Cardano Struggles to Outpace Bitcoin in DeFi TVL Despite Releasing Hydra

Cardano’s exceptional growth this year has positioned it as a formidable contender, challenging the likes of Bitcoin and Ethereum. The Proof-of-Stake network has its sights set on the top, given its record-breaking ADA TVL, increased DeFi TVL, and new scalability protocols.

However, the path to surpassing Ethereum, considering its titanic DeFi metrics, remains an arduous task. Making things more difficult is Bitcoin’s current reign, fueled by the craze around BRC-20 and Ordinals.

The question looms: Will Cardano overcome Bitcoin’s supremacy, or will it fade?

Cardano and Bitcoin Race to the Top

In a captivating race, Cardano made an impressive ascent in DeFi TVL rankings, claiming the 16th spot with a total value locked (TVL) of $183.16 million on May 17. The POS chain exhibited its growing strength by surpassing competitors like Bitcoin with its $182 million TVL.

The Cardano community was initially thrilled to see the chain climb in rankings, but their excitement was short-lived as their hopes of regaining a top-ten spot dwindled. Losing $30 million in TVL, Cardano dropped to the 18th spot, allowing Bitcoin to overtake and secure the 14th spot, alongside Fusion, Osmosis, and Klayton’s rise.

While experts highlight new dApps on the network have yet to launch, Cardano’s TVL is mostly denominated in ADA, which is still down by 90% from its all-time high. This could be why Cardano has fallen in rankings since ADA dropped 5% in value to 0.36 on May 18. In contrast, Bitcoin experienced a mere 2% drop in value to $26,746, according to CoinMarketCap data.

Nonetheless, both networks have grown substantially over the past year, showing increasing determination in their journeys.

Cardano and Bitcoin DeFi Performance Compared

Cardano’s DeFi TVL has consistently grown since the start of the year. Recently, the total value locked in ADA reached a new high of $504 million on May 14. Some users suggest considering this data, Cardano could comfortably secure the 8th rank according to DeFiLlama’s metrics.

It is worth noting that Cardano has made significant progress on its development roadmap this year, including the launch of its highly anticipated layer-2 scaling solution, Hydra, aimed at expanding the network’s DApp ecosystem.

However, the protocol’s impact could take time to unfold, given there are only 20 DeFi protocols on the network, one of which is the Djed stablecoin protocol, released earlier this year.

Many community members, including Charles Hoskinson, considered Cardano to advance ahead of Bitcoin with Hydra’s release. Nevertheless, the network still faces challenges in surpassing Bitcoin, which currently is experiencing high network activity driven by the Ordinals and BRC-20 craze.

Cardano’s struggle to surpass Bitcoin could be attributed to the POS chain’s comparatively lower number of active users, amounting to 16 times fewer than Bitcoin. According to DeFiLlama, Bitcoin boasts over 800,000 users across its seven DeFi protocols, while Cardano accommodates 49,680 users across its 20 protocols.

It’s important to note that Bitcoin’s Lightning Network is considered a DeFi protocol, which is why the data aggregator reports the high active user count.

While both networks continue to race to the top, there’s still a fair bit of ground left to cover in surpassing Ethereum, which currently boasts a staggering $26 billion in TVL across 789 protocols, setting the bar high for Cardano and Bitcoin alike.

On the Flipside

• On Thursday, May 18, the number of unique addresses performing transactions daily dropped to less than 800k. This marks a 22-month low for Bitcoin, the lowest level since July 2022.
• Following Hydra’s purported 1 million TPS rate making headlines, a Cardano developer had to chime in and stop the misinformation.

Why This Matters

Both Cardano and Bitcoin are on a very positive trajectory, given the rise of network development and activity. Data suggests both networks are in a tight race to the top, which is very good for the space, given the competition they bring.

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