Crypto researcher John Nakamoto says Cardano (ADA) main problem is not its technology, but its ability to turn its high market value into real-world network use.
He made this point on X after examining Cardano’s performance since ADA became the third-largest cryptocurrency by market value in 2021.
On September 3, 2021, ADA was worth about $2.97, giving Cardano a market value of around $95 billion, according to Nakamoto. ADA later rose above $3 before beginning a long decline.
Since its peak, ADA price has lost more than 92% of its value. This has led some people to call Cardano “dead.”
However, Nakamoto says that view misses the real problem facing the blockchain.
Cardano Value vs. Network Usage
Nakamoto says a massive gap exists between Cardano’s market value and how much the network is actually used.
He pointed to a market value of about $10.2 billion, compared with only about $71 million locked in Cardano’s DeFi ecosystem. In other words, Cardano’s market value is around 144 times larger than the money in use in its DeFi system.
He also noted that Cardano has about $67 million in stablecoins, around $4.4 million in daily DEX trading volume, and roughly 16,000 daily active addresses.
For Nakamoto, these numbers expose Cardano’s biggest challenge of turning its high valuation into real usage.
He believes Cardano’s technology is strong, but investors ultimately want to see more users, money, apps and activity on the network.
USDCx Brings More Money to Cardano
Nakamoto believes USDCx can help solve Cardano’s liquidity problem. USDCx is backed 1:1 by USDC and gives users access to dollar-based liquidity on the Cardano network. This makes it easier for money to move into Cardano without relying heavily on third-party bridges.
Nakamoto also pointed to Cardano’s recent network upgrades and governance changes.
The Van Rossem hard fork was an important step because the Cardano community proposed, discussed and approved it through the network’s governance system.
He also highlighted Leios, a project designed to help Cardano handle many more transactions. One part of Leios, called Input Endorsers, increases network capacity by 10 to 65 times. The technology remains under development and has not been fully deployed.
Cardano Treasury Is a Major Advantage
Nakamoto also believes Cardano’s treasury can become a major advantage. ADA holders participate in governance through representatives, while stake pool operators and the Constitutional Committee also help make decisions.
Nakamoto estimates that Cardano’s treasury holds around 1.4 billion ADA. Meanwhile, a large treasury does not automatically make the network more valuable. What matters is how that money is used.
The market wants to see the treasury bring in more users, liquidity, DeFi activity, transactions, fees, and applications.
Privacy and Real-World Uses
Nakamoto says privacy is becoming an important part of Cardano’s future. He pointed to Midnight, a Cardano partner project focused on protecting private data, along with its NIGHT token. Privacy is becoming increasingly important as people and businesses look for ways to keep sensitive information safe while using blockchain technology.
Nakamoto also highlighted Cardano’s work with Petrobras, a Brazilian energy company. Petrobras is using Cardano to record and verify information about sustainable aviation fuel and renewable diesel.
This gives Cardano a real-world use beyond simply buying and selling cryptocurrency.
CIP-113 Helps with Real-World Assets
Nakamoto also mentioned CIP-113, which helps Cardano with the tokenization of real-world assets. The proposal lets developers build rules directly into tokens. These rules include KYC checks, approved-user lists, transfer limits, freezing features and location restrictions.
CIP-113 does not automatically make Cardano legally compliant. Instead, it gives developers tools to build certain regulatory requirements directly into token transfers.
This is useful for stablecoins, tokenized securities and other real-world assets.
ADA Remains Important to Robinhood
Nakamoto also noted that ADA was included in Robinhood’s initial list of cryptocurrencies for its planned perpetual futures product for eligible U.S. customers. The list includes Bitcoin (BTC), Ethereum (ETH), Solana (SOL), XRP, Dogecoin (DOGE), Cardano (ADA), Chainlink (LINK), and Hyperliquid (HYPE).
According to Nakamoto, ADA contracts offer up to 3x leverage and have no expiration date.
He said this does not prove Cardano is a DeFi leader. However, it shows that ADA still has enough market interest and liquidity to be included among the major assets.
Cardano Biggest Challenge Is Adoption
In sum, Nakamoto rejects the idea that Cardano is “dead.” He urges investors to focus on how much people actually use the network.
The main problem is the enormous gap between Cardano’s market value and its real economic activity.
Cardano is worth far more in the market than the money currently in its DeFi ecosystem. Nakamoto believes this gap needs to shrink.
For ADA holders, growing the ecosystem is just as important as improving the technology.
Cardano has the technology, treasury, governance structure and infrastructure to build a larger ecosystem. The next step is converting those strengths into users, liquidity, applications, DeFi activity and real-world projects.