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ADA’s value takes a hit but Cardano’s TVL could make up for it. Here’s how…
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Journalist
- ADA’s TVL saw a massive jump of 51% over the last three months.
- DEXs faltered but lending protocols impressed.
Cardano [ADA], one of the largest smart contracts platforms operating in the Web3 realm, lost a major chunk of its native token’s value over the last three months. A combination of market factors pulled the token down nearly 31% from its yearly peaks in mid-April, data from CoinMarketCap highlighted at press time.
Read Cardano’s [ADA] Price Prediction 2023-24
Despite the underwhelming performance of ADA, Cardano managed to take giant strides as far as DeFi activities were concerned.
TVL jumps despite ADA’s losses
During the time in which the native token lost ground, the total value locked (TVL) on the network jumped by 28%, according to data by DeFiLlama. On a year-to-date (YTD) basis, Cardano’s TVL has more than tripled, raising hopes of a quicker return to its all-time highs hit in 2022.
Source: Glassnode
TVL, or the total worth of all crypto assets deposited on smart contracts, remains the most popular indicator among DeFi investors. The locked-up capital is used for operations such as staking, lending, and liquidity provisioning on a DEX.
A higher TVL means more liquidity and therefore, higher chances of the project’s adoption. A protocol’s TVL fluctuates with the USD value of the deposited assets in the market. As a result, many investors regularly monitor the TVL in terms of the native token.
In Cardano’s case, the total TVL in ADA terms ballooned to 578 million at the time of writing, representing a massive jump of 51% in the last three months.
Source: DeFiLlama
In fact, a Twitter user recently shared that Cardano was the only major chain where the TVL in native currency shot up during the bear market.
2/7
Recently, DeFi Tx-volume went up aggressively, thanks to memecoin season & “DeFi summer”!
Cardano is ranked #15 chain for TVL (in $), ADA being at -90% from its ATH.
It’s the only major chain where TVL in native currency went up during the?time in crypto markets. pic.twitter.com/TPHGdk7HYp
— stake_pool (@OuroborosOmega) July 23, 2023
In comparison to other top blockchains, Cardano ranked low in terms of DeFi TVL. However, its growth trajectory in recent weeks has been impressive. The proof-of-stake (PoS) blockchain saw its TVL soar by nearly 16% over the past month, surpassing all other entities ranked above it.
The story of Cardano staking
Apart from DeFi assets, Cardano’s staked value has also been a subject of discussion. As per staking rewards, about 22.54 billion, or 63% of Cardano’s total circulating supply, was staked by users aiming to harvest rewards by participating in network activities.
Furthermore, on several occasions, ADA supporters have rued not including Cardano’s staked capital in the TVL figures. However, it should be noted that Cardano has a built-in liquid staking mechanism, meaning that, unlike other chains, staked capital is not ‘locked’ and is free to be spent elsewhere.
In contrast, Ethereum’s [ETH] TVL reflects its staked value. In fact, 30% of the overall TVL is composed of the liquid staking product Lido [LDO], according to DeFiLlama.
A look at areas of growth and weaknesses
Cardano’s DEX landscape has been one of the weaker DeFi sectors of late. After two consecutive months of growth, trading volumes across non-custodial exchanges fell sharply in July. Trades worth $39 million were settled over the past week, marking a decline of 9.4%.
Source: DeFiLlama
Minswap, the largest DEX on the network and the protocol with the largest TVL was the primary driver behind the decline.
The DEX suffered a significant drop in daily volumes after gaining from the memecoin frenzy in late May, during which all-time high figures were scaled. The volume on 23 July was just $3.77 million, a huge decline from the average of $20 million during the May peak.
While DEXs failed to put up a decent show, Cardano’s lending protocols marched ahead. The network’s largest lender Liquid Finance registered a TVL increase of more than 48% over the past month.
Lenfi is another platform that allows users to lend, borrow, and earn rewards on their crypto assets. The platform also witnessed a rise in deposited value by 26% in the last 30 days.
Source: DeFiLlama
How much are 1,10,100 ADAs worth today?
Over the years, Cardano’s DeFi growth has lagged well behind its market cap increase. However, the latest strings of successes could create the foundation for its launch to the top league of DeFi chains.
