According to recent data from the cryptoanalysis platform, Santiment, Cardano is undervalued. That conclusion is drawn from looking at a tool called the Market Value to Realized Value (MVRV) indicator. This assesses the ratio of an asset’s market cap against its realized cap (meaning value stored), to identify fair value and market tops and bottoms.
Dive as deep as you like into how the indicator works, but the upshot is, if you consider these kinds of analyses to be reliable, that ADA is being traded at below its fair value.
When you consider that the Cardano ecosystem is currently an extremely active and interesting place, the fact that it may be undervalued starts to sound interesting. Is there a possibility that given a spark, Cardano is ready to ignite?
Volume and TVL
In terms of Total Value Locked (TVL), Cardano has seen an impressive monthly increase of 1070%. While this still only amounts to a TVL of $187 million, placing it at number 28 in a ranking of blockchains by TVL, it marks an explosive burst of activity.
That sudden growth is due to working DEXes finally coming to life on Cardano. The chief among them are SundaeSwap, which has locked up $118m in value, and Meld (an innovative platform combining crypto and traditional currencies), with $51 million locked in.
And, for some really striking data, there was the crypto research group, Messari’s table of on-chain transaction volume. On which, in number one, above Bitcoin and Ethereum, you could make out the spooky former ghost chain, Cardano.
At the time of writing, Cardano is still up there, not only transacting at high volume but with 24-hour transaction fees of just around $50,000, compared to costs of $0.48 million and over $18 million, on Bitcoin and Ethereum, respectively.
Congestion Is Easing
To the casual observer (and user), things were not looking entirely great after the highly-anticipated launch of the SundaeSwap DEX, back in January. The problem was network congestion, as Cardano slowed to a crawl, and transactions seemed to disappear, endlessly queued or drowning somewhere in an overloaded mempool.
Veteran ADA hodlers were unperturbed though, predicting that matters would improve before too long, and nodding at a post from the SundaeSwap team itself forecasting that this exact predicament, network jam, was almost certainly going to happen.
And, it turns out that the ADA vets were right to stay calm, as less than a month later the blockchain load came down, meaning transactions were going through smoothly and, usually, without excess delays. The reason for that is a series of pre-planned scaling steps deployed this month, with an increase in both the network block size and also to Plutus script memory limits. (Plutus is Cardano’s smart contract platform).
Cardano has a detailed roadmap of step-by-step scaling solutions scheduled to be implemented throughout 2022, including measures that are both on-chain (such as block size increases) and off-chain (incorporating sidechains and the Hydra layer 2 protocols).
NFTs Have Momentum
Whether you like them or not, NFTs are not slowing down, and continue to catch the attention of people who might otherwise not be interested in crypto. The main blockchain for NFTs is Ethereum, with Solana also making moves, but Cardano has become a viable alternative for NFT projects to launch on.
The majority of NFT trade on Cardano used to go through the CNFT.IO marketplace, which played a critical role in the early days of Cardano NFTs. However, while CNFT.IO is still active, a competitor, JPG Store, has now taken over as the primary marketplace.
Easy-to-use and attractively designed, JPG Store enables frictionless NFT trading through smart contracts, and has brought the whole Cardano NFT experience up a level, presenting a clean first view to newcomers.
There are new projects dropping constantly, with some high-quality artwork and concepts, and there are several NFT-focused proto-DAOs hoovering up valuable assets.
One of the most ambitious projects is Pavia, which aims to build a fully-functioning metaverse on the Cardano network. Pavia just completed its final NFT land sale, for which there was huge excess demand, and the project has attracted increased mainstream media attention over the last several months.
On the whole, when people get used to trading NFTs in a particular cryptocurrency, they tend to invest some of their gains in other sections of that currency’s network. With DEXes now launching, and a variety of Cardano native tokens to pick up, some ADA profits from NFTs are likely to flow into DeFi, bolstering the ecosystem as a whole.
Macro Factors
Considering the macro environment, Cardano’s lack of dramatic price action is not such a surprise. Some observers predicted that we would be in a 2018-style crypto winter by now, and there has been a significant amount of bearish sentiment within crypto and more widely.
Daily speculation about the Fed’s next moves, economic instability and the (hopefully now fading) possibility of war have become routine and, understandably, caution has been the default.
Looking forward though, in the medium to long term, when external factors alter and sentiment shifts, Cardano might just have set itself up as well-placed to blaze, or at least, in a more peer-reviewed, Cardano-esque manner, smolder upwards.
