"Cardano, funds draining and collapsing"...Upgrade expectations fade

▲ Cardano (ADA)

Despite expectations for network performance improvements, concerns are growing about the shrinking ecosystem of Cardano (ADA) due to a sharp decline in decentralized finance (DeFi) deposits.

CoinGape, a cryptocurrency specialized media outlet, reported on May 4 (local time) that Cardano's Total Value Locked (TVL) in decentralized finance has recently decreased sharply, weakening market confidence. The deposited assets, which once exceeded $600 million, have now shrunk to around $210 million, showing an accelerating trend of capital outflow.

The Leios upgrade, currently being pursued by the development team, is expected to significantly increase transaction processing speed and scalability, but the market reaction remains cold. Investors are more sensitive to actual ecosystem utilization metrics than to technological advancements, and the decline in deposited assets is overshadowing these advancements. In particular, as users continue to migrate to competing networks such as Solana and Ethereum, the activity of Cardano-based decentralized exchanges and lending platforms has slowed down.

This trend is directly putting pressure on the price. With the $0.45 support level in a precarious situation, additional downward pressure is increasing, and if key support levels collapse, a further decline to the $0.38 level is possible.

Market analysts point out that Cardano needs to move away from its technology-centric strategy and implement policies that attract actual users. Whale investors are also reducing their positions due to concerns about liquidity contraction. On-chain data showing a more than 15% decrease in active addresses compared to the previous month suggests that the ecosystem's growth momentum is weakening.

Cardano's future direction is said to depend on the speed of actual service adoption after the Leios upgrade. If technological achievements do not translate into actual demand, a rebound will inevitably be limited.

*Disclaimer: This article is for investment reference only and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*