The world’s leading crypto-assets manager, Grayscale, has released a new report on Cardano as part of its series of educational overviews of cryptocurrencies called “Building Blocks”.
In the report, the investment firm described the main advantages of the 3rd largest cryptocurrency in market capitalization, as well as some of the main risks associated with it.
As reported by U.Today, ADA became the third largest position on the Digital Large Cap Fund, Grayscale’s large fund, in early July.
-Charles Hoskinson, CEO of Input Output, is seen as the driving force behind the blockchain, with his “vision” being singled out as one of Cardano’s main strengths.
-Cardano’s Treasury, which currently has around US$ 1.5 billion in cash, is also considered a strength of the project.
-Cardano’s strong community, broad accessibility and decentralization, which became possible after the Shelley update last year, were also mentioned as the main reasons why the blockchain is likely to succeed.
When it comes to potential risks, the obvious is the fierce competition in the area of smart contracts. Ethereum, the current industry leader, as well as start-ups like Solana and Avalanche are also vying for dominance.
Despite the launch of smart contracts, the Cardano blockchain had few uses, according to Grayscale. The report says it remains to be seen whether the decentralized applications being released on the blockchain will have any significant adoption.
Finally, the report raises the possibility that the ADA is overvalued due to its low rates:
Cardano network fee revenue is still relatively low compared to other Proof of Stake (PoS) blockchains such as Ethereum 2.0. Unless the network can increase rates of new applications or increased usage, the ADA’s valuation cannot be “calculated” based solely on its staking.
Finally, the report cites that potential technical problems and a lack of regulatory clarity in the US could hamper its growth.
What is your opinion about the future of Cardano, is it worth investing? Leave your comment below and listen to the Cointimes podcast that we discussed about Cardano with experts in the field.