Cryptocurrency Cardano: reasons for growth and prospects for the ADA token

Since the beginning of February, the price of the Cardano project's ADA token has increased by 300% — from $0.35 to $1.33.Its market cap is nowis $ 32.7 billion, which allowed Cardano to rise to third place in the CoinMarketCap ranking. Analysts believe that this is far from the limit - by the end of the year, the coin may grow another 10 times.

The main driver of such rapid growth isthe upcoming launch of the Goguen update, which will allow users to create their own tokens, run smart contracts, decentralized applications (dApps) and DeFi protocols. In light of this, let us recall how the project developed, why Cardano is considered one of the main competitors of Ethereum 2.0 and what is the likelihood of a further price rally of the ADA coin.

Why are developers updating Cardano?

Cardano is a decentralizeda blockchain system conceived as an alternative to Ethereum, but faster, scalable and secure. Currently, the project only has a native ADA coin, but soon users will be able to run smart contracts and sidechains and create decentralized applications (dApps). Moreover, in the future, Cardano users will also be able to create, transfer and accept custom tokens with minimal fees.

Cardano runs on the dPoS consensus algorithm undercalled Ouroboros - there is no mining, and the generation of new coins occurs through ADA staking. Owners of ADA coins can also take part in voting on decisions about the future development of the platform.

One of the main differences between the Cardano blockchain andcompetitors is that the network is divided into two levels: in one, transactions with ADA coins take place, and in the second, smart contracts and dApps will work. An error in one of the levels does not affect the work of the other - they work in parallel with each other.

Work on Cardano began in 2015 underled by mathematician and Ethereum co-founder Charles Hoskinson. By 2017, the project team conducted several initial coin offerings (ICOs), which brought in a total of $63 million. Interestingly, the project is most popular in Asia: Japan, South Korea and Thailand.

The development of the Cardano project is divided into fivestages named after famous writers. Each of them must launch one of the key components of the project, namely the main network, decentralization, smart contracts, scalability and transition of project management to the community.

To date, Cardano has successfully activated the first two stages and is preparing to launch the third:

Byron (Byron). From September 2017 to June 2020, the main network of the Cardano blockchain and the ADA coin were launched.
Shelley (Shelley).From June 2020 to March of this year, the dPoS algorithm is activated, staking is launched with a yield of 4–5% per annum, and the ability for users to independently launch nodes, join pools and take part in voting on the development of the project is being integrated. The activation of this update became the main driver of ADA growth last year - the coin grew by 430% in 2020.
Goguen (Gauguin).This March, the launch of smart contracts, decentralized applications (dApps) and custom tokens, as well as the possibility of using coins from other blockchains, should take place.
Basho (Basho) - will increase and improve the basic network performance, scaling and interoperability, and will also allow the launch of sidechains of new blockchains compatible with the Cardano main chain.
Voltaire (Voltaire) - will start the mechanismvoting for decisions on the future development of the network, and will also be the beginning of the transition of project management to the community. This will make Cardano a completely decentralized system.

The exact dates for the launch of updates have not been announced, but it is assumed that we are talking about the next year or two. Developers are working on all these stages in parallel.

A new one has been developed for Cardano smart contracts.programming language - Plutus, which should become a more advanced analogue of the smart contract standard for launching ERC-20 tokens for Ethereum. Moreover, the team developed another new language for concluding financial contracts - Marlowe.

At the same time, Goguen itself is launched in severalstages. The first, a separate hard fork of Allegra, was launched in December 2020. He prepared the Cardano platform to integrate smart contracts and support other tokens, updating all the main components of the system. The second one, Mary, was launched on the test network. We will talk about it below.

What will happen to Cardano after the implementation of Goguen?

On February 2, the Cardano team launched a testnetwork update Mary (named after the author of Frankenstein, Mary Shelley). If testing is successful, the update will be implemented on the main network (mainnet) by March 1. This will be the beginning of the launch of the third stage - Goguen.

Here are the main innovations in Goguen:

Users will be able to create their own tokens, including NFTs. These custom tokens will be native so they can be used directly on the Cardano blockchain, just like ADA.
It will be possible to launch smart contracts and decentralized applications (dApps). This paves the way for DeFi protocols.
The mechanism for calculating the commission has been revised.It will be fixed and will not depend on the network congestion, as it happens in Ethereum. Therefore, you should not expect an increase in commissions due to network overload. The commission is charged by ADA itself.
Custom tokens don't need separatesmart contracts for launch. They use the same protocols as the Cardano blockchain itself. This makes the network easier and more convenient to use, and also reduces the chances for hackers to withdraw funds by exploiting the vulnerability of the smart contract;
All network components will also be updated.
After it becomes clear that the systemworks properly, a virtual machine (KEVM) will appear in it, which is responsible for the execution of smart contracts. It will allow you to transfer applications from Ethereum to Cardano.

Fundamental Growth Factors for ADA

The upcoming update is not the only reason for the increase in the cost of ADA. After all, the entire Cardano ecosystem is actively developing.

So, back in the spring of last year the teamCardano presented its network scaling solution, Ouroboros Hydra, a layer-2 protocol that runs on top of the main network. This solution should increase the speed of transactions and allow efficient micropayments.

And according to AdaStat, there are now 1,687 staking pools operating on the network, with almost 228,000 people participating. The company has partnerships with hundreds of companies.

At the same time, Charles Hoskinson recently toldon its YouTube channel that in March the Cardano team will announce new major partners, including Celsius Network and other DeFi projects, and will also talk about the launch of a dApps store. Hoskinson even hinted that the largest American crypto exchange Coinbase could be among the new partners.

Charles Hoskinson talks about upcoming partnerships and plans:

Cardano's competition with Ethereum 2.0

Ethereum is the dominant player in the market todaysmart contracts. However, the Cardano team believes that upcoming updates will make the project a technically more advanced network than Ethereum. Moreover, even after Ethereum transitions to state 2.0, Cardano will still be ahead of Vitalik Buterin’s blockchain in many respects.

Hinrich Pfeiffer, General Secretarynon-profit Cardano Foundation, in comments to Cointelegraph said the team hopes Cardano's "value proposition" will prove popular with firms and attract institutional investment. Indeed, in addition to scalability, large investors may be attracted by the high level of security of Cardano. Pfeiffer believes that “Cardano can take a completely different market share than Ethereum” - this blockchain ecosystem can be used at the government level for user identification and document flow, as well as in financial infrastructure and large businesses.

We are already hearing about numerous Ethereum “killers”many years. Binance Smart Chain, EOS, NEO, and TRON, among others, were vying for this role. However, Ethereum is still the main blockchain for running smart contracts, and Ether is almost always the second coin in terms of capitalization.

We think the Cardano team is overly committedoptimistic. The project is still in the development stage for key updates. It is developing, albeit thoroughly, but very slowly. Despite the fact that the project started in 2015, only now smart contracts will be added to the network. While we see a lot of promises and promising developments, Cardano's functionality is still very far from the current capabilities of Ethereum.

The team is confident that there will be problems with the launch andthe transition to the next stages of updates will not arise, but it seems too presumptuous - there are always difficulties. In the end, Vitalik Buterin was also not going to stretch the preparation for the Ethereum 2.0 update for several years, but everything turned out to be more complicated than expected. Ethereum is the most actively developed blockchain protocol.

We think for a full launch and configuration of allCardano will take several years to update. During this time, the Ethereum upgrade to state 2.0 should be completed. As a result, on the one hand, we will have a project whose full functionality has just launched, and on the other, a project with a developed infrastructure, a huge army of users and developers, as well as a capitalization that is several times higher than the competitor’s valuation. We think Ethereum shouldn't worry.

However, it is worth noting here that Ethereum will still lose its monopoly position - several platforms will compete in the market. We believe Cardano will be one of the strong players.

ADA Price Outlook

Since last February, the ADA coin has increased by 1,200%.Sustainable implementation of the roadmap is critical to the long-term development of the project. If Cardano continues to follow suit, ADA should continue to rise in the short to medium term.

As for price forecasts, analysts are confidentin continuation of the upward trend, but warn of possible corrections. However, such a rapid growth of ADA in recent weeks has come as a surprise to many.

So, back in early January, when the coin cost $0.25, some analysts predicted its growth from $0.50 by the end of the year and to several dollars in a couple of years. And already in mid-February, others predicted $1.1 by the end of the year and a rise to $1.50 next year.

There are also more optimistic forecasts: up to $10 by the end of this year and about $22 by the end of 2022.

If Ethereum has problems scaling and implementing the upgrade, then we could see prices even higher - any problems with Ethereum will benefit ADA.

</p>

Where can you buy Cardano tokens (ADA)? TOP-5 exchanges

For a safe and convenient purchase of cryptocurrencies with a minimum commission, we have prepared a rating of the most reliable and popular cryptocurrency exchanges that support deposits and withdrawals of funds inrubles, hryvnias, dollars and euros.

The reliability of the site is primarily determinedtrading volume and number of users. By all key metrics, the largest cryptocurrency exchange in the world is Binance. Binance is also the most popular crypto exchange in Russia and the CIS, since it has the largest cash turnover and supports transfers in rubles from bank cardsVisa / MasterCardand payment systemsQIWI, Advcash, Payeer.

Especially for beginners, we have prepared a detailed guide: How to buy cryptocurrency for rubles?

Rating of cryptocurrency exchanges:

#	Exchange:	Website:	Rating:
1	Binance (Editor's Choice)	https://binance.com	9.7
2	Bybit	https://bybit.com	7.5
3	OKEx	https://okex.com	7.1
4	Exmo	https://exmo.me	6.9
5	Huobi	https://huobi.com	6.5

The criteria by which the rating is set in our rating of crypto-exchanges:

Work reliability— stability of access to all functions of the platform, including uninterrupted trading, deposits and withdrawals of funds, as well as the duration of the market and daily trading volume.
Commissions– the amount of commission for trading operations within the platform and withdrawal of assets.
Feedback and support– we analyze user reviews and the quality of technical support.
Convenience of the interface– we evaluate the functionality and intuitiveness of the interface, possible errors and failures when working with the exchange.
Platform Features– availability of additional features — futures, options, staking, etc.
final grade– the average number of points for all indicators determines the place in the ranking.

Conclusion

Cardano is not a new project.He develops without haste, without rushing anywhere. ADA's growth proves that investors believe in it. There is also room for growth - if the updates turn out to be successful, take place on time, and the market remains bullish, ADA may well grow several times more before the end of the year.

The developers promise that Cardano will become the most...the perfect blockchain and will solve most of the problems of decentralized networks, but what project did not make such promises? In the meantime, Cardano doesn’t stand out too much from other Ethereum “killers” technologically. Moreover, the project still has not offered the market any new functionality - the team only promises to improve the current one. Doesn't sound too revolutionary.

Perhaps if the developers had launchedupdates earlier by several years, then Cardano would now be in second place in terms of capitalization after Bitcoin. But this did not happen. Technology has long been no longer the main component in the blockchain. Much more important is the real and practical application, as well as the infrastructure built around the blockchain network.

We are confident that Cardano will make a big statement yet. But competitors will step on their heels, and the project team cannot relax.