- The Cardano (ADA) community has seen an increase in profitable transactions following the Chang hard fork, despite initial selling pressure from whale investors.
- The upgrade aims to enhance ADA’s utility and transition towards a decentralized governance model, but market volatility and new governance mechanisms remain challenges.
The Cardano (ADA) community has witnessed a significant shift in transaction trends following the recent Chang hard fork. According to data from cryptocurrency analytics firm Santiment, the number of profitable Cardano transactions has seen an uptick, with the volume of profitable transactions slightly surpassing those resulting in losses.
The Chang hard fork, launched earlier this week, introduced major governance changes to Cardano’s network, aiming to transition towards a more decentralized system. This upgrade has been met with cautious optimism, as evidenced by the ratio of daily transaction volumes in profit to loss standing at 1.15. This ratio indicates that for every transaction resulting in a loss, there are approximately 1.14 transactions yielding a profit, reflecting a positive sentiment among ADA holders.
Whale Sell-Off and Market Dynamics
Despite the initial enthusiasm, ADA faced significant selling pressure from whale investors post-upgrade. Reports indicate that whales sold approximately $326 million worth of ADA shortly after the Chang hard fork went live, driving the price down to a low of $0.311 on September 3, according to CoinGecko’s data. This activity is seen as a classic “sell-the-news” phenomenon, where investors capitalize on the hype surrounding major events but sell off their assets once the event occurs, causing a temporary price decline.
As of now, ADA is priced at $0.33, marking a 3% increase in the last 24 hours. However, this uptick may be short-lived as the price-DAA (Daily Active Addresses) divergence stands at -30.93%, suggesting that ADA might be overbought. The broader market downtrend has also impacted ADA, with many top cryptocurrencies, including Bitcoin (BTC) and Ethereum (ETH), experiencing sharp corrections.
Future Prospects and Governance Changes
The Chang hard fork is a stepping stone towards the Voltaire era, focusing on a fully decentralized governance model. This transition aims to enable ADA holders to participate actively in the network’s decision-making process. Cardano anticipates that this upgrade will enhance ADA’s utility beyond its current use cases, potentially stabilizing its value in the long term.
However, the network faces challenges related to its staking mechanism post-Chang. Cardano’s liquid staking mechanism allows ADA holders to move their staked assets without a locking period, raising concerns about potential market volatility. Large amounts of ADA can be released and sold quickly, contributing to price fluctuations.
Furthermore, the community is still grappling with the new governance mechanisms and reward systems. Charles Hoskinson, the founder of Cardano, clarified that ADA holders would need to choose from three options to withdraw staking rewards: a vote of no confidence, abstain, or delegate to a Delegated Representative (DRep). Hoskinson emphasized that wallets like Lace would automatically choose to abstain if a user selects delegation only.
While the Chang hard fork has brought temporary profits and promises of a more decentralized future, ADA’s path forward will require navigating market pressures and understanding new governance structures. The Cardano community remains hopeful that these changes will lead to a more robust and stable network.
