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Cardano sets sight on token burning despite resistance from founder Charles Hoskinson

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  • Cardano is now looking into a token burning mechanism, proof of burn (PoB) from Iagon tech company.
  • Initially, founder Charles Hoskinson adamantly rejected the proposal, but now seems to have given in to pressure to cut down the 45B ADA token supply.

The Cardano (ADA) blockchain has been considering introducing a proof-of-burn (PoB) mechanism to its ecosystem. Proposed by Cardano founder Charles Hoskinson, the PoB will be brought forth by the Iagon decentralized cloud services platform.

Invented by Iain Stewart in 2012, PoB is an alternative consensus algorithm with several applications. In proof of work (PoW) blockchains, burning cuts down energy consumption by reducing the amount of mining energy required. Additionally, the mechanism allows miners to “burn” virtual currencies, in exchange for mining privileges or the blockchain’s native currency, in this case, ADA. And as Iagon notes in its blog, the burning mechanism “may be used as a proof of commitment in blockchain protocols.”

To burn coins, miners need to send them to a verifiably un-spendable address, also known as a “black hole” address. Tokens in this address can never be retrieved. Resultantly, ADA tokens become scarce (deflationary pressure), boosting their value. Other token-burning techniques, such as Ethereum’s EIP-1559, burn a portion of the transaction fees instead.

Cardano Proof of Burn solution for deflationary pressure

Notably, the PoB solution has come in response to criticism directed to Cardano for its huge supply of ADA tokens. According to our data, the network has its token supply capped at 45 billion, with over 32 billion tokens currently in circulation.

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Some members of its community are also concerned about growing competition from rival networks Ethereum and Binance Smart Chain (BSC). The former recently introduced a deflationary mechanism through the EIP-1559. Similarly, Binance Coin recently held its 17th token burning, removing 1 million BNB tokens, or $639 from the supply. Hoskinson noted after the observations were made that;

It’s time for the Cardano community to deal with hostile proposals,” 

Lagon’s protocol came up as the best choice for Cardano due to its censorship-proof abilities applied on all user wallets. The platform’s solution practically zeroes out the possibility of miners opposing ADA token burning.

Cardano’s PoB application was meant to be launched after the completion of the Alonzo series, which took place on Sept. 12. Hoskinson noted that the new application would engage new developers of the Cardano ecosystem and be ideal training for them. The tech entrepreneur even offered the best developer a reward in the form of an NFT.

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Earlier on, Hoskinson was strongly in opposition to a token burning feature for the Cardano network. As CNF reported, Hoskinson said token burning was synonymous with “grabbing someone’s wife,” or siphoning gas out of other people’s cars for your own. Indignant with the suggestion, he said it would only benefit those looking to make a little extra cash then move on to something else more hyped.

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Cardano on the edge: Why and what it needs to make a recovery

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These are not the best of times for Cardano. While the asset may have maintained its sixth position in the rankings with a market cap of $49.1 billion, it is consistently reaching new lows over the past week, and at present, it is possibly at the last key support before an evident bearish reversal.

This article will draw estimates around the current price movement of Cardano and explain why it should recover moving forward to avoid further corrections.

Red-Flags for Cardano

Source: Trading View

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While a sense of optimism is appreciated for one of the top performers of 2021, ADA’s price structure is anything but ideal. Earlier in November, the asset finally breached above its long-term ascending channel pattern but it was followed by immediate invalidation. It was a sign of things to come for the asset, and Cardano barely recovered ever since.

Now, at press time, the asset has finally dropped under the pattern in a bearish direction, eliminating any chance of immediate bullish recovery. $1.80 was an important high-time frame support, which did not hold ADA‘s crashing valuation.

Source: Trading View

The importance of $1.80 can be understood from the Fibonacci levels. $1.80 marked the 0.618 Fibonacci level, which fundamentally is the last support during a correction phase of a bull run.

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During the Q3 correction period, Cardano dropped down to $1.00 which was the Fib level of 0.618 for a market top of $2.47. The same situation hasn’t panned out this time, with the market falling sharply beyond the retracement levels.

Is there still hope?

Source: Trading View

Well, never say never in crypto trend, and volatility could swing in Cardanos’ favor as well. According to data from intotheblock.com, 4.93 billion ADA currently resides between the range of $1.34-$1.63 amongst 394,ooo addresses. While this suggests that ADA may drop down to as low as $1.40 in the next few days, the flip side is, it can recovery strongly as well.

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However, failure to do so may see Cardano enter price discovery between $1.11 and $1.34. Close to 8.37 billion ADA resides in that range distributed amoong ~590,000 addresses. The situation is definitely on the edge for Cardano, and major sentiment indicates a bearish outlook.

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Cardano Foundation Facilitates The Improvement Proposal Process

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Cardano has been making headlines a lot in 2021 due to the various exciting projects that the team has been working on.

ADA is also showing a great price trajectory and this probably mirrors the success of the project as well.

Now, it’s been revealed that the Foundation is facilitating the Cardano Improvement Proposal process.

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Check out the revealing tweet that the team shared recently:

Someone said: ‘until the number of coins decreases, you will not have the upper hand, and as long as there is one conversation, everything will be all the same. and you have only one conversation.! scarcity creates supply, this is the law! and it always works!’

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One other follower said: ‘The price is only one element. Price will recover, don’t look only at the price movement’s. The technology and the vision is the key and Cardano is on the right way.’

ADA is embracing more investors amidst market correction

A few days ago, we were revealing that CoinShares’ reports note the fact that top smart contract platforms like Ethereum, Solana, and Cardano (ADA) are seeing a huge amount of investments.

“Ethereum saw inflows totaling US$14m last week, marking its fourth consecutive week of inflows totaling US$80m…”

The same notes continued and said:

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“Inflows into world computer assets suggest that investors favor Solana. By measure of total inflows over the last month, Solana has seen inflows totaling US$43m over the last month versus Cardano at US$23m.”

Despite the market corrections, there are all kinds of optimistic predictions about the prices of cryptos these days. ADA is one of the coins that saw a correction.

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The ADA Coin Stands At The Last Fibonacci Retracement Support Of 0.718. Is There Still Hope For Bulls?

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After rejecting from the $3 mark, the ADA coin entered this retracement phase. The coin price tried hard to sustain above the $2 support but overpowered bears didn’t let that happen. The coin has steadily dropped lower and has re-established another significant support level of $1.5. Watch out for these technical levels to spot good opportunities. 

Key technical points:

  • The ADA coin chart shows the 20-and-50-day are on the verge of a bearish crossover
  • The intraday trading volume in the ADA coin is $3.2 Billion, indicating a 1.37% gain
TradingView Chart

Source- ADA/USD chart by Tradingview

As mentioned in my previous article on ADA/USD, the ADA price breached the crucial support of the $2 mark. The coin price offered a proper retest to check for sufficient resistance at this level and continued to drop lower. Right now, the price is plunged to a significant support level of $1.5, which is in confluence with the weak but valid support level of 0.718 FIB.

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According to the crucial EMAs(20, 50, 100, and 200), the coin price is currently under a downtrend. Moreover, this chart shows the 20 and 50 EMA may soon offer a bearish cross, which could attract even more sellers in the market.

The Relative Strength Index(28) states the dominance of sellers in ADA coins. However, the RSI line has entered the oversold zone, suggesting good potential if a new rally emerges.

Important Weekly Announcement For Cardano(ADA)

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What fueled the strong sell-off in ADA coin was an announcement from eToro, which is an online broker and investment platform, saying that it would be limiting trading on ADA and Tron coin for its U.S.users. 

ADA/USD Chart In The 4-hour Time Frame

TradingView Chart

Source- ADA/USD chart by Tradingview

The ADA Coin price is currently hovering near the $1.5 support, indicating an intraday loss of 7.28%. However, the price has not yet displayed any sufficient reversal signs that can reinforce a bullish sentiment.

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The crypto traders can observers the coin for some time and wait for sufficient demand pressure to confirm a long trader. Anyhow, if the bears even managed to drop the price below this support. The ADA coin may return to the $1.

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