Source: Cointelegraph.com NewsOn March 2, President Donald Trump mentioned Cardano\u2019s ADA (ADA) token among the cryptocurrencies to be included in the US strategic crypto reserve. Trump\u2019s March 6 executive order clarified that altcoins would be part of the Digital Asset Stockpile (DAS) under the \u201cresponsible stewardship\u201d of the Treasury.
\nADA\u2019s potential inclusion in a government-managed portfolio sparked industry-wide surprise and, at times, harsh criticism. Although it has loyal investors who have supported it for years, many in the crypto community questioned why the token was included in the digital asset stockpile.
\nLet\u2019s analyze the blockchain to see if ADA\u2019s fundamentals and utility support its place in the US Digital Asset Stockpile.
\nThe case for ADA in the US Digital Asset Stockpile
\nLaunched in 2017 via an ICO, Cardano is one of the oldest smart contract platforms. It differs from others through its research-driven design approach and its use of a delegated proof-of-stake mechanism combined with an extended UTXO accounting model.
\nCardano\u2019s ambition as a smart contract platform is well captured by X \u2018Cardano_whale,\u2019 who outlined the blockchain\u2019s \u201cnon-negligible fees, voting power, decentralized consensus, all native token trading paired with it.\u201d
\nThe X post emphasizes ADA\u2019s utility (something \u201cmost VC coins lack\u201d) along with Cardano\u2019s decentralized governance as key advantages.
\nIndeed, Cardano\u2019s Project Catalyst is one of the largest decentralized funding initiatives in crypto. Through it, treasury funds from transaction fees and inflation are allocated democratically to community proposals. Also, unlike the Ethereum network, which still relies on offchain governance for major upgrades, Cardano aims to transition entirely to onchain governance.
\nThe Plomin hard fork that took place on Jan. 29 marked the transition to \u201cfull decentralized governance,\u201d according to the Cardano Foundation. It grants ADA holders \u201creal voting power\u2014on parameter changes, treasury withdrawals, hard forks, and the blockchain\u2019s future.\u201d
\nCardano\u2019s native coin, ADA, is used for network fees, staking, and governance. Its maximum supply is 45 billion, with 31 billion initially distributed\u201426 billion sold in the public sale and 5 billion allocated to IOHK, Emurgo, and the Cardano Foundation.\u00a0
\nThe remaining 14 billion ADA were reserved for gradual release through minting. With 0.3% of ADA reserves distributed as rewards every five days, ADA inflation declines as reserves deplete. The current inflation rate is approximately 4%, with a circulating supply of 35.95 billion ADA.
\nWhile a capped supply can support a coin\u2019s value and justify its inclusion in the DAS, other ADA metrics, such as fees and staking yields, lag far behind competitors.\u00a0
\nShould Cardano\u2019s lagging activity raise concerns?
\nDespite its years in the smart contract ecosystem, Cardano has struggled to generate enough activity to establish itself among the leaders. As a result, ADA\u2019s limited usage within the crypto ecosystem raises concerns about its long-term value.
\nAccording to Messari\u2019s Q4 2024 State of Cardano report, the blockchain processed an average of 71,500 daily transactions, with 42,900 daily active addresses. Quarterly fees totaled $1.8 million, a stark contrast to Ethereum\u2019s $552 million in fees over the same period, according to CoinGecko.
\nCardano\u2019s annualized real staking yield, adjusted for inflation, was approximately 0.7% in Q4, compared to Ethereum\u2019s 2.73%.
\nCardano key metrics overview, Q4 2024. Source: MessariRelated: Crypto fans are obsessed with longevity and biohacking: Here\u2019s why
\nOther blockchain activity metrics reinforce the concern about adding ADA into a government portfolio:<\/p>\n
With 449 developers working on the blockchain, Cardano ranks 12th among blockchains in developer count, according to Electric Capital\u2019s report.
\nIts stablecoins\u2019 share is just 0.01% of the total $224 billion stablecoin market cap, per DefiLlama.
\nCardano\u2019s DeFi ecosystem is underdeveloped, accounting for just 0.3% of the total $169 billion DeFi sector. However, if we include its core staking, which does not require locking and therefore is not counted in the TVL, Cardano\u2019s share will grow to 12%.
\nCardano\u2019s DApp activity remains low compared to other smart contract platforms. In Q4, it averaged just 14,300 daily DApp transactions\u2014well outside the top 25 and a fraction of Solana\u2019s 22 million. Even more concerning is its 73% decline from Q4 2023, when Cardano recorded 52,700 daily transactions. Such a sharp drop signals a troubling trend for a blockchain that is still in its growth phase.<\/p>\n
Cardano DApp transactions, Q4 2024. Source: MessariIs ADA\u2019s potential enough to justify a US government investment? Source: Cointelegraph.com NewsOn March 2, President Donald Trump mentioned Cardano\u2019s ADA (ADA) token among the cryptocurrencies to be included in the US strategic crypto reserve. Trump\u2019s March 6 executive order… <\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[5],"tags":[],"_links":{"self":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/posts\/125343"}],"collection":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=125343"}],"version-history":[{"count":0,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=\/wp\/v2\/posts\/125343\/revisions"}],"wp:attachment":[{"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=125343"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=125343"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/cryptospotters.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=125343"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nThe case for ADA in the strategic crypto reserve is far less clear than for Ethereum and Solana, which are leading blockchains in many different categories. Cardano\u2019s low activity, limited adoption, and weak staking incentives raise serious doubts about ADA\u2019s suitability for a government-managed asset pool.
\nOn the other hand, ADA\u2019s capped supply and Cardano\u2019s focus on decentralization give it a unique edge over competitors. They could lead to greater adoption and relevance in the long run.
\nFurthermore, projects like those by Atrium Lab are exploring Cardano\u2019s native compatibility with Bitcoin through the eUTXO system, which could potentially unlock a new framework for DeFi on Bitcoin and drive activity to Cardano.
\nCould this possibility be enough to justify ADA\u2019s place in the digital asset stockpile?
\nAs David Nage, the portfolio manager of the venture capital firm Arca, put it,\u00a0
\n\u201cLike the rest of crypto, the Cardano ecosystem needs to find and support developers to create products and applications that millions of people enjoy and depend on. Then, they need brilliant storytellers to solidify the narrative behind it to build mass, sustainable audiences. After all that, putting ADA into a US national reserve begins to make more sense, in my opinion. It can be done.\u201d
\nThis article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author\u2019s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.Read More<\/a><\/p>","protected":false},"excerpt":{"rendered":"