‘$ADA Whale’ Explains His Approach to Valuing Cardano

A popular Cardano ($ADA) influencer has recently explained his approach to valuing the smart contract platform, pointing out he sees a contradiction between “those who really seem to believe Cardano is fundamentally overvalued” and himself.

In a series of tweets, the Cardano influencer known as “ADA whale” on the microblogging platform Twitter told his nearly 110,000 followers that those who believe Ada is overvalued “mostly appear to approach it from a technology stock valuation perspective” whereas the influencer looks at it “more in a FX [foreign exchange] valuation context.”

The main contradiction between those who really seem to believe Cardano is fundamentally overvalued and myself (can’t speak for others) is that they mostly appear to approach it from a technology stock valuation perspective whereas I look at it more in a FX valuation context

— ADA whale (@cardano_whale) August 9, 2022

Per the whale, seeing cryptoassets as technology stocks would mean dumb money is attracted to Bitcoin, as the flagship cryptocurrency is “slow, doesn’t have smart contracts, [and has] little innovation” in its core business. Dumb money, it’s worth noting, is a term for capital managed by retail investors who do not have access to proper analysis and instead trade based on instinct.

The influencer noted that the market hasn’t been dominated by dumb money “for years” and as such “there is something else at play here.” They added that investors then start looking at crypto analogies for monetary and fiscal policy, security, growth, inflation, and more.

Decentralized applications, he added, are meanwhile building on top of these. Per his words, layer-1 networks are “being built as a product can be valued as stocks, with much more limited upside.”

ADA whale also noted that the currencies Switzerland, Hong Kong, and Singapore, which collectively have 0.2% of the world’s population, are all in the top 20 fiat currencies with “market cap multiples” that of Bitcoin. They concluded that currency upside “is a lot larger, but not easy to get right.”

As CryptoGlobe reported, a recently published report from Messari suggests that Cardano is being ‘aggressively priced’ ahead of the Vasil hard fork, at least when compared with rival smart contract networks that aren’t Ethereum, including Solana ($SOL), Algorand ($ALGO), Tezos ($XTZ), and $NEO.

According to a tweet Messari shared, Cardano’s active addresses are far below those of Solana, but tower those of Algorand, Tezos and NEO, although it processed around 62,000 daily transactions, compared to over 296,000 from Algorand, 208,000 from Tezos, and 174,00 for NEO. Solana processes over 38 million daily transactions.

The tweet details that the total value locked on Cardano’s decentralized finance space is below that of Solana and Algorand, while its annualized revenue tops all other competitors except Ethereum.

Taking this into account, Messari found Cardano is “aggressively priced” when it comes to its total value locked multiple, which is based on the value locked on its DeFi applications, and on its transaction multiple, which is based on the cryptocurrency’s daily transactions.

As CryptoGlobe reported, the total number of wallets on the Cardano ($ADA) blockchain has surpassed the 3.5 million wallet milestone.  Notably, the number of smart contracts deployed on the Cardano network has also reached a new milestone above the 3,000 mark for the first time in the cryptocurrency’s history as developers work on it ahead of the Vasil hard fork.

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