Cardano and the Need for a Stablecoin to Strengthen its Ecosystem

Recently, a topic has gained prominence in the Cardano community: the importance of a stablecoin pegged to the US dollar for the success of Cardano (ADA). According to the analyst known as Cardano Yoda, this integration could be a catalyst for an uptrend in the year 2025.

A stablecoin, for those less familiar, is a type of cryptocurrency whose value is linked to a traditional currency, such as the US dollar or the euro. This feature provides greater stability to its price compared to other cryptocurrencies, which are notorious for their fluctuations in value.

Once #Cardano has a USD-backed stablecoin, it will be ready for the bull run in 2025. Once Input Endorsers are implemented and Hydra deployed, we will have plenty of time for further improvements for the 2029 bull run.

— Cardano YODA (@JaromirTesar) January 17, 2024

The introduction of a popular stablecoin, such as USDT or USDC, on the Cardano blockchain could significantly increase activity in the ecosystem, boosting not only decentralized finance (DeFi) but also the market for non-fungible tokens (NFTs). This change could increase the number of users interacting with dapps (decentralized applications) on the Cardano network, increasing the demand for ADA, which is used to pay fees on the network.

Furthermore, the presence of a stablecoin with a high market capitalization can provide a continuous flow of value transfers, in addition to reducing market volatility. Other blockchain networks such as Ethereum, Tron, and Solana have already witnessed a surge in activity due to the incorporation of billions of dollars worth of stablecoins such as USDT, USDC, USDD, and DAI into their respective ecosystems. This has contributed to an increase in the total value locked (TVL) in its DeFi and NFT protocols, with some managing billions of dollars.

To put this into context, according to data from DeFiLlama, the Ethereum and Solana DeFi ecosystems have a TVL of US$32 billion and US$1.3 billion, respectively, while Cardano has a TVL of around US$337 million. This indicates ample room for growth and development in the Cardano ecosystem.

At the time of publication, the price of ADA was quoted at US$0.515 with an increase of 3% in the last 24 hours.

Disclaimer:

The views and opinions expressed by the author, or anyone mentioned in this article, are for informational purposes only and do not constitute financial, investment or other advice. Investing or trading cryptocurrencies carries a risk of financial loss.