It was a busy week for the world of blockchain and digital assets. Cardano, one of the world’s top 5 largest cryptocurrency protocols, firmed up their launch date for smart contracts with the announcement of the “Alonzo” upgrade commencing on September 12th. This news sent ADA, the protocols underlying token, up 55% to a high of $2.25 before settling back down to $2.07 (at time of writing).
Founded in 2015 by Ethereum Co-Founder Charles Hoskinson, Cardano has taken an academic and research approach to the development of it’s blockchain technology. Hoskinson and his team have written over 100 peer reviewed research papers during the construction of Cardano. Known as one of the potential “Ethereum Killers”, Cardano uses a different Consensus Algorithm known as “Proof of Stake” compared to Ethereum and Bitcoin’s “Proof of Work”. This differences allows for greater scalability, transaction speed and energy efficiency; three key components necessary to deliver a blockchain solution on a global scale.
In July, we shared that Tom Brady was teaming up with DraftKings to launch his NFT collection. The 7x Super Bowl MVP’s digital cards didn’t last long, as waiting lines of 20,000 people per drop lined up to get a piece of the GOAT. We have been keeping a close eye on the NFT space since January and the excitement around these digital assets continues to grow. There is a massive value creation proposition due to the shifting of economic constraints that previously existed in entire collectible/hard asset marketplace. Liquidity, pricing, storage and authenticity have all been disrupted in a way that provides greater efficiency to the collector.
With the growing demand around NFT’s, it is no surprise to see the continued momentum in Ethereum. The majority of NFT’s are created using the Ethereum blockchain and OpenSea, the largest NFT marketplace, uses ETH as its native currency. Furthermore, the London Upgrade which took place on August 5th, is also providing a boost to the price of ETH. The most material change from this network upgrade was the decision to change the use of proceeds from transaction fees. Previously, these transaction fees were being paid to the miners but moving forward will be burned. Token burning is the equivalent in the crypto space to share buybacks in the equity space. This creates a deflationary supply element moving forward which is a bullish sign for the price of ETH long term.