Cardano Continues to Impress: Research Report Highlights Strong Q1 2023 Performance

Cardano’s Q1 performance was nothing short of impressive, with notable increases in both financial and ecosystem metrics.

On April 18, Messari’s Protocol Research Analyst Red Sheehan released the “State of Cardano Q1 2023” report, providing an overview of Cardano’s ($ADA) performance and developments.

Launched in 2017, Cardano is a Proof-of-Stake (PoS) Layer-1 smart contract network that focuses on security, scalability, and sustainability for decentralized applications and systems. The network is supported by Input Output Global (IOG), The Cardano Foundation, and EMURGO. Cardano’s phased development roadmap and methodical approach prioritize stability and sustainability over speed.

The network overview section of the report highlights a decrease in new addresses (71.5% QoQ) and average daily transactions (10.6% QoQ). However, the average transaction fee rose by $0.01, from $0.11 to $0.12, which is still lower than the $0.17 average transaction fee in Q3 2022.

The financial overview section says that ADA’s price increased by 54% in Q1, moving Cardano from the ninth to the seventh largest cryptocurrency by market cap. The treasury balance grew to 1.21 billion ADA in Q1, with a 100 million ADA increase consistent with previous quarters’ growth. The value in ADA terms rose 9.1% QoQ, while the USD value increased by 66%, from $278 million to $460 million.

In the ecosystem overview section, Sheehan states that Cardano’s USD-denominated TVL grew 172% QoQ, from $50.8 million to $138.3 million. This growth was driven by the adoption of new stablecoins, which form the cornerstone of DeFi. Minswap, an automated market maker (AMM), remains the leading decentralized exchange (DEX) on Cardano. However, Minswap’s dominance decreased for the second consecutive quarter in Q1, alongside other popular DEXs such as SundaeSwap, WingRiders, and MuesliSwap.

According to Sheehan, the shift in dominance from incumbent DEXs to emerging DeFi applications can be attributed to the following:

1. Djed, an overcollateralized ADA-backed stablecoin minting protocol, ended Q1 with a TVL of $13.1 million and a 9.5% dominance.
2. Liqwid, a borrowing and lending protocol, concluded Q1 with a TVL of $8.4 million and a 6% dominance.
3. Indigo, an issuer of synthetic assets and stablecoins, finished Q1 with a TVL of $24.1 million and a 17.4% dominance.

The adoption of Indigo’s IUSD and Djed’s DJED stablecoins contributed to a 261% QoQ increase in the total stablecoin value. This adoption also played a crucial role in boosting the overall TVL growth.

The first Hydra Head, a Layer-2 state channel scaling solution, was introduced to the mainnet in March, but with limited implementation.

Meanwhile, Milkomeda C1, IOG’s EVM proof-of-concept sidechain, Wanchain, and Midnight persist in their efforts to enhance interoperability and explore new use cases within the broader Cardano ecosystem.

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