The Harsh Truth About Cardano

Gm, anon.

Continuing our deep dive into Friday’s newsletter on the attention economy's stranglehold on the crypto space, we need to dissect one of the market's biggest enigmas: Cardano.

Here's a blockchain that boasts one of the largest market capitalizations, currently at $16B, yet if you peel back the layers, you'll find a network that's virtually devoid of daily active users, daily transactions, blockchain fees generated, DEX trading volume or in general any type of product market fit to differentiate it from it's myriad of competitors. How does this incongruity exist? What props up Cardano's inflated valuation when it lacks any substantial usage?

The Charisma Effect: Charles Hoskinson's Masterclass in Vision Selling

Enter Charles Hoskinson, the charismatic founder of Cardano. Hoskinson is a master at selling visions. He paints grand pictures of the future, full of potential and transformative impact. A quick search on YouTube will flood you with videos, podcasts, and interviews where he talks about Cardano's work in Africa, solving global problems, and pioneering technology. But let’s cut through the fluff: what’s really happening here?

Hoskinson's genius lies not in blockchain innovation but in his ability to captivate and persuade. He has turned Cardano into a case study of how the attention economy can drive market value. Investors aren’t putting their money into Cardano because it has proven utility or a bustling user base. No, they’re buying into the dream Hoskinson sells, a dream meticulously crafted and delivered to millions. This, more than anything, has propelled Cardano to its lofty heights, which in September 2021, topped at nearly $100B. That’s a massive valuation based on nothing but hopes, dreams and sweet words. 

Historical Parallels: Selling Dreams Over Delivering Results

This isn't a new trick. Look at history: charismatic leaders have always been able to whip up fervor and drive valuations based on promises rather than results. Remember, this is the same market where Dogecoin, a meme with no intrinsic value, shot up because of a few tweets from Elon Musk. In recent news, online sensation Roaring Kitty was able to drive a massive meme run-up in GameStop. It’s not about fundamentals; it’s about who can tell the most compelling story.

The Metrics Don't Lie: Cardano's Underwhelming Performance

And let’s be clear: Cardano’s metrics don’t justify its status. Looking at data from Artemis and comparing metrics across various different blockchains, we can see that: 

With a paltry 42.3k daily transitions, Cardano is near the bottom compared with its competitors 

28.2k daily active addresses puts Cardano near the midrange compared to its competitors

Cardano is again found towards the end with a measly $2.9M in daily DEX volume. Compare that with Ethereum’s $2.4B and Solana’s $1.1B

Lastly, with its multibillion dollar valuation and top 10 ranking by market cap, Cardano is barely able to squeeze out $6.8k in daily blockchain fees. How does that make economic sense?

This stark contrast highlights how skewed the perception can be when driven by narrative over numbers. Cardano isn’t generating significant revenue because, frankly, it has no significant user base to generate that revenue from.

The Attention Economy's Grip on Crypto

The lesson here is brutally clear. The crypto market up until now in 2024 isn’t about delivering real utility or solving pressing problems—at least not yet. It’s about capturing attention, spinning a narrative, and maintaining that illusion long enough to attract investment. This market doesn’t reward the quiet achievers diligently building in the background. It rewards those who can shout the loudest and promise the most.

Redefining Investment Strategy: Focus on Narrative Over Fundamentals

For any investor or participant in the crypto space, this reality should be a wake-up call. Stop fooling yourself into believing that strong fundamentals are what drive market success here. They don’t—not in this stage of the market’s evolution. What drives success is the ability to command attention and sell a vision. 

So, the next time you’re looking at a project, don’t just ask about its technology or its roadmap. Ask about its narrative. Ask who’s behind it and how effectively they can market their vision. In the attention economy, these are the metrics that matter.

Conclusion: Adapt or Get Left Behind

Cardano’s inflated valuation is a testament to this truth. It’s not about what Cardano is doing today. It’s about what Charles Hoskinson has convinced the market it might do tomorrow. And until the market matures to a point where real utility is demanded, this is the game we’re all playing.

Are you ready to adapt, or will you cling to outdated notions of value? The crypto market is evolving, and those who fail to understand the rules of this new game are doomed to be left behind. Embrace the reality: in this attention-driven market, it’s not the fundamentals that will make you money. It’s the story you can sell.

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