Cardano drops out of top 10 cryptocurrencies by market cap

Cardano, once among the top 10 cryptocurrencies, has fallen out of the top 10 in terms of market capitalization.

For those who follow Cardano (ADA) closely, this may not come as a surprise as the cryptocurrency is facing significant challenges due to increasing competition and slow adoption rates.

Cardano’s decline can be attributed to its reliance on off-chain components that weaken its decentralization, low network activity compared to peers like Ethereum (ETH) and Solana (SOL), and its inability to keep up with faster, more active competitors.

Cardano’s price reached $3.09 in September 2021 but is currently trading at $0.33. Back then, Cardano’s market cap was flirting with the $100 billion market but is currently just under $12 billion.

Market cap is often used to compare the relative size and importance of different cryptocurrencies. Generally, cryptocurrencies with higher market caps are considered more established and less volatile than those with lower market caps.

What went wrong with Cardano?

Cardano has struggled to gain significant adoption due to competition from Ethereum and the rise of Layer 2 solutions that diminish its unique advantages. Despite increased development activity, many projects in its ecosystem have failed to thrive, leading to low user engagement and over-reliance on the ADA token.

Cardano’s smart contract functionality has come under scrutiny over the years for its reliance on off-chain components that contradict the principles of true decentralization.

Developers have highlighted potential risks, including the possibility of user funds being squeezed during outages and difficulties maintaining proprietary solutions. Despite its strong technological foundation and smart contract capabilities, Cardano’s network activity remains low compared to its peers, leading to a decline in market value.

Cardano has been left behind by more active networks over the years, which has affected its development and overall market position.

Cardano developments

Intersect recently asked decentralized application projects using Cardano to accelerate their preparations for the upcoming Chang Upgrade #1.

The upgrade, which is set to introduce on-chain governance, is vital to moving Cardano towards a fully decentralized system. Over 80% of Cardano’s staking pool operators have already upgraded to the latest validator node, but exchanges and decentralized applications still need to follow suit.

Cardano’s declining position could indicate a loss of investor confidence as it grapples with declining trading volumes and market interest. However, if Cardano can revitalize its ecosystem and gain momentum, a potential recovery is not out of the question.