In this bull market of encrypted digital currencies, some encrypted digital currencies have suddenly emerged, reaching unprecedented heights in terms of market value. In the field of public chain products, Polkadot and Cardano are the fastest growing in market value. These two public chain products have entered the top 5 in the market value of encrypted digital currencies. And from a trend point of view, their market value status will continue to remain at this level. Polkadot has its distinctive characteristics, and it is likely to become a major blockchain ecology in the future (see my article "Six reasons why Polkadot is expected to surpass Ethereum" and "Pokadot is becoming a blockchain ecosystem Spring"). Like Polkadot, the Cardano project also has very distinctive features, and it is these features that helped it reach its current market value.
1. The founder
The first and most concerned factor of the Cardano project is its founder. This feature is the same as other public chain projects. Basically, the future of this public chain can be judged from the characteristics of the project founder. Charles Hoskinson, the founder of the Cardano project, is a very distinctive character. Like Gawin Wood, the founder of Polkadot, he is also one of the eight founders of Ethereum. But Hoskinson was different from Vitalik in terms of vision and business strategy, so he left after 8 months at the Ethereum Foundation. He subsequently founded the Cardano project.
Hoskinson is a person who has ideals, sentiments, pursues equality, and is full of love for mankind. He is building a fairer underlying blockchain technology through the Cardano project so that people all over the world can obtain more efficient financial infrastructure services on an equal basis. His vision can be clearly seen from his various speeches and his frequent social media speeches. Under the guidance of his vision, the biggest feature of the Cardano project is its support for distributed computing. It can be said that among the existing public chain projects, the Cardano project is the one that best supports distributed computing.
Another very notable feature of Hoskinson is his use of social media. He frequently communicates with the community on the YouTube platform, sharing his vision and explaining the progress of the project. He therefore has a large number of fans on YouTube. This has played a very important role in gaining community understanding and support for the Cardano project.
2. Token Economics
In terms of Cardano's token economics, Cardano also strives to achieve the most equal distribution method. 80% of the Cardano ADA that has been circulated in the market now is in the community. The number of nodes that provide staking pools is also numerous. The distribution of Cardano tokens actually reflects Hoskinson's vision of pursuing equality.
The pursuit of equality is also reflected in Cardano's staking pool design. In order to avoid a large number of tokens from being concentrated in a small number of staking pools, Cardano is designed to support the optimal number of tokens for a staking pool. When the number of tokens in the staking pool exceeds a certain limit, the revenue of the staking pool will decrease. This will encourage investors to invest their tokens in other staking pools.
Three, development and promotion strategy
In terms of technology development and commercial promotion, Cardano has taken a measure that is not so consistent with its pursuit of equality and broad vision. In terms of product development, it mainly relies on its own company IOHK to provide basic development. In this regard, although Polkadot is also mainly dependent on its company Parity, Polkadot attaches great importance to the developer community. The W3 Foundation provides a large amount of continuous funds to the developer community to support various developments in the Polkadot ecosystem. Cardano is lackluster in supporting community development. In terms of market development, it also mainly relies on its own business development team. In target areas, especially in Africa, promote it to government departments. It can be said that in terms of marketing, Cardano's approach is more similar to having its own direct sales team. Such development and promotion methods are not the usual methods used by public chain products. Whether such development and marketing promotion methods are beneficial to the market promotion of public chain products in the long term remains to be tested. However, so far, Cardano's product development and marketing are indeed achieving results.
Fourth, competition with Ethereum
Cardano's goal is to build a better Ethereum, so its competition with Ethereum is inevitable. Especially in view of the current applications of all encrypted digital currencies are basically carried out on Ethereum. In order to succeed in this competition, Cardano must attract traffic on Ethereum to the Cardano ecosystem. And Cardano's preparation for this is amazing. Cardano provides tools for smart contracts on Ethereum to be easily migrated to the Cardano ecosystem. Among the ways of migration, there are two that will be very influential. One is to lock the assets in Ethereum in Ethereum through smart contracts, and at the same time generate and bind the same amount of assets in the Cardano ecosystem. The other is to destroy the assets in Ethereum through smart contracts, and then issue the same amount of assets in the Cardano ecosystem. These tools will be very convenient for the current assets in Ethereum to migrate to the Cardano ecosystem. So in this sense, Cardano is indeed the killer of Ethereum.
V. Anticipation of Cardano's prospects
5.1 The future as a public chain
First of all, as the bottom layer of a public chain, I think Cardano has very good prospects. Its design goal is to become a more distributed blockchain bottom layer than Bitcoin. Its specific implementation also shows that it is realizing such a vision. To this day, even if it has not been officially launched, it has nearly 1,800 nodes. So in terms of system stability and scalability, Cardano will be a very good choice. The means it provides for the migration of Ethereum assets to Cardano will also promote the migration of assets in the Ethereum ecosystem to the Cardano ecosystem.
In terms of the operation and promotion of the Cardano ecosystem, Cardano pays special attention to areas with relatively underdeveloped financial infrastructure such as Africa, and its business efforts are achieving results. In the near future, African countries will announce the adoption of Cardano as the underlying infrastructure, and 5 million users will establish digital identities in the Cardano ecosystem. Although the details of such cooperation have not been finally announced, it is clear that Cardano's achievements in Africa are positive. From the perspective of the product's market positioning, Cardano's market positioning is more conducive to its differentiated competition with other blockchain ecosystems, such as Ethereum and the upcoming Diem ecosystem. Therefore, Cardano will have a place in the future blockchain-based ecosystems.
5.2 Cardano's market value
Regarding the market value of Cardano, I think the current market value is obviously too high. This is because the bull market of encrypted digital currency is mainly driven by the market's purchase of Bitcoin. In addition to Bitcoin, the user groups who trade in various other encrypted digital currencies have not essentially changed, and are still dominated by retail users. Therefore, for other encrypted digital currencies other than Bitcoin, the nature of this bull market is no different from the nature of the bull market at the end of 2017. So this bull market will not last. In addition, in terms of the progress of the Cardano project itself, its development stage is not enough to support such a high market value. The above logic also applies to other encrypted digital currencies. So in general, Cardano's market value is likely to continue to be among the top 5, but its absolute market value will not be so high.