors.
Dmytro Kharkov

Holding a Master’s Degree in Finance (Distinction), Dmytro Kharkov has proven expertise in Business Analytics, Data Analysis, and the crypto market. He has completed online courses on Machine Learning and Data Science from the leading universities and online schools. He closely monitors the latest crypto analytics insights from Glassnode, IntoTheBlock, Santiment, etc.