Cardano (ADA) has seen a massive increase in its total value locked (TVL), reaching over $300 million for the first time in 21 months and ranking among the top 10 protocols.
Cardano has witnessed a remarkable surge in its total value locked (TVL), which measures the amount of assets committed to the network’s smart contracts.
According to DeFiLlama, a leading source of data on decentralized finance (DeFi), Cardano’s TVL has jumped by more than $337 million in the past 24 hours, surpassing the $300 million mark for the first time since March 2022.
This impressive growth has propelled Cardano to the 10th position in the TVL rankings, trailing behind Ethereum, Binance Smart Chain, Terra, Solana, and other leading DeFi platforms.
The Factors Behind Cardano’s TVL Surge
Cardano’s TVL growth can be attributed to several factors, including the recent launch of smart contract functionality on the network, the rising demand for DeFi products and services, and the increasing adoption of ADA, Cardano’s native token.
In September 2021, Cardano completed the Alonzo hard fork, which enabled the deployment of smart contracts on the network, opening the door for a variety of DeFi applications to be built on Cardano.
Since then, several DeFi protocols have launched or announced their plans to launch on Cardano, such as Minswap, Liqwid, SundaeSwap, Maladex, and ErgoDEX. These protocols offer users various DeFi services, such as decentralized exchanges, lending and borrowing, liquidity provision, stablecoins, and synthetic assets.
The demand for DeFi products and services has been growing steadily as more users seek to access the benefits of decentralized, permissionless, and transparent financial systems. According to DeFi Pulse, the total value locked in DeFi across all blockchains has reached over $100 billion, a tenfold increase from a year ago.
Cardano, as one of the most advanced and scalable blockchain platforms, has the potential to capture a significant share of this growing market, especially as it offers lower fees, higher security, and better interoperability than some of its competitors.
Another factor that drives Cardano’s TVL growth is the increasing adoption of ADA, the native token of Cardano. ADA is used to pay for transactions and smart contract execution on the network, as well as to participate in network governance and staking.
ADA is also the main collateral asset for DeFi protocols on Cardano, such as Djed, a stablecoin developed by IOHK, the company behind Cardano.
As more users and developers flock to Cardano, the demand and value of ADA increase, which in turn boosts the TVL of the network.
The Impact of Cardano’s TVL Growth on Its Price
Cardano’s TVL growth has a positive impact on its price, as it reflects the network’s health, activity, and adoption. As more assets are locked in Cardano’s smart contracts, it indicates that more users and developers are using and building on the network, which creates a positive feedback loop of network effects.
Moreover, as more ADA is locked in DeFi protocols, it reduces the circulating supply of the token, which creates a scarcity effect that drives up its price.
Cardano’s price has hit a yearly high of $0.52, surging by nearly 20% in the past 24 hours and over 36% in the past week. This is partly due to Cardano’s on-chain activity, which has a strong influence on driving ADA prices.
According to Santiment, a blockchain analytics firm, Cardano’s development activity, which measures the GitHub submissions of the project, has declined from 686 to 300 in the past month, which is inversely proportional to the price. This suggests that the market is anticipating a new wave of development activity in the near future, which could bring more innovation and value to the network.
Additionally, an analyst points out that lowering the total number of ADA addresses is a good sign, as it implies that smallholders are selling their ADA to whales at a loss, which could create a buying opportunity for long-term investors. The analyst had previously uploaded a chart on the microblogging network X, showing that 32,100 ADA wallets were liquidated earlier this year when ADA’s price dominance (in percent) overtook Bitcoin before the pattern was repeated.
The Future of Cardano and Its DeFi Ecosystem
Cardano and its DeFi ecosystem have bright prospects, as they offer a unique value proposition to the crypto market.
Cardano is not only a blockchain platform but also a social and economic movement that aims to empower individuals and communities through decentralized, inclusive, and sustainable solutions. The blockchain platform is built on rigorous academic research and formal methods, which ensure its security, scalability, and interoperability.
It is also constantly evolving and improving, with upcoming upgrades such as Basho, which will enhance the performance and scalability of the network, and Voltaire, which will enable a fully decentralized and democratic governance system.
Cardano’s DeFi ecosystem is also flourishing, as more protocols and tokens based on the Cardano chain have shown impressive growth in the past 24 hours. Snek, the Cardano-based meme coin, has recently experienced a great bull run, soaring by over 200% and reaching a market capitalization of over $54 million.
Snek is a community-driven project that aims to create a fun and engaging environment for Cardano enthusiasts and support charitable causes. Not only Snek but also top protocols like Minswap, a decentralized exchange, and Liqwid, a lending protocol, saw a staggering price rise after the TVL surge.
Cardano and its DeFi ecosystem are poised to capture a significant portion of the crypto market. They offer users and developers a superior platform for building and accessing decentralized financial services. With a strong vision, a dedicated team, and a vibrant community, Cardano and its DeFi ecosystem are set to achieve new heights in the coming months and years.
