Since its creation in 2017, Cardano (CRYPTO: ADA) has spent most of its existence trading for less than a dollar. In September 2021, the introduction of smart contracts caused the price to hit an all-time high just shy of $3.
From that all-time high, however, Cardano has continued to put in lower lows week after week and currently trades for only about $0.50. Yet there’s a glimmer of hope for Cardano.
Last week, Cardano founder Charles Hoskinson announced that the Vasil hard fork will be implemented on June 29. The changes set to come will enable Cardano to handle more traffic, lower fees, and provide new capabilities for smart contracts. The main upgrade of the hard fork will be a scaling solution known as diffusion pipelining.
Diffusion pipelining is a method that allows validators on the blockchain to basically work ahead and complete tasks at the same time other validators are verifying blocks of data. Cardano’s block verification process consists of six steps. Before diffusion pipelining, each validator would have to wait until the preceding validator accomplishes their task. Now, validators can begin their work before the previous validator has finished.
Cardano keeps growing
Due to the integration of smart contracts, there’s been much more congestion on Cardano than ever before. This streamlining is badly needed.
At the beginning of 2022, there were roughly 1,000 smart contracts built on Cardano. Since then, the number of smart contracts has increased to 3,000.
Another metric used to measure the value of a DeFi ecosystem is the total value locked (TVL). The TVL quantifies how much money is locked in smart contracts and has become one of the default statistics to compare different DeFi blockchains.
Despite not being reflected in its current price, Cardano’s TVL has seen major growth in 2022. It hit an all-time high in late March of nearly $325 million. At the beginning of the year, the TVL of Cardano wasn’t even above $1 million.
In order to ensure that developers continue to build DeFi applications and user adoption grows, Cardano needed to introduce some kind of scaling solution. To see the impact of not scaling, look no further than one of Cardano’s smart-contract rivals, Ethereum.
Due to massive growth, Ethereum has been hampered by high fees and slow speeds due to a lack of scaling solutions. Cardano is attempting to stay ahead of the curve and avoid any situation similar to Ethereum’s by introducing the Vasil hard fork.
The case for $1
Cardano can hit $1 again, as long as it continues to foster an innovative ecosystem for developers and users. Despite Cardano taking nearly four years to become smart-contract compatible, this quick turnaround and release of the Vasil hard fork is a breath of fresh air for a blockchain that seemed to always be a few steps too late.
To keep things simple, Cardano must roughly double from these prices in order to reclaim the $1 mark. And frankly, the recent developments could be the perfect catalyst for more DeFi-use cases and higher prices.
If it weren’t for the current sell-off sweeping through the crypto economy, this news would have likely been more well-received by investors. However, this is a long-term game. Cardano is taking all of the right steps to ensure longevity in the DeFi space.
Blockchains that continue to innovate, even in downturns, are worthy of being a part of a well-diversified portfolio. Let’s see just how long it takes before Cardano returns to $1 again.