Can Bitcoin Save Cardano’s DeFi Aspirations? Insights from Hoskinson

Charles Hoskinson, the founder of Cardano, believes that the key to reviving Cardano’s DeFi landscape lies not in its technology but in improving community coordination. As Cardano grapples with low DeFi liquidity despite having a substantial user base, Hoskinson advocates for a strategy that connects Cardano with Bitcoin and incorporates real-world lending to attract fresh liquidity.

Key Takeaways

Coordination Issues: The low DeFi activity on Cardano is primarily due to weak coordination and governance rather than technological shortcomings.
User Base Potential: While Cardano has over 1.3 million users, most are not involved in DeFi protocols, creating a barrier to liquidity.
Strategic Moves: Hoskinson is focusing on linking Cardano with Bitcoin and real-world lending solutions to revitalize its DeFi sector.
Development Activity: Although Cardano's total value locked (TVL) remains low, its development activity is robust, surpassing Ethereum and Solana in late October.
Market Status: As of now, ADA is facing bearish trends, trading at approximately $0.60, indicating a need for improved market momentum.

Can Bitcoin save Cardano’s DeFi dreams? Charles Hoskinson says YES, IF…

Understanding Cardano’s Challenges

Recently, Hoskinson pointed out that the low DeFi activity numbers do not accurately represent Cardano's large community. With more than 1.3 million ADA holders engaged in staking and governance, the majority of these users are not participating in DeFi services.

cardano

This situation creates a "chicken and egg" dilemma, whereby low engagement in DeFi discourages liquidity and partnership opportunities. As Hoskinson articulated, the obstacles are not technological or procedural but rather stem from governance and coordination issues within the community.

To address these challenges, Hoskinson highlighted two initiatives: Midnight and RealFi. These projects aim to establish a connection between ADA and Bitcoin while facilitating real-world lending. By enabling capital to flow from outside the crypto space, Cardano could potentially access "billions of dollars" for its ecosystem.

Current State of Cardano's DeFi Market

cardano

As of the latest reports, Cardano's DeFi TVL is merely $271 million, a stark contrast to Ethereum’s impressive $85.5 billion and Solana’s $11.29 billion. This comparison positions ADA significantly behind its competitors.

However, data from Santiment shows that Cardano has outperformed Ethereum and Solana in terms of development activity recently, signaling a healthy level of ongoing projects and innovations within the network.

cardano

This reflects a dichotomy where Cardano currently faces activation challenges rather than a lack of demand.

Current Market Position of ADA

At present, ADA is trading around $0.60, with its momentum remaining weak. The price has not broken above any significant moving averages, including the 20 EMA near $0.65, the 50 EMA around $0.71, and the 200 EMA close to $0.74.

These trends indicate that sellers currently dominate the market. The Relative Strength Index (RSI) confirms weak momentum, which is far from indicating a bullish reversal. Additionally, the Chaikin Money Flow (CMF) is slightly below zero, suggesting that capital inflows have not yet resumed.

Overall, ADA appears to be experiencing a slow downward trend without any strong indications of returning buyer interest.