The staking market is likely one of the most attractive sectors in decentralized space, and the Cardano blockchain has been showcasing tremendous traction on that frontier. The network has grown in popularity significantly since it announced smart contract capability in September, driving thousands of new users to start staking its native ADA token.
The Cardano blockchain has been gaining momentum since then as developers and investors are flocking to the network in hopes of seeing it become the next major competitor to Ethereum. Such immense interest is largely fuelled by the underlying capabilities of the Cardano blockchain – its ability to support various types of applications across industries, with finance being the most obvious among them. Given the transaction processing speeds of 250 transactions per second that Cardano boasts and the low commissions for transfers, the network is rightly being considered as a future infrastructure for health-care, edu-tech, supply chain management and a host of other applications.
But the main selling point of Cardano is its Proof-of-Stake consensus algorithm, which allows users to stake their ADA tokens in exchange for rewards. The system was introduced with the Goguen – the name of the third stage of network deployment marking its integration of DeFi. The staking feature became the highlight and Cardano’s ADA managed to gain more than 1,200% in price throughout 2021.
Such price dynamics are not surprising, considering the utility that the ADA bears as an asset worth having for the mere sake of generating yields in the form of rewards. As the platform scales, more stakers are expected to join, and market analysts believe Cardano could surpass the $500-billion capitalization mark by the year 2025, up 10 times from its current market cap of $53.4 billion.
Apart from the fact that ADA staking is very safe, as users’ tokens never leave their wallets, rewards are accrued in much the same manner as on bank savings accounts. With the option of unstaking at any time being up to users, the opportunities for applying such a rewarding mechanism become enormous across applications on the Cardano network.
The various partnerships and initiatives focused on increasing usability on the network that have been announced over recent months seem to have paid off, as Cardano’s ADA hit an all-time high of $1.59 per token. The growing metrics give a number of incentives to crypto users for staking ADA, considering the many upgrades and applications for the token that some projects are offering.
One such application was recently introduced by ADACash – a Cardano rewards system deployed on the Binance Smart Chain, which sees reflections from every transaction transferred to all ADA holders as rewards, essentially generating passive income.
ADACash reportedly reached a $40-million cap and attracted 10,000 of its first users 14 days after launch, highlighting the interest decentralized market participants are exhibiting towards the possibility of obtaining rewards for ADA staking. Many users have been reinvesting their passive income, considering that the rewards can be cashed out and used on daily payments. ADACash is already being viewed as a next-generation yield generator by many, given the use of the reflections system, which automatically calculates dividends every 60 minutes and transfers them to users’ wallets.
The main appeal of such staking solutions in the Cardano network is the fact that they are becoming a viable alternative to bank savings accounts, which have been all but rendered useless by the recent global economic downturn. As some banks offer even negative interest rates and inflation values are soaring into double-digits in some countries, the need for additional sources of income is becoming a matter of survival for many people in developing countries. The DeFi market is offering such solutions that impose no high walls or insurmountable thresholds on entry for retail investors.
The Cardano blockchain is, thus, becoming one of the pioneers in the staking sector with the relatively high APY of 5.09% for 20 days of asset holding, and the security and flexibility it offers users in terms of asset management.
As the DeFi sector heats up and major cryptocurrencies like Bitcoin and Ethereum are becoming inaccessible to the majority of decentralized market participants due to their restrictive prices, alternatives like Cardano are becoming attractive venues for both retail and institutional investors. Chances are quite high that despite the recent dip after its delisting from eToro, Cardano will see a surge in price, driven by staking supporters.