The Cardano blockchain will roll out the long-awaited Alonzo hard fork on September 12. It will then have smart contracts and the possibility of competing with Ethereum on DeFi.
Ethereum is the undisputed champion of decentralized finance. According to Defi Llama, this market represents a total blocked value (TVL) of 178 billion dollars. The ETH network alone processes 75% of this value.
However, Ethereum must now contend with increasing competition. Several other blockchains are developing in DeFi. In order of importance, its main rivals are Binance Smart Chain, Terra, Polygon and Solana.
The ADA fired by the imminence of Alonzo
Another suitor is preparing to come also to challenge the domination of Ethereum ($ 400 billion in capitalization). The 3e The sector’s cryptocurrency in terms of capitalization ($ 80 billion), Cardano, is in the process of acquiring smart contracts.
This feature is essential to compete with Ethereum. It will finally be effective on Cardano on September 12. It is indeed on this date that the Alonzo hard fork will be deployed on the mainnet. It will therefore be necessary to watch over the next few days the ADA course.
This impending launch of Alonzo was heavily involved in pulling the price of the token and carrying it up to the 3e place, just behind Ether (ETH). Thus, last week, smart contracts landed on the testnet.
The result was not long in coming for the ADA. The price climbed above $ 3, establishing a new ATH. According to CoinMarketCap, the cryptocurrency is currently trading at $ 2.49, down slightly over 24 hours. The ADA also recorded a drop of 15% over one week.
The token was suffering from the fall in the price of Bitcoin at the start of the week and a massive sell-off of cryptos. Unlike the SOL, it has not yet been able to recover the lost value. The ADA nevertheless displayed several cycles of increase during the day of September 9, progressing for example beyond 2.6 dollars.
Cardano must prove itself now
Cardano’s native cryptocurrency may be suffering from technical glitches faced by the first DEX being developed on the blockchain. Minswap was forced to stop prematurely.
The cause, a problem of “competition”. Clearly, only one user was able to interact with a smart contract per block or transaction. A serious handicap for a DEX and DeFi protocols.
For Eric Wall, investment director of Arcane Assets, this episode demonstrates the incompatibility of Cardano with DeFi. A radical opinion that obviously does not share its creator, Charles Hoskinson.
After Alonzo deploys on September 12, Cardano and the ADA will be under scrutiny. Hoskinson has widely touted the capabilities of the blockchain, especially in competing with Ethereum. To prove it, he will need successful DeFi projects on Cardano.