Cardano is facing challenges due to users increasingly moving towards blockchains like Solana and Base.
The Cardano blockchain has recently seen a remarkable surge in on-chain volume, according to a report from blockchain analytics platform IntoTheBlock.
Cardano is a blockchain and smart contract platform with ADA as its native token. The protocol aims to be a decentralized application (dApp) development platform with a multi-asset ledger and verifiable smart contracts.
The report noted that Cardano handles an impressive $7.2 billion daily on-chain transactions, surpassing many other networks. This results in a notably low NVT ratio of 2.62, indicating that ADA could be undervalued.
IntoTheBlock also noted that the Cardano ecosystem has experienced stagnation in the growth of wallets holding ADA tokens since 2023. The analytics firm also revealed that despite the slowdown in new user adoption, the network’s active user base and transaction count have remained steady since April, indicating a committed community that continues to engage with the protocol.
Why Cardano Faces Challenges Attracting New Users
The report stated that the network’s challenges are attributed to shifting sentiments in the crypto sector, with users increasingly moving towards blockchains like Solana and Base.
Solana supports billion-dollar meme coins like BONK and Dogwifhat (WIF), while Base features BRETT, which has a market capitalization exceeding $900 million. In contrast, Cardano’s meme coin, SNEK, holds a market cap of just $54 million.
Furthermore, the percentage of ADA tokens held by long-term investors has hit a record high, with nearly 40% of the total supply, demonstrating a significant confidence level among holders.
ADA Still Far from ATH
Cardano saw significant growth in ADA holders during the last bull cycle due to the network’s position as a strong alternative to Ethereum. As a result, the number of ADA-holding wallets surged rapidly, increasing from below 1 million in January 2021 to nearly 4 million by September 2021.
The growth in Cardano addresses was mirrored in the token’s market performance, as ADA climbed to an all-time high of $3.09 on September 2, 2021.
However, according to data on CryptocurrenciesToWatch, the token is down 89% from its ATH and currently trading at $0.34 with a market cap of $12.11 billion at the time of writing.
