Assessing the rise and fall of Cardano

• Cardano was briefly displaced by Base in terms of TVL on 22 August.
• A look at user activity on Cardano revealed a decline in the last month. 

During the intraday trading session on 22 August, the total value locked (TVL) in Cardano’s [ADA] decentralized finance (DeFi) ecosystem was briefly overtaken by that of Coinbase’s Layer-2 (L2) platform Base. 

As on-chain analytics platform Nansen noted in a tweet, Cardano’s TVL was behind Base’s by about $1 million for a short period before it regained dominance.

It didn’t take long for Base to overtake Cardano’s TVL

Maybe they should pivot into becoming an ETH L2… pic.twitter.com/8Ma2vhqQaT

— Nansen (@nansen_ai) August 22, 2023

At $190.7 million at press time, the value of assets on Cardano ranked ahead of Base, which had a TVL of $186.31 million, according to data from DefiLlama. 

The year has been good for Cardano’s DeFi ecosystem, but…

While it started the year with a low TVL of $64.85 million, the past few months have been marked by a surge in the protocol’s assets. According to DefiLlama, these have grown by 197% in the last eight months.

As earlier reported, the growth in the network’s TVL, particularly in the second quarter, has been due to the enlargement of its stablecoin market. 

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Between April and June, the total stablecoin market capitalization on the network grew by 34.9% from $10.0 million to $13.5 million. So far this year, Cardano’s stablecoin market capitalization has risen from 54th to 37th place among other networks.

However, on a broader assessment, Cardano’s TVL has plummeted significantly in the last year. Peaking at $434 million on 28 March 2022, Cardano’s DeFi vertical has since shed over 50% of its value. This drop is attributable to the severe bearish conditions that marked the 2022 trading year.

User activity in the last month

Cardano has experienced a general network decline in the last month. While its TVL has fallen by 16% during that period, user activity on the chain has also trended downwards.

Data from Artemis revealed a steady drop in the daily count of unique wallet addresses that have completed on-chain transactions on Cardano in the last 30 days. Between 23 July and 21 August, this declined by 44%.

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With fewer active addresses on the Layer 1 (L1) network in the last month, the number of transactions completed has also slowed. Per Artemis, the total number of transactions registered on-chain in a rolling 24-hour period between 23 July and 21 August fell by 32%.

Regarding its DeFi vertical, trading activity on the decentralized exchanges (DEXes) housed on Cardano peaked on 7 August. But it has since begun to trend downward. With $2.72 million recorded in DEX volume on 22 August, a 79% decrease was recorded in the last 15 days.