The total crypto market cap has gone up around 200% this year, reaching $2.5 trillion at the time this was written. Much of that growth has come from Bitcoin, which makes up around 45% of the market. But over the long haul, other cryptos like Cardano and Aave might help support growth and adoption in this exciting sector. Let’s take a look at them.
Cardano is a public blockchain that allows peer-to-peer transactions through its cryptocurrency called Ada. Users can program decentralized apps (dApps). And it has an edge over its rivals such as Ethereum because of its more energy friendly proof-of-stake process which is known as Ouroboros.
Unlike proof-of-work protocols, during which miners have to use thousands of computers to solve computational problems to ensure transactions are valid (and create new coins), Ouroboros instead allows miners to validate blockchain transactions based on the amount of coins they have. This system takes less energy, giving Cardano an edge in an increasingly environmentally focused world.
Ada prices have gone up over 1,100% since the beginning of the year, earning Cardano a total market cap of around $69 billion, and making it the fourth largest crypto. Cardano’s environmentally friendly mining and its ecosystem of good dApps could allow for continued long-term increases.
Cryptocurrencies usually rely on the bigger fool theory, which means people buy in order to then sell to someone else for a greater price without thinking about the fundamentals. Assets like Aave push back on this narrative by creating real-world use cases to encourage more adoption.
Aave is an ERC-20 protocol that was programmed on Ethereum. It aims to decentralize consumer finance by giving a way for people to borrow and lend over 20 different cryptos without one central intermediary.
Users deposit their digital assets into “liquidity pools” where they get interest. These pools also serve like funds that borrowers can draw against, with the loans overcollateralized (borrowers must give more than 100% of the loan in other tokens) to lower risk. Lenders get the benefit from earned income from their cryptocurrency holdings, while borrowers can get their holdings without needing to sell.
At a recent price of $301 per coin, Aave has increased around 500% during the previous 12 months. Its market cap is now around $4 billion, making it a small coin compared to Ethereum or Bitcoin, with market values of around $450 billion and $1.2 trillion, respectively.
Author: Blake Ambrose