While Bitcoin and Ethereum have been attracting attention after reaching new highs in October, another cryptocurrency has quietly launched a few new updates on its system. Cardano, or ‘The Ethereum Killer’ made a huge announcement on September 13, after finally deploying smart contracts on their blockchain. This has had a massive impact not only on its price, but has also attracted new NFT projects.
Let’s take a look at everything that is going on with Cardano.
In September, the third largest cryptocurrency in terms of market cap rolled out the much-awaited Alonzo upgrade, which introduced us to their smart contracts feature. This allows developers to use the blockchain for making dApps, minting NFTs and much more.
Competition with Ethereum
Cardano has always rivalled Ethereum and has challenged its dominance in the decentralized finance (DeFi) and Web 3.0 sector. But, Ethereum has always had the advantage because smart contracts have existed on their blockchain for years. Up until the news broke out in September, Cardano was criticized for failing to deliver this functionality on its blockchain.
Now that smart contracts have been deployed, Ethereum is looking to pick up on its momentum. But, the creators themselves have warned users that the first uses of smart contracts won’t be available for at least a few years. The Cardano team said that ‘there are high expectations resting on this upgrade. Some unreasonably so. Cardano watchers may be expecting a sophisticated ecosystem of consumer-ready DApps available immediately after the upgrade. Expectations need to be managed here’.
While this was expected, the creators have big plans in store as well.
The Cardano Foundation wrote on Twitter, ‘The Alonzo upgrade will bring highly anticipated capabilities to Cardano…this is where the mission truly begins as we – the whole community – start delivering on the vision we have all been working towards for so long’. This news has closed the gap between Cardano and Ethereum once again since the update gives developers more flexibility when it comes to developing Non-Fungible tokens (NFTs) on the blockchain.
The two competitors are very similar in architecture, both using proof-of-stake (PoS) systems, which gives miners the option to stake their own cryptos. But the difference between the 2 stems from overall prices. Ethereum has been criticized for abnormally high gas fees for transactions and its limited scalability, something which the creators are working on with Eth2.0. Cardano, on the other hand, offers lower gas fees and is much more flexible for developers, so it will be interesting to see how this affects the two platforms.
Cardano price performance after the announcement
Cardano has been neck in neck with Eth since the deployment of smart contracts, but Ethereum still remains the largest cryptocurrency after Bitcoin. Cardano stands as the third largest crypto but does not even have 10% of the market cap of Ethereum. That being said, the last few months have been unbelievable for Cardano. After trading at a low of $1.06 in July, the coin jumped by 192% to reach a quote of $3.10 on September 3rd. Cardano experienced one of the strongest bull-runs in August, as it soared past the estimated price predictions of $2.50. In 2021, the coin has gained more than 1,6000%, showing just how popular it has become among investors.
However, since the highs of September, the coin dipped down to the $2.30 mark. This was an expected correction, which continued even after the smart contracts were deployed. Currently, Cardano is trading at $2.21.
Deployment of new NFTs through Cardano smart contracts
The popularity of Non-Fungible Tokens (NFT) has shot up in 2021. The market allows artists and designers to sell digital art pieces along with collectibles, digital albums, etc. The deployment of smart contracts on Cardano’s contract has given developers the opportunities to issue NFTs on the blockchain.
One huge announcement that has got Cardano investors smiling has been the launch of SpaceBudz, which is a set of 10,000 collectibles in the form of astronaut animals. As is the case with all NFTs, each piece is unique and cannot be exchanged as we see with cryptos. This particular brand has launched 10,000 unique pieces, ranging between 10 – 100 ADA. After September 13th, these pieces became tradable and thus have gained more value.
The talks of Ethereum V Cardano have emerged once again. This update makes many projects such as SpaceBudz prefer Cardano over Ethereum due to the preferable and low-cost gas fees. In fact, the SpaceBudz creators had the following to say on the pros and cons of the two blockchains.
‘If we compare these NFTs to Ethereum NFTs, there are some differences. Ethereum tokens like the ERC-721 and ERC-1155 standard, are smart contracts. They are not the same as Ethereum itself. To send a token you need to execute a Smart Contract and pay much higher transaction costs than you pay for ETH. On the Cardano chain, tokens are native, so they are on the same level as ADA. Sending tokens costs the same as if you would send ADA. Also, because the tokens are not smart contracts, they are more secure because they don’t allow for human errors since you don’t need to write a contract”.
Thus, Cardano has provided a sensible and cheaper option for the project developers, which is going to work in their favor going forward. As mentioned earlier, Ethereum still has a much higher market cap than Cardano, but smart contracts will only strengthen the case for this cryptocurrency.
The challenge ahead
Despite the deployment of smart contracts, there have been a lot of obstacles that Cardano has faced. For starters, the value of the coin has dipped from a peak of $3.10 in September, down to $2.20 in October. Although a price correction as large as this is normal, investors expected a price jump in mid-September. This did not happen, which means that the coin has still been trading at a similar price point, having created a sideways trend line for the last 6 weeks.
Further challenges arise from inside the smart contracts themselves. Founder of the platform Internet Computer, Dominic Williams questioned the time it took Cardano to release their smart contracts. ‘It amazes me that this chain has been in the market for 2 years, and is only just adding support for smart contracts, and people are happy with the progress.
To add fuel to the fire, Cardano was in the news in September, after the first-ever DApp to be launched on Cardano’s smart contract faced failures in the transaction processing. Since then, the creators have commented and solved the issues, but made it clear that it is impossible to perfect the smart contracts overnight.
As of now, Cardano still remains a popular prospect in the cryptocurrency market, but Q4 will be a very telling phase for the coin. With many more upgrades to still be made, Cardano could be a valuable coin to hang onto. But, remember, in this volatile market, it is best to only invest what you can afford to lose.