Cardano | Goguen and DeFi will take it to $2?

in LeoFinance2 months ago


I know most of you know what Cardano (ADA) is, but for someone who is new to this market let's remind you. Cardano is a Smart Contract network, a useful payment network that was initially conceptualized in 2015 but launched or introduced to the market in 2017, and just like Ethereum, it is a platform for the development of decentralized applications and smart contracts, used to transact on the Ethereum platform. The ADA token provides fast, secure and inexpensive funds transactions; but apart from the similarities with Ethereum, Cardano has surpassed it on the technical side, as well as other cryptocurrencies, because it is building a third-generation blockchain that is scalable and interoperable.

The big difference of Cardano is that it is a blockchain created under a concept, a design, and an academic and scientific development that seeks to bring some of the most interesting innovations in this industry. This 2021 ADA has had a rally of over 400% in six consecutive weeks, and is still just over 40% up to reach its previous all-time high of $1.3 three years ago in January 2018. It currently ranks sixth in the ranking of largest cryptocurrencies by market capitalization, and we know that in this bull market several major cryptocurrencies have already reached their all-time highs. Bitcoin just surpassed $50,000, $30,000 above its last all-time high achieved three years ago; Ethereum just crossed $1,900, almost $600 above its previous all-time high; the same is the case for Polkadot, Binance Coin, or Chainlink, for example. So, we still have room for more ADA growth in this 2021 to reach and surpass that all-time high.

cardano.pngScreenshot coinmarketcap

But, let's detail what are Cardano's fundamentals behind this current growth and what is expected in this year 2021. The first and the immediate thing that we will see what specifically will be implemented in early March, is the Mary Hard Fork, which is a new update to the network that is intended to make it a favorable environment for various DeFi (Decentralized Finance) projects, and this is something that will significantly boost decentralized applications and native tokens for those applications, because it is an update that will make the Cardano blockchain a multi-asset blockchain, which will allow users to create and use custom tokens for in-network transactions through the main Deadalus wallet after this update. In addition, the update will also fully unlock smart contract functionality in Cardano.

It is important to mention that Cardano users are going to have to upgrade their nodes by downloading the latest version of the Deadalus wallet in order to access this new network upgrade after the beginning of March. Now, as you know, Cardano is working on the current phase of the Goguen roadmap, the upgrade that is implementing smart contracts on the network and that thanks to this Mary Hard Fork will already be very close to the Goguen Mainnet being implemented.

I explain several things to give you a clearer idea of the importance of these updates, and of Cardano's capabilities for when they reach the transition of the Goguen era. These new updates are going to allow developers, on the one hand to take full advantage of smart contracts and your organization's functionality within Cardano, i.e., this is going to create a whole new ecosystem with greater scalability. Specifically, developers will be able to create native tokens from other projects so that transactions can be made directly within the network, and this will also open the door for other projects that already exist in other networks, such as Ethereum for example, to migrate completely or offer part of their token supply in Cardano.

goguenprogramplan.pngScreenshot Reddit

Unlike other networks such as Ethereum, Cardano uses a mechanism that handles organization natively within its laws or within the network, rather than through smart contracts. That means that all tokens on the Cardano blockchain, are going to follow the same logic and be inherently compatible with the network rather than requiring, for example, the creation of second layers that work on top of Ethereum through those Smart Contracts, as for example happens, with the ERC-20 and ERC-721 tokens, which is the standard for fungible tokens within Ethereum. But, it also means that all tokens are going to behave in the same way as Cardano's native cryptocurrency, which is the ADA, simply that the only difference between those native tokens that are going to be created from new projects and the ADA token, will be that those new tokens are going to be able to be created and destroyed, while the ADA token, will be used to pay transaction fees, staking reward fees and future liquidity pool deposit fees.

In fact, when the Goguen Mainnet is launched the team plans to launch its own liquidity and loan provisioning protocol, called Liqwid Finance, so it will likely be the first DApp built on the Cardano blockchain. So, we are simply left to wait very shortly to see the start of Cardano's DeFi ecosystem. All these new features are going to result in better scalability, better performance, and will definitely reduce transaction costs, which will be especially beneficial for all DeFi platforms within Cardano, as they are going to reduce the costs associated with interacting with them, something that is currently the biggest headache and the big problem of the Ethereum network.

Now, continuing with the fundamentals of Cardano, I'm going to show the indicators that are supporting a sharp rise in the price of ADA, beyond its all-time high, in the immediate future. Cardano is gaining quite a lot of popularity in this 2021, and it started from 2020 with a strong growth, being one of the winners of the market with almost 3,000% upside; right now it is at 40% upside to reach its all-time high and at about 115% to $2, which is a very modest estimate for these fundamentals. First we can analyze some data, such as the number of large transactions, with a value of more than $100,000, which is trending upwards, and has been maintained since the end of 2020. Cardano is currently processing between 5,000 to 7,000 transactions every 24 hours, above $100,000 and worth more than $16 billion.

intotheblock.pngScreenshot app intotheblock

This number of large transactions has increased by more than 400% in the US in 2021, going from 916 transactions at the beginning of January, to almost 5,000 transactions as of February 17, surpassing even the all-time high of transactions they were processing in January 2018, above 4,000 transactions when it reached its all-time high price above $130. So, we are currently at an all-time high of large transaction volume occurring the Cardano network. Now, what this metric indicates is that whales, or high net worth individuals, are again interacting on the Cardano network currently making million-dollar transactions, between $12,000 to $16,000 every 24 hours, which can be a very positive sign, because the last time the number of large transactions within Cardano grew above 300%, the price went up almost 75%. So I think we could eventually see price action with a similar performance, first reaching its all-time high, and from there reaching towards $2 . This is a possibility, but not rocket science.

intotheblock1.pngintotheblock2.pngScreenshot app intotheblock

Another indicator to watch out for is the In/Out of the Money Aroun Price, basically it means that the money entering and exiting the Cardano market around the current price is showing little resistance or little selling pressure to prevent it from reaching its upside growth potential towards the next all-time high. In addition, the majority of current addresses on the network, which is at over 83%, have purchased ADA at and below the current market price, compared to the number of current addresses that purchased the token above $1.2, which again indicates that there will be less selling pressure. According to this indicator, right now there are about 22,000 wallets buying more than 366 million ADA between $0.89 and $0.92 a token.

arounprice.pngaddresses.pngScreenshot app intotheblock

So fundamentally and technically the price and uptrend of Cardano, looks good because the current demand for the token can help soak up any long-term selling pressure like a sponge, and drive the price higher. In fact, holders within this price range are even buying more tokens, although my short-term prediction is that based on the indicators (Cardano has been in a continuous uptrend for six weeks now), we should be cautious when entering new trading positions, particularly as it is always healthy in a bull market for the price to correct and consolidate a bit before continuing its trend.

However, regardless of all these strong fundamentals I have told you about, I will personally wait for a possible correction to the first support, which is in a range between $0.68 to $0.70, to continue to accumulate more and let the price run to its uptrend from here; but this is in the short term, because in this year Cardano is going firstly towards the all-time high and then, in my opinion, towards $2 and all this impressive Cardano community and investors who came in several years ago, know that this is an investment for the long term.

Cardano will probably be the biggest threat Ethereum and any other Smart Contracts network has. If ADA starts building their ecosystem of DApps and DeFi projects starting this very 2021, they are going to create an unstoppable network effect that will drive Tokens to over $10 growth by 2025. This is my prediction and opinion about the future of the network and the price of ADA, I don't have a crystal ball, these are probabilities founded with real data, this market is very volatile and that volatility plays a positive or negative factor depending on the direction the market takes, and depending on the investment approach you adopt. It is also a speculative market, we are all speculators, so don't lose your head, don't sell your house or your vehicle to invest in cryptos and never invest an amount you can't afford to risk.

Images taken from published by Juan Pablo, of free use for personal or commercial purposes.
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Cover image is a screenshot of Roadmap Cardano and Coinmarketcap.
All designs were created in PowerPoint.


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