State of Cardano Q3 2024

Key Insights

• The Chang Hard Fork occurred on Sept. 1, 2024, initiating a technical bootstrapping phase that set the stage for decentralized governance over Cardano by ADA tokenholders.
• Revenue (USD) decreased 31.2% QoQ to $0.51 million. This was impacted by Cardano’s 15.9% QoQ decrease in average daily transactions, which fell to 43,200.
• TVL (USD) rebounded 13.3% QoQ to $231.6 million. This was led by Liqwid and Splash, whose TVL grew 77.2% and 76% QoQ, respectively.
• Stablecoin market cap stagnated, up just 5.4% QoQ to $20.7 million. USDM continued to grow after launching in March, increasing 148.5% QoQ to $7.9 million.
• ADA’s token price decreased 4.8% QoQ to $0.37, with its market cap rank falling from 10th to 11th.

Primer

Cardano (ADA) is a Proof-of-Stake (PoS) Layer-1 network launched in 2017. Cardano aims to provide security, scalability, and functionality to decentralized applications and systems building atop the network. In addition to its community of developers, node operators, and projects, Cardano is supported by entities like Input Output Global (IOG), Cardano Foundation, EMURGO, and others. These entities support the network’s development, adoption, and finances as Cardano moves toward the age of Voltaire, the final phase of its roadmap.

Cardano has taken a unique approach to development when compared to other smart contract networks. The Ouroboros consensus mechanism allows for delegation of stake, while the extended unspent transaction output (eUTXO) accounting model enables native token transfers, scalability, and decentralization.

With a dedicated community of users and developers, Cardano has demonstrated staying power. After the launch of smart contract support via the Alonzo hard fork in 2021, Cardano began to compete in more traditional crypto markets, such as DeFi and NFTs. For a full primer on Cardano, refer to our Initiation of Coverage report.

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Key Metrics

Financial Analysis

ADA is the native asset of Cardano that is used as the primary medium of exchange when transacting on the network. It has four primary network-level use cases: (i) settling network transaction fees, (ii) being used to register a stake pool to participate in network consensus as a stake pool operator (SPO), (iii) staking as a stake pool operator or delegator to help secure the network and earn token rewards, (iv) being used to reward voters and fund projects in Project Catalyst.

ADA’s maximum token supply is 45 billion, and its circulating token supply experiences inflation until it reaches that maximum. After each five-day epoch, 0.3% of ADA reserves (i.e., the ADA not in circulation) are distributed as SPO rewards. This “inflation” trends towards zero as the reserves deplete and the circulating supply approaches 45 billion.

Annualized real staking yield accounts for any value dilution due to inflation. In Q3, the annualized real staking yield was 0.6%, though this can vary by stake pool.

ADA’s price decreased 4.8% to $0.37 in Q3. ADA’s market cap fell a similar 6.9% QoQ to $13 billion, with the slight discrepancy being due to a 2.2% decrease in circulating supply. Due to the decrease in price, ADA’s circulating market cap rank fell from 10th to 11th in Q3.

Each transaction on Cardano is accompanied by a network transaction fee for processing transactions and paying storage costs. Fees are calculated by a minimum fee plus a variable fee based on transaction size. Revenue (USD) decreased 31.2% QoQ to $0.51 million, while revenue (ADA) decreased by a lesser 14.2% QoQ to 1.4 million. This difference was due to the price of ADA falling throughout the quarter.

Currently, 20% of Cardano’s transaction fees go to the treasury. Cardano’s treasury balance (ADA) fell 1.2% QoQ to 1.55 billion ADA, though the treasury’s dollar value increased 3% to $622.92 million.

Network Analysis

Cardano’s average daily transactions (txs) decreased by 15.9% QoQ to 43,200, while average daily active addresses (DAAs) fell 14.5% to 27,200. Cardano’s average transaction fee (USD) stayed flat at $0.13. However, the average transaction fee (ADA) dipped 17.9% QoQ to 0.54.

The ratio of transactions to active addresses (txs/DAAs) decreased by 1.7% QoQ to 1.59, an increasing ratio suggests activity is being distributed more evenly across users; conversely, a decreasing ratio suggests an increase in “power users.”

Total stake (ADA) and ADA’s staking rate decreased 0.3% and 4.1% QoQ, respectively. Total stake (USD) decreased 5.1% QoQ to 8.5 billion due to ADA’s price decrease. Total stake (USD) represents the economic security of the network.

Governance

Chang Hard Fork

In April 2024, Cardano unveiled the Chang Hard Fork, a two-phase network upgrade that would enable onchain governance and fulfill the core purpose of Cardano’s final roadmap phase (Voltaire). Voltaire takes the final steps toward Cardano’s self-sustainability via onchain voting and offchain mechanisms and institutions like the member-based organization, Intersect.

• Phase one began upon the Chang Hard Fork, which occurred on Sept. 1, 2024. Phase one initiated a technical bootstrapping phase that sets the stage for decentralized voting and governance actions.
  • The Interim Cardano Constitution serves to bridge the gap until the actual constitution is iterated on through Cardano Constitutional Workshops and ratified at the Cardano Constitutional Convention in Buenos Aires, Argentina, in December 2024.
  • The Interim Constitutional Committee (ICC) comprises seven members, three of which were voted in. It has veto powers over certain onchain governance actions throughout phase one.
• Phase two will see Cardano’s onchain governance fully online as the Cardano Constitution is finalized and ratified. This phase will empower ADA tokenholders to direct technical changes and treasury withdrawals, partially through the introduction of a new user role, Delegate Representatives (DReps). ADA tokenholders will be able to delegate governance power to DReps and SPOs, who will be able to vote on governance proposals on their behalf.
  • Registration to become a DRep is open and requires a one-time deposit of 500 ADA.

After completion of phase two, DReps, SPOs, and the Constitutional Committee will govern all areas of the network via an onchain voting and treasury system based on CIP-1694. This would transfer responsibility from IOG, Cardano Foundation, and EMURGO, which combined, have historically held all seven governance (genesis) keys. Governable actions will include those related to the Constitutional Committee, parameter changes, constitution updates, hard fork initiation, protocol parameter changes, and treasury withdrawals.

Intersect & SanchoNet

CIP-1694-related testing continues on SanchoNet, a testnet network launched in Q3 2023 to serve as a sandbox to test and build out processes and tools for Cardano’s onchain governance. Developers use the testnet to launch new infrastructure (e.g., wallets and vote explorers), SPOs can test voting/proposing, and details on DReps can be hashed out.

SanchoNet and the wider Voltaire rollout are being championed by Intersect, a member-based organization for the Cardano ecosystem, among other community members, SPOs, and project teams. Intersect launched with the aim of bringing ADA tokenholders together behind a shared vision to enable a more transparent, collaborative, and innovative Cardano ecosystem.

Intersect maintains over 60 repositories including the full Cardano Haskell codebase and champions Cardano’s open-source approach through various Standing Committees and Working Groups. Additionally, Intersect is focusing on creating an open product roadmap, annual budget process, and has been operating a grants program, with projects awarded for working on governance-related areas such as education and DRep platforms.

Ecosystem Analysis

Average daily Dapp transactions on Cardano decreased 54.2% QoQ to 15.5, while average daily DEX volume (USD) fell 41.4% to $2.4 million. Overall Dapp activity is largely affected by Minswap, which is consistently Cardano’s most active application. The next two largest contributors are typically Liqwid Finance and jpg.store. This was no different in Q3’24.

• Minswap is an automated market maker (AMM) DEX that has been the most popular Cardano Dapp by transactions every month over the past year. Minswap remained the most-used Dapp in Q3, accounting for 28.5% of Dapp transactions at 398,000.
  • In July, Minswap launched its V2 upgrade, introducing new features like automatic swap routing, advanced order types, adjustable trading fees, increased swap throughput, and more. The protocol incentivized the migration of liquidity to Minswap V2 via reduced farming rewards on V1, decreased transaction fees on V2, and increased MIN token emissions on V2.
  • In September, Minswap launched its Launchbowl V2 which enables initial DEX offerings (IDOs). Rewards for staking MIN expanded to include Launchbowl tokens, in addition to yield coming from the protocol’s revenue.
• Liqwid Finance is a lending, borrowing, and liquid staking protocol. Liqwid Finance was the second-most-used Dapp in Q2, accounting for 23.5% of Dapp transactions at 327,700.
  • In April, Liqwid Finance launched its V2 upgrade, revamping its UI/UX, creating a public API, adding supply and borrow cap parameters, and more. Afterward, the protocol released a 12-month roadmap which includes updates for non-market parts of the protocol.
  • In September, Liqwid completed a rebrand and added support for growing assets like USDM.
• jpg.store is Cardano’s top NFT marketplace in terms of transactions and volume (ADA). jpg.store was the third-most-used Dapp in Q3, accounting for 19.6% of Dapp transactions at 273,800.
  • In July, jpg.store announced a new product, Rocket. Rocket is similar to pump.fun on Solana, allowing users to easily launch and trade tokens. Trading on Rocket is processed by SundaeSwap and the protocol rewards early users with rewards. Rocket launched soon after the end of Q3 in October.

DeFi

DeFi TVL (USD) on Cardano increased 13.3% QoQ to $231.6 million in Q3, while the DeFi diversity score (i.e., the number of protocols making up 90.0% of a network’s TVL) increased 12.5% to 9. There was a lot of movement among each of these protocol’s TVLs in Q3

Minswap saw a slight 4.4% QoQ increase in TVL to $58.6 million. Liqwid’s TVL shot up 77.2% QoQ to $47.1 million, surpassing Indigo, which fell 19.7% to $38.4 million. Smaller protocols like Splash Protocol and SundaeSwap grew 76% and 26% QoQ, up to $16.9 million and $16 million, respectively.

• Indigo is a synthetic asset-issuer that offers iUSD, iBTC, and iETH. Indigo completed an upgrade to V2.1 a week after the conclusion of Q3. This upgrade introduced an algorithmic interest rate, split interest to be shared between the treasury and INDY stakers, among other upgrades.
• Splash is a DEX that launched in July after a token sale for SPLASH raised 17.2 million ADA in May. Splash also worked to develop snek.fun, another protocol similar to pump.fun on Solana that allows users to easily launch and trade tokens. The application launched in September and saw over 2,230 tokens created and 4.5 million in trading volume (ADA) in the first 24 hours.
• SundaeSwap continued its momentum from Q2 when it launched a V3 upgrade that introduced a dynamic fee model and increased transaction load capabilities. The launch included reduced trading fees for 90 days. This expired in August and a proposal to increase fees passed in September. SundaeSwap revenue is distributed across SUNDAE tokenholders, SundaeSwap’s treasury, Sundae Labs, and more.

Stablecoins

Stablecoins are ideal for pairing in liquidity pools, borrowing and lending, creating leverage, and providing quick escapes from volatility. Cardano’s first stablecoins (iUSD and DJED) were launched in November 2022. In Q3, the stablecoin market cap on Cardano had rebounded, increasing 5.4% QoQ to $20.7 million.

The market caps of iUSD and DJED decreased by 29.8% and 14.5% QoQ, respectively, in Q3. MyUSD experienced slight growth of 7.7% QoQ while USDM’s market cap shot up 145.5%, ending the quarter on par with iUSD at a market cap of $7.9 million.

• USDM’s market cap increased 145.5% QoQ to $7.9 million in Q3. Launched on March 16, 2024, Moneta’s USDM is not algorithmic or synthetic, unlike iUSD, DJED, and MyUSD.
  • USDM is collateralized 1:1 with U.S. Dollars (USD). Indigo’s iUSD has had an inconsistent peg, something that is less likely to happen with 1:1 USD backing as more accessible redemptions create arbitrage opportunities that close price gaps.
• MyUSD’s market cap increased 7.7% QoQ to $2.3 million. MyUSD launched in December 2023 and is collateralized by USDC and USDT. In June 2024, Mynth introduced MyUSD staking to earn Mynth’s MNT tokens. This program has driven growth for MyUSD in H2’24.
  • While USDC and USDT aren’t natively available on Cardano, they are made available via Wanchain. Wanchain is a Layer-1 EVM-compatible network that doubles as an interoperability protocol, making USDC and USDT available on Cardano through its various bridges.

Notably, USDA is expected to enter the fold in the future. USDA will be launched by Encryptus with technological support from EMURGO and stablecoin issuance performed by Anzens. In Q3, Anzens announced it would partner with BitGo, a qualified custodian that will custody USDA reserve assets.

Real-world Assets

In Q3, several announcements to launch tokenized gold on Cardano were made.

• Kinka announced the upcoming launch of its gold-backed token, Kinka Gold (XNK).
• TVVIN announced the upcoming launch of its gold-backed token, TVVIN Gold (VVG).
• Finest announced the upcoming launch of its gold-backed token, Finest Gold (fGOLD). fGOLD launched on Oct. 1, 2024, selling $150,000 worth of tokens.

NFTs

Average daily NFT sales on Cardano were down 19.1% QoQ to 590 in Q3, while average daily NFT trading volume (ADA) decreased 22.4% to 116,500. jpg.store remained Cardano’s top NFT marketplace in terms of transactions and volume (ADA), and was even Cardano’s third-most-used Dapp in Q3.

In June, jpg.store launched NFT lending and borrowing, allowing NFT holders to borrow assets against their NFTs. The protocol continues to incentivize activity, having distributed JPG tokens to users in July at the end of Season 3. Season 4 began on July 17, 2024, and is ongoing, providing XP boosts for users of the new lending and borrowing features alongside regular XP accrual through NFT trading.

Development, Growth, and Community

Partner Chains

Partner Chains is an all-encompassing term that can include technically sovereign sidechains or modular networks. Some of these networks include Milkomeda C1, Wanchain, Midnight, and World Mobile. Launched in August, the Alpha v1 Toolkit allows developers to bootstrap the security of Partner Chains by leveraging Cardano’s network of SPOs. The toolkit introduces a committee selection algorithm that integrates Cardano data to form trusted committees capable of producing a predetermined percentage of blocks. By leveraging Cardano’s SPOs, Partner Chains can quickly grow their validator sets, enhancing security.

Notably, Midnight launched on Testnet on Oct. 1, 2024. Midnight is developed by Input Output Global (IOG) and offers data protection and privacy capabilities using zero-knowledge proofs (ZK Proofs). The testnet allows developers to take advantage of Midnight’s capabilities in a stable sandbox environment. Midnight’s programming language, Compact, is based on Typescript allowing Web2 developers to easily begin writing onchain smart contracts. Midnight continues to grow via partnerships and hackathons.

Project Catalyst

Project Catalyst is a decentralized fund for projects in the Cardano ecosystem. In this fund, ADA tokenholders decide which proposals receive funding from Cardano’s treasury. Through 12 funding rounds, Project Catalyst has funded 1,892 proposals for $90.5 million worth of ADA.

Voting for Fund12 concluded in July with 258 funded proposals for 46.5 million ADA. Funding was distributed across six categories, with the highest funded proposals coming from the “Cardano Partners and Real World Integrations” category.

Proposal submission for Fund13 began at the tail end of Q3, and the round’s voting phase will conclude in December. Fund 13 aims to distribute 50 million ADA toward six categories. A significant change in this round is a reduction in the minimum amount of ADA needed in order to vote. In Fund13, only 25 ADA is needed to vote, down from the 450 ADA, which has been in place since Fund4.

Closing Summary

Cardano saw decreases in many financial, network, and ecosystem metrics in Q3 2024. Revenue (USD) decreased 31.2% QoQ to $0.51 million and was impacted by a 15.9% decrease in average daily transactions, which fell to 43,200. ADA’s token price decreased 4.8% QoQ to $0.37, with its market cap rank falling from 10th to 11th.

A highlight was Cardano’s DeFi ecosystem, which continued to mature in Q3 as DeFi TVL (USD) increased 13.3% QoQ to $231.6 million. Liqwid’s TVL shot up 77.2% QoQ to $47.1 million, surpassing Indigo, which fell 19.7% to $38.4 million. Average daily DEX volume (USD) fell 41.4% to $2.4 million, though several token launchpads like Minswap’s Launchbowl, Rocket, and snek.fun launched and could catalyze an increase in trading activity going forward. The USDM stablecoin continued its growth as its market cap grew 145.5% to $7.9 million, while various tokenized gold tokens were announced to be launching on Cardano.

The Cardano community can expect the Chang Hard Fork to be completed in the coming months, bringing onchain governance to Cardano for the first time. This will fulfill the core purpose of Cardano’s final roadmap phase (Voltaire), and achieve long-term self-sustainability through democratic decision-making driven by Cardano’s various stakeholders.

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