Cardano (ADA): A Comprehensive Overview of the PoS Network

ce its launch in 2017, Cardano (ADA) has grown into a PoS network that aims to push the limits of blockchain technology. As a platform committed to security, scalability, and functionality, Cardano is more than just a cryptocurrency, but provides a powerful environment for developers and users to build decentralized applications and systems.

Cardano (ADA) is a proof-of-stake (PoS) layer 1 network that was launched in 2017. It aims to provide security, scalability, and functionality for decentralized applications and systems built on its network.

In addition to community support from developers, node operators, and projects, Cardano is also supported by Input Output Global (IOG), the Cardano Foundation, EMURGO, and others. Together, these organizations drive network development, adoption, and fundraising, leading Cardano toward the final stage of its roadmap, the Voltaire Era.

Compared to other smart contract networks, Cardano takes a unique approach in development. The Ouroboros consensus mechanism allows for staking delegation, while the extended eUTXO accounting model facilitates native token transfers, scalability, and decentralization.

With a loyal group of users and developers, Cardano has proven its staying power. After supporting smart contracts through the 2021 Alonzo hard fork, Cardano began to compete in more traditional crypto markets such as DeFi and NFT.

Key Data

Profitability Data

ADA is the native asset of Cardano and serves as the main medium of exchange for transactions on the network. It has four main network-level use cases:

(i) Settlement of network transaction fees: ADA is used to pay for transactions conducted on the Cardano network.

(ii) Registering a Stake Pool: Users can use ADA to register a stake pool, participate in the network consensus, and become a stake pool operator (SPO).

(iii) Staking: Whether as a stake pool operator or a delegator, staking ADA can help protect network security and earn token rewards.

(iv) Rewarding voters and funding projects: In Project Catalyst, ADA is used to reward voters and fund projects.

The maximum supply of ADA is 45 billion, and its circulating supply will experience inflation before reaching this maximum. After every five-day epoch, 0.3% of the ADA reserve (uncirculated ADA) is allocated to SPO as a reward. This "inflation" tends to zero as the reserve is consumed and the circulating supply approaches 45 billion.

The annualized effective staking yield takes into account the dilution of value due to inflation. In the third quarter, the annualized effective staking yield was 0.6%, but this may vary depending on the different equity pools.

In Q3, ADA’s price dropped by 4.8% to $0.37. Correspondingly, ADA’s total market capitalization dropped by 6.9% quarter-on-quarter to $13 billion. The slight difference in total market capitalization is due to a 2.2% decrease in circulating supply. Due to the price drop, ADA’s total circulating market capitalization ranking dropped from 10th to 11th in Q3.

On Cardano, each transaction is subject to a network transaction fee, which is used to process the transaction and cover storage costs. The fee calculation includes a minimum fee plus a variable fee based on the size of the transaction. Revenue (in USD) fell 31.2% quarter-on-quarter to $510,000, while revenue (in ADA) fell 14.2% quarter-on-quarter to 1.4 million ADA. This difference is due to the decline in ADA's price throughout the quarter.

Currently, 20% of Cardano’s transaction fees go into the treasury. Cardano’s treasury balance (in ADA) fell 1.2% month-on-month to 1.55 billion ADA, but the dollar value of the treasury increased 3% to $622.92 million.

Daily Activity Data

In the third quarter, Cardano’s average daily transaction volume fell by 15.9% month-on-month to 43,200, while the average number of daily active addresses (DAAs) also fell by 14.5% to 27,200. Cardano’s average transaction fee remained unchanged at $0.13. However, the average transaction fee (in ADA) fell by 17.9% month-on-month to 0.54.

The ratio of transactions to active addresses (txs/DAAs) fell 1.7% month-over-month to 1.59. An increase in this ratio generally means that activity is more evenly distributed among users; conversely, a decrease in the ratio indicates an increase in “heavy users.”

Total stake (ADA) and ADA’s staking ratio decreased by 0.3% and 4.1% month-on-month, respectively. Due to the decline in ADA prices, total stake (in USD) decreased by 5.1% month-on-month to $8.5 billion. Total stake (in USD) represents the economic security of