Holders of Cardano (ADA) and XRP (XRP) hoping for a dedicated exchange-traded fund (ETF) might need to adjust their expectations. Recent research by GSR casts doubt on the immediate possibility of ETFs for these two cryptocurrencies.
GSR’s newly unveiled “ETF Possibility Score” evaluates the potential for cryptocurrency ETFs based on two key metrics: decentralization and demand. Decentralization, a core principle in blockchain technology, considers factors like permissionless participation, control over development, token distribution, and hardware diversity. Metrics like the Nakamoto Coefficient (measuring the minimum entities needed to compromise a network) and staking requirements are used to assess decentralization.
On the decentralization front, the picture isn’t rosy for Cardano and XRP. GSR’s analysis assigns them scores of -0.9 and -0.1, respectively, placing them last and fifth out of the evaluated cryptocurrencies. It’s worth noting that GSR used estimates for Cardano due to unavailable data from Nakaflow.
Demand potential, another crucial factor, takes into account market capitalization, trading volume, and community activity. Higher scores in these areas suggest stronger future demand for an ETF. Here again, XRP and Cardano come in fourth and sixth with scores of -0.2 and -0.5, respectively.
GSR’s ETF Possibility Score combines these decentralization and demand scores, weighting demands more heavily (67%) than decentralization (33%). Based on this calculation, Ethereum emerges as the frontrunner for a potential ETF, with Solana and NEAR also showing promise. Conversely, XRP and Cardano’s lower scores suggest a significantly reduced likelihood of ETFs for these assets in the near future.
Don’t write off Cardano (ADA) just yet. While recent analysis suggests a bumpy road to ETFs, ADA’s strong fundamentals remain. Cardano boasts a robust and secure blockchain network, constantly undergoing development to improve scalability.
The upcoming Hydra protocol promises significant transaction speed boosts. Furthermore, Cardano’s focus on smart contract functionality positions it well for the booming decentralized application (dApp) market. With a passionate community and a focus on real-world applications, ADA retains its potential for long-term growth.
