Hello Cardano enthusiasts! You'll never look at Cardano NFTs the same again.
In August of 2021, Ethereum's EIP-1559 upgrade was introduced to the crypto community. This proposed taking a portion of Eth's high transaction fees and burning or destroying it upon every transaction. Due to Eth's inflationary nature and no limit to its max supply, this upgrade was met with a ton of fanfare as it would finally reduce the amount of Eth in circulation. Many Eth holders touted this as another reason Eth was superior to Bitcoin because in theory as Ethereum's network grew in users and transactions, the network would reach a point where the amount of Eth burned outpaced its rate of inflation therefore overmaking its supply deflationary. Many investors saw this as the reason to bet on Eth over ADA and even BTC (the king of growth for the past 13 years).
Many in the crypto community started asking questions about when Cardano would implement a token burn to compete with these types of supply reduction mechanics. Founder Charles Hoskinson responded by proclaiming the Cardano team will never burn ADA leading some investors and content creators to voice their dislike for his statements. But they were missing something BIG!!
CARDANO'S SUPPLY IS ALREADY DEFLATIONARY
I'm here to shed light on a unique aspect of the Cardano blockchain that, unbeknownst to many, contributes to the deflationary nature of ADA - the minting of NFTs. Unlike other blockchains, Cardano's protocol allows the creation of NFTs without the necessity for smart contracts. This is due to Cardano's inherent multi-asset network feature, enabled by its extended-UTxO (eUTXO) model, which allows for the transfer of custom assets like NFTs along with ADA in the same transaction.
When an NFT is minted on Cardano, a small amount of ADA, which is required to process the transaction, is fused with the NFT. There is currently no process by which this can be reversed. The ADA utilized in the minting process is then effectively taken out of circulation. As the Cardano network continues to foster a growing ecosystem of NFTs, with 8,379,100 already minted at the time of this post, this mechanism perpetually reduces the available supply of ADA. (The Burn)
Potential Price Implications
The law of supply and demand posits that a decrease in supply, with demand remaining constant, often leads to an increase in price. As more ADA gets locked away through the NFT minting process, the reduced supply could potentially exert upward pressure on ADA's price. This deflationary characteristic, inherent in Cardano's design, might not only enhance ADA's value proposition but could also attract more investors and NFT creators to the platform, further fueling its ecosystem and possibly impacting ADA's market dynamics positively.
BTC is great because its supply is limited to 21 million coins. ETH isn't limited but has the potential to be deflationary the more the network is used, potentially making it a better investment vehicle than BTC. ADA is limited to 45 billion coins with just over 35 billion in circulation and is already deflationary with more ADA being bound to a growing number of NFTs by the day.
Pool. pm to watch NFTs being minted in real-time.
FAQs
Cardano's Token Burning Mechanism is a feature that allows for the permanent removal of native tokens from circulation. It can be used by token issuers to reduce the supply of their tokens, potentially affecting their value or implementing specific tokenomic models.
How much will 1 Cardano be worth in 2030? ›
Cardano (ADA) Price Prediction Table
| Year | Average Price* | Percent Increase |
|---|
| 2027 | $0.996 | 25.13% |
| 2028 | $1.41 | 41.57% |
| 2029 | $2.02 | 43.26% |
| 2030 | $2.92 | 44.55% |
8 more rowsCardano operates on a specially designed proof-of-stake (PoS) blockchain consensus protocol called Ouroboros. This consensus mechanism ensures that ADA can be easily and securely sent and received at all times while also safeguarding the security of smart contracts on the Cardano blockchain.
Why is Cardano struggling? ›
However, despite its impressive technological foundation, Cardano has been struggling to maintain momentum in recent months. The ongoing legal battle with the U.S. Securities and Exchange Commission (SEC), which has classified ADA as a security, has weighed heavily on investor sentiment.
Which coin has burning mechanism? ›
Coin burning in major cryptocurrencies
BNB regularly burns a portion of its tokens based on trading volume, gas fees, token price, and number of blocks produced. XRP too has a mechanism that destroys a small amount of tokens with each transaction, and has the option to burn millions of tokens held in escrow.
Does Cardano burn supply? ›
In an effort to stabilize and potentially boost the price of ADA, the Cardano (ADA) community has proposed a 1.5 billion Cardano (ADA) treasury burn. This move is intended to reduce the total supply of Cardano (ADA), which could create upward pressure on the price by increasing scarcity.
How high can ADA go? ›
Long-Term Price Projections for 2025–2030: ADA will continue to gain traction with targets around $1.05 and above. As is always the case with cryptocurrencies, predictions vary from 2026 to 2030. Some estimates predict that Cardano will exceed $10 by 2030, while other experts believe it will drop to $0.21.
What is the ADA price for 2040? ›
ADA price forecasts for 2040
However, they recognise that price cycles may peak at more moderate levels, ranging between $3.18 and $19.36.
Is it wise to invest in Cardano? ›
Cardano's developer and transaction growth might make it a strong contender for a well-rounded wallet if you're a crypto investor looking for a long-term growth play.
Is Cardano better than Solana? ›
Cardano vs Solana FAQs. Why Solana is better? Comparing Solana vs Cardano, Solana offers vastly faster speeds of 65,000+ TPS, lower average transaction fees of $0.00025, and has seen more rapid adoption and growth in areas like DeFi protocols (100+ vs 15 on Cardano) and daily active users.
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By staking your ADA assets, you can receive up to 2.25% in passive income and watch your holdings grow by locking in your cryptocurrency for any length you want.
Is there a future for Cardano? ›
The recent surge in Cardano's price, from approximately $0.25 in October 2023 to $0.64 as of March 21, 2024, illustrates a robust upward trend. This performance mirrors the general optimism seen across the cryptocurrency market, largely attributed to the approval of 11 spot bitcoin ETFs for trade in the US.
Can Cardano reach 100? ›
Wild price predictions are circulating on the forums and the Cardano reddit, ranging from a few US dollars to a whopping $1000 per ADA in five years time and even though a lot may happen in five years, a price of $1000 or even $100 is not very likely to happen.
Is Cardano in danger? ›
While Cardano's price struggles against many other top-ten cryptocurrencies, the project is not dead and Cardano continues to find real-world use cases for blockchain technology. Slow and steady growth: Cardano's long-term price action mirrors the project's development pace.
Why did Cardano collapse? ›
Cardano whales are accumulating ADA during the correction period, ignoring the centralization warning. Cardano's (ADA) price has declined by 7.25% to reach $0.474 on May 22, two days after cryptocurrency analyst Justin Bons accused the blockchain project of being extremely centralized.
What is a crypto burn mechanism? ›
"Burning" a cryptocurrency refers to the act of sending a token to an inaccessible address. Wallet addresses used for burning cryptocurrency are called "burner," "eater," or "null" addresses. The act of burning effectively removes tokens from the available supply, which decreases the number in circulation.
Why is Cardano not burning? ›
Cardano founder Charles Hoskinson is among those opposed to the burns. He took to X to criticize the proposal, which he believes is tantamount to stealing from the people working tirelessly to build applications and advance the ecosystem.
Why burn tokens? ›
Token burning is a method that involves the permanent removal of tokens or coins from circulation by sending them to an irretrievable address, thereby reducing the total supply. In most cases, the primary intention of burning crypto is to make it scarce and valuable, benefiting its investors and community.
What is the burn mechanism in Chiliz? ›
By burning tokens whenever a team scores or wins, Chiliz aims to reduce the overall token supply, thereby increasing scarcity and potentially boosting token value. This innovative approach not only adds excitement to the Champions League but also positions Chiliz as a forward-thinking player in the crypto space.
