- A new research report in Grayscale argues that Cardano may be undervalued relative to Ethereum.
- The report notes that Cardano’s on-chain metrics have grown strongly over the past 12 months.
- The third largest cryptocurrency in the market has seen a huge rise in both usage and user adoption.
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According to a research report by Grayscale, the world’s largest crypto asset manager, Cardano can be underestimated given its massive growth in adoption over the past 12 months.
Cardano is seeing a growth in adoption
Grayscale suggested that Cardano might be undervalued compared to Bitcoin and Ethereum.
The research report published on Sunday highlights how cryptocurrency fundamentals have improved in third place across the board over the past year.
Cardano recently launched smart contract functionality with the Alonzo upgrade, paving the way for decentralized apps to thrive. The update makes the blockchain led by Charles Hoskinson. A direct competitor network for other smart contract platforms such as Ethereum, Solana, Avalanche, and Polkadot.
According to the report, Cardano is currently settling for more pay-per-unit market capitalization than its direct competitors, suggesting that the asset may be undervalued. Cardano has settled more than $1.6 trillion in total value of on-chain transactions over the past 12 months, which is about 40% less than Ethereum and 50% less than Bitcoin. Meanwhile, their market capitalization is about 80% and 90% less than that of Ethereum and Bitcoin, respectively.
Furthermore, Grayscale notes that Cardano may also be undervalued relative to Ethereum based on market capitalization per active monthly user. Cardano currently has approximately 2.8 million monthly users, while Ethereum has nearly 7 million. Cardano also has a lower market value per user. The report indicates:
The value of Ethereum per user is around $55,000 while Cardano is worth about $30,000. This could indicate that Cardano is undervalued relative to its largest crypto network, Ethereum, based on this particular metric.”
Besides the slight increase in user adoption, Cardano has also seen a significant growth in usage. The network currently processes more than 115,000 transactions per day, an increase of about 13 times since the beginning of 2021. Revenues from fees paid to ADA companies that support network security have continued to rise rapidly, rising nearly 65 times over the past year.
Grayscale also noted that the market may find other metrics significant, and that the network still has a long way to go to offer a competitive DeFi platform to its competitors. While smart contracts have been in effect on the mainnet of the network since September 12, users have yet to see fully functional decentralized applications because concurrency issues have left developers facing major scaling problems.
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