Cardano (ADA), the native token of the Cardano network, has been making headlines recently for its impressive on-chain transaction volume. According to a recent analysis by on-chain analytics firm IntoTheBlock, the network settles a staggering $7.2 billion daily, surpassing the figures of many other blockchain networks. This high volume suggests significant activity on the Cardano network, potentially indicating its growing utility.
However, the picture isn’t entirely rosy. While boasting a high on-chain volume, Cardano’s Network Value to Transaction (NVT) ratio sits at a remarkably low 2.62. The NVT ratio is a metric used to assess if a cryptocurrency is overvalued or undervalued. It compares the market capitalization of a coin to its transferred volume. A very low NVT ratio, like Cardano’s, could be interpreted as a sign of potential undervaluation, suggesting that ADA might be trading below its true market value.
This potential undervaluation is further bolstered by the high percentage of ADA held by long-term investors. Currently, around 40% of the total ADA supply is held by long-term holders, signifying a strong level of confidence in the project’s future potential.
However, there’s another side to the story. Despite the high on-chain volume, Cardano appears to be struggling to attract new users. The number of addresses with a balance on the network has remained stagnant around 4.45 million for over a year, indicating a lack of growth in the user base. This contrasts with the growth seen in platforms like Solana and Base, which have been attracting significant new users in this cycle.
While Cardano enjoyed substantial growth during the previous crypto market cycle, positioning itself as a viable competitor to Ethereum, the current cycle presents a different challenge. The network seems to be losing ground in user acquisition compared to its faster-growing rivals.
Interestingly, despite the slowdown in new user onboarding, Cardano’s existing user base appears engaged. According to IntoTheBlock, the network’s transaction count and active user base have remained consistent since April. This suggests that a core community of users continues to actively utilize the Cardano protocol.
The future of Cardano remains to be seen. While the high on-chain volume and low NVT ratio hint at potential undervaluation, the stagnant user growth poses a challenge. Whether Cardano can overcome this hurdle and translate its network activity into a wider user base will be a key factor determining its success in the long run.
