Cardano (ADA) ended 2023 with a sprint, but so far has stumbled out of the blocks in 2024. The layer-1 blockchain’s native token ADA jumped from $0.28 on October 24 to $0.67 on December 14, a 140% gain in less than two months.
The rise coincided with a surge in total value locked (TVL) on Cardano’s burgeoning decentralized finance (DeFi) ecosystem from $194 million to $440 million over the same period as investors searched for returns outside of Ethereum (ETH).
However, the breakneck growth has proven unsustainable so far in the new year. ADA currently trades around $0.54, near where it started its Q4 charge.
More concerning is that trading activity on Cardano’s decentralized exchanges (DEXs) has fallen off significantly. Data from analytics site DeFiLlama reveals that total weekly DEX volume on Cardano has plunged by 19.37% over the past week. The result is a weekly volume of $46.58 million.
Halfway through January, and DEX volume is approximately 55% lower than December’s numbers. Although, the news isn’t all bad. January could still outperform almost every single month in 2023 if trends continue.
The cooldown comes despite optimism around new DeFi products launching on Cardano like algorithmic stablecoin USDM. However, USDM’s launch has been pushed back multiple times already. A move that has not been helpful to ADA’s price.
Of course, as a top 10 crypto asset, Cardano maintains an active and engaged community. But after the feeding frenzy induced by last year’s pre-ETF rally, ADA may enter a period of stabilization until tangible progress emerges around DeFi adoption and real-world use cases.
A January 15 research report by K33 paints an even bleaker picture of Cardano’s outlook. The report argues that there is “no outside proof” of any meaningful activity occurring on Cardano, using the lack of major stablecoins like USDT and USDC as evidence that no significant DeFi ecosystem exists.
With “many years of history” but still zero traction, K33 believes there is little hope for Cardano becoming a relevant blockchain network.
K33 believes the market will slowly “bleed out” worthless blockchains like Cardano over years rather than kill them overnight. With ADA continuing to lag the broader crypto market during rallies, the research firm sees strong signals of a “dying coin” facing a gradual road to irrelevance.
Unsurprisingly, not everyone agreed, particularly when it came to ADA holders. One Cardano holder countered with a thread of ADA’s long-term qualities, including the fact that the Cardano chain is peer-reviewed.
The report also faced criticism for its employment of provocative language and lack of a professional tone. “Is it a joke?” asked one X user. “Serious question.”
In other Cardano news, Charles Hoskinson, the network’s founder, has endorsed Vivek Ramaswamy’s plans for a crypto Bill of Rights. Ramaswamy dropped out following the Iowa caucuses on January 15, although crypto advocates will be hoping his dream lives on.
The Indian-American entrepreneur emphasized that his administration would enforce only crypto policies explicitly approved by Congress and advocates classifying most crypto assets as commodities. Ramaswamy also believes in the right to hold digital assets in self-custody wallets, beyond regulatory reach, and backs a more transparent advance notice of government crypto token classifications.
Additionally, he proposes that stablecoin issuers receive the same financial facilities from the Federal Reserve as banks, and also argues against holding software developers, like those involved with Tornado Cash, criminally or civilly liable for merely writing code.