The top cryptocurrency asset manager has taken an in-depth look into Cardano
Grayscale, the leading cryptocurrency asset manager, has released a new report on Cardano as part of its educational cryptocurrency snapshot series titled “Building Blocks.”
In the report, the investment firm has outlined the main advantages of the third-largest cryptocurrency as well as some of the major risks associated with it.
Charles Hoskinson, CEO of Input Output, is seen as the driving force behind the blockchain, with his “compelling vision” seen as one of Cardano’s main strengths.
The Cardano Treasury, which currently boasts a war chest of $1.5 billion, is also believed to be the project’s forte.
Cardano’s strong community, wide accessibility as well as decentralization, which became possible after Shelley’s upgrade last year, were also mentioned by Grayscale as the main reasons why blockchain is likely to be successful.
As reported by U.Today, ADA became the third-biggest holding of Grayscale’s Digital Large Cap Fund in early July.
Possible risks
When it comes to potential risks, the most obvious is the fierce competition in the smart contract space. Ethereum, the current leader in the sector, as well as upstarts of the likes of Solana and Avalanche are all vying for dominance.
Despite the launch of the smart contract, the Cardano blockchain has seen very little use. The Grayscale report says that it remains to be seen whether or not decentralized applications that are getting launched on the chain will see any significant adoption.
The firm also believes that the Cardano blockchain may be overvalued due to its low fees:
Cardano network fee revenue is still relatively low compared to other PoS blockchains like Ethereum 2.0. Unless the network can increase costs for new applications or increased usage, ADA valuation may not be supported on the sole basis of the utility of staking cash flows.
Finally, potential technical issues and the lack of regulatory clarity in the U.S. could hamper its growth.
