Recently, former US President Trump signed an executive order to officially include Cardano (ADA) in the national digital asset strategic reserve (DAS). This decision has caused widespread controversy in the crypto industry. As the native token of the old smart contract platform Cardano, Cardano has been based on the market with its research-driven design concept and unique proof-of-stake mechanism (DPoS) since its birth through ICO in 2017. However, its low on-chain activity and slow ecological development have also made the outside world question whether it has the long-term value to enter the government asset pool.
From the perspective of technical architecture, the underlying design of Cardano is indeed unique. Cardano adopts an extended UTXO model and combines it with an on-chain governance framework to try to build a more decentralized ecosystem. After the Plomin hard fork upgrade in January this year, Cardano holders can directly vote on core decisions such as network parameter modifications and fund allocation. In addition, Cardano’s “Catalyst Plan” has developed into one of the largest community-autonomous fund projects in the crypto field by distributing transaction fees and issuing additional tokens through an on-chain democratic mechanism. These features are regarded by supporters as the key advantages of Cardano compared to “venture capital tokens” – as community opinion leader Cardano_whale said: “On-chain fees, governance rights and native asset trading pairs constitute the practical value of Cardano that cannot be ignored.”
However, Cardano’s market performance is embarrassing. Messari data shows that Cardano’s average daily transaction volume in the fourth quarter of 2024 was only 71,500 transactions, and the quarterly fee income was US$1.8 million, which is in sharp contrast to Ethereum’s US$5.52 billion fee scale in the same period. What is more worrying is its ecological activity: the average daily DApp transaction volume is 14,300 transactions, a 73% drop from the same period last year, and the DeFi market share accounts for only 0.3% of the entire industry. Even if the pledged assets that do not need to be locked are included, the total share is only 12%. In terms of the number of developers, Cardano ranks 12th among blockchain projects with 449 full-time developers, far behind the leading public chains.
The supply mechanism of Cardano has become the last “theoretical line of defense” for supporters. Its total upper limit of 4.5 billion coins is designed to be combined with a gradual inflation model that releases 0.3% of reserves every five days. The current annualized inflation rate has dropped to 4%, and the circulation volume has reached 3.595 billion coins. This deflation model is believed to support long-term value. At the same time, the Cardano community is exploring native compatibility with Bitcoin through the eUTXO system, and projects such as Atrium Lab are trying to use this to open up the Bitcoin DeFi ecosystem. David Nage, portfolio manager of venture capital firm Arca, pointed out: “If Cardano can attract developers to build phenomenal applications and strengthen the technical narrative, its logic of entering the national reserve will be more self-consistent.”
Faced with the choice of the US government, the crypto community is divided into two camps: one side believes that Cardano’s technical precipitation and governance framework meet the positioning of “strategic assets”, while the other side criticizes its ecological data for being difficult to match the strict standards of national reserves. In this value game, Cardano needs to prove the technical foresight of its UTXO model, and more urgently needs to achieve breakthroughs in practical areas such as developer ecology and on-chain applications. After all, the entry ticket to the national digital asset reserve will ultimately depend on the market rather than theory.
