Know Cardano is a threat to other cryptos

• The Cardano network’s staking infrastructure, the staking procedure itself might be keeping Cardano ahead of its participation.

• According to the latest data from cryptocurrency exchange Kraken, 70 percent of the total supply of Cardano’s native token ADA has now been staked, valued at around $26.3 billion.

The world’s first cryptocurrency, Bitcoin, was envisioned and intended to use a Proof-of-Work mechanism for transactions to be completed. It became clear that this was not sustainable for the environment in the long run. 

As a result, the majority of the newer blockchains have chosen a Proof-of-Stake consensus mechanism, which allows all members to participate in the validation process while earning a few additional dollars on the side.

Cardano is rushing ahead 

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Even though most third-generation blockchains are now based on this concept, the process and its outcomes are not always consistent. Furthermore, as evidenced by the Cardano network’s staking infrastructure, the staking procedure itself might be a deciding factor in its participation.

According to the latest data from cryptocurrency exchange Kraken, 70 percent of the total supply of Cardano’s native token ADA has now been staked, valued at around $26.3 billion, despite the fact that its annual percentage yield (APY) remains one of the lowest in the market at 5 percent.

Kraken speculated that this could be due to Cardano’s “unique” staking system, which includes the ability for less-skilled parties to stake their tokens through delegation. Stakeholders in the network can delegate their ADA to another validator, known as a stake pool operator (SPO), in exchange for a portion of the validator’s returns. This enables increased staking participation and, as a result, a higher percentage of staked tokens.

Priority is given to security

Users can also continue to delegate their ADA to an SPO of their choice from within smart contracts. According to the study, “this capability has huge consequences not just for DeFi, but also for Cardano’s security,” because it “improves access to staking and allows users to utilize their ADA while voting in the network’s security.”

While this notion was intended to reduce the risk of stake concentration, it may not have worked entirely in Cardano’s favor. SundaeSwap, the network’s much-anticipated decentralized exchange, has begun on an ambitious Initial Stake Pool Offering (ISPO) after its launch last month, allowing users to stake ADA to an SPO of their choice.

ALSO READ: $20 million compatibility program for Ethereum and Algorand 

What Makes Cardano unique?

Cardano’s ADA coin remained virtually unseen by traders until the end of November, after it was launched in September 2017. Since then, the cryptocurrency’s value has climbed by 1,520 percent. Cardano is the fifth most valuable cryptocurrency as of this writing, with a market capitalization of $18.8 billion.

Cardano is a great proof-of-work blockchain that allows for cheap and quick transactions. The forthcoming improvements may increase the project’s value even more. ADA may soon compete with Ethereum and Binance Coin for the top three cryptocurrencies by market capitalization.