Cardano’s ADA lands spot in US Digital Asset Stockpile — Will it generate value?

On March 2, Donald Trump was inaugurated as President. mentioned Cardano ADAADATrump’s March 6 tweet that he would be adding cryptocurrencies into the US strategic crypto reserves. Trump’s 6 March executive order The Digital Asset Stockpile, or DAS (Digital Asset Stockpile) is a digital asset pool that includes altcoins. “responsible stewardship” Treasury

The potential inclusion of ADA in a portfolio managed by the government surprised many and sparked harsh criticism. Many in the crypto-community questioned the inclusion of the token in the digital assets stockpile, despite the fact that it had loyal investors for many years.

Analyze the blockchain in order to determine if ADA’s utility and fundamentals support its inclusion in the US Digital Asset Stockpile.

Digital Asset Stockpile in the US: A Case for ADA

Cardano, launched in 2017 through an ICO is among the oldest platforms for smart contracts. The platform is unique in its research-driven development and use of a delegated-proof-of stake mechanism, combined with an expanded UTXO account model.

Cardano’s ambition to become a smart-contract platform is well-founded captured by X ‘Cardano_whale,’ who outlined the blockchain’s “non-negligible fees, voting power, decentralized consensus, all native token trading paired with it.”

The X Post emphasizes ADA’s utility. “most VC coins lack”Cardano’s governance decentralization and its decentralised nature are key features.

Cardano Project Catalyst has been dubbed one of the most decentralized initiatives for crypto-funding. It allows community members to allocate treasury money from inflation and transaction fees democratically. Cardano also aims for a complete transition to onchain governance, as opposed to Ethereum, which is still reliant on offchain management to make major upgrades.

It is important to note that the word “you” means someone. Plomin hard fork On Jan. 29, the world witnessed a transition from “full decentralized governance,” Cardano Foundation. According to the Cardano foundation, it grants ADA Holders “real voting power—on parameter changes, treasury withdrawals, hard forks, and the blockchain’s future.”

Cardano’s native coin ADA is used to pay for the network, stake and govern. Its maximum supply is 45 billion, with 31 billion initially distributed—26 billion sold in the public sale and 5 billion allocated to IOHK, Emurgo, and the Cardano Foundation. 

The rest of the 14 billion ADA was reserved to be released gradually through coinage. ADA inflation falls as reserves are depleted, thanks to the distribution of 0.3% per five-day period. Current inflation is around 4% with a supply of 35.95 Billion ADA.

The ADA is far behind its competitors in terms of fees, staking returns, and other metrics. 

Cardano’s slowing activity is a cause for concern.

Cardano, despite its long history in the ecosystem of smart contracts, has not been able to create enough activity for it to be considered a leader. ADA is not widely used in the crypto-ecosystem, which raises questions about its value.

Messari’s Q4 of 2024 State of Cardano According to the report, there were 42,900 active addresses each day. The blockchain averaged 71,500 transactions per day. According to a report, quarterly fees were $1.8 million. This is a dramatic contrast with Ethereum’s $552 millions in fees for the same time period. CoinGecko.

Cardano’s real staking annualized yield was 0.7% (adjusted for inflation) in Q4 compared with Ethereum’s 2.73 %.

Related: Crypto fans are obsessed with longevity and biohacking: Here’s why

The concern over adding ADA to a portfolio of government agencies is reinforced by other blockchain metrics:

• According to Electric Capital, Cardano has 449 developers who are working on its blockchain. This puts it 12th in the list of blockchains. report.

• The stablecoins share of its $224 billion market capitalization is only 0.01%. DefiLlama.

• Cardano has a very underdeveloped DeFi ecosystem, which accounts for only 0.3% of $169 Billion DeFi industry. Cardano will have a 12% share if you include the core stake, which doesn’t require any locking, and is therefore not included in TVL.

• Cardano DApps remain low when compared with other smart contracts platforms. In Q4, it averaged just 14,300 daily DApp transactions—well outside the top 25 and a fraction of Solana’s 22 million. This 73% drop is more worrying than the 52,700 Cardano daily transactions recorded in Q4 2023. This sharp decline is a worrying trend for a growing blockchain.

Can the potential of ADA justify a US investment?

The argument for ADA’s inclusion in the Strategic Crypto Reserve is less convincing than that of Ethereum or Solana. These blockchains are leaders in many categories. Cardano’s lack of activity, its limited adoption, as well as the weak staking rewards, cast serious doubts on ADA’s suitability to be a part of a managed government asset pool.

Cardano, with its focus on decentralization and ADA’s capped production limit, has a distinct advantage over the competition. These factors could increase adoption and relevance over time.

Projects such as those Atrium Lab explores Cardano’s compatibility with Bitcoin using the eUTXO, which can potentially open up a new framework to DeFi for Bitcoin and encourage activity towards Cardano.

Can this be sufficient to warrant ADA’s inclusion in the digital assets stockpile

David Nage was the portfolio director of Arca Capital. put it, 

“Like the rest of crypto, the Cardano ecosystem needs to find and support developers to create products and applications that millions of people enjoy and depend on. Then, they need brilliant storytellers to solidify the narrative behind it to build mass, sustainable audiences. After all that, putting ADA into a US national reserve begins to make more sense, in my opinion. It can be done.”

The information contained in this article is meant to provide general knowledge and not as a legal or investment advisory. These are solely the opinions, views, and thoughts of the author and may not reflect the opinions and views of Cointelegraph.