As more users start interacting with DeFi (decentralized finance) on Ethereum, transaction fees are rising. This leads to the greater adoption of “Ethereum killers”. These are alternative smart contract platforms with higher transaction speeds and lower costs.
The cryptocurrency market is feeling this move directly. One platform seeing increased attention is the Cardano network. In particular, ADA, the native currency of the Cardano smart contract platform, overtook XRP as the fourth largest crypto by market cap. This comes amid ADA gaining over 25% in value in the last day and almost 100% in the previous week.
Have We Arrived at Altcoin Season?
Cryptocurrency investors who have been around since 2017 probably remember the following cycle. First, there’s BTC growth, followed by ETH growth, followed by altcoin growth. It is a pattern we seem to be going through again. Bitcoin reached all time high prices. Then, Ether followed not long after as it exploded past $1600, and now select altcoins see the hype reflected in their cryptocurrency prices.
History does not repeat itself, but it rhymes, and it’s hard to deny the pattern’s existence. Logically, it makes sense, as new users and institutions are most likely to get Bitcoin and Ethereum exposure before learning about altcoins. This has led to price increases across some of the popular cryptocurrencies in the market with high potential upsides.
We have also seen a significant increase in DeFi usage, as total value locked (TVL) grew from less than $1 billion in early 2020 to the current value of almost $34 billion. This led to an increase in smart contract platform usage, as these networks allow for the creation and hosting of decentralized applications. Some of the largest competitors, Polkadot, Cardano, EOS, and Stellar, have seen positive price movements due to this adoption.
What is ADA?
ADA is the native cryptocurrency of Cardano. Named after Ada Lovelace, a 19th-century mathematician widely seen as the first computer programmer, the coin provides its users permissionless security of value. With ADA, anyone around the world can secure their savings and instantly exchange value with ADA without the oversight of a third party. According to Cardano, “Every transaction is permanently, securely, and transparently recorded on the Cardano blockchain”.
ADA also provides its holders ownership rights in the stake of the Cardano network. Anyone can delegate their ADA and validate transactions on the network, providing them payment in the form of ADA. This creates a self sufficient pool of network users who look out for the platform’s best interest in order to earn ADA.