The firm pointed out that the market values Cardano users at a bit more than half as much as Ethereum users.
A report by Grayscale Investments suggests that Cardano is undervalued compared with Ethereum, which would make it a strong investment candidate.
The fourth-largest cryptocurrency, with a market capitalization of $70 billion, has had a spectacular 2021.
It started New Year’s Day at $0.18 and reached as high as $3.10 before slipping to its current level of $2.20, up more than 12x.
Meanwhile, the number of Cardano’s monthly active users has grown more than 7x to about 2.8 million.
Dividing its market cap by its users, Grayscale’s “An Introduction to Cardano
” puts the value of Cardano users at about $30,000
, while Ethereum’s are worth $55,000
This “may imply Cardano’s [valuation] is cheaper than its largest peer based on relative user value fundamentals,” the report said.
Notably, Cardano’s September 12 “Alonzo” upgrade added smart contract functionality, Grayscale said, noting that “DApp capabilities should allow Cardano to eventually compete in a wider range of modern crypto cloud market segments, including Decentralized Finance (DeFi), Non-Fungible Tokens (NFTs), and other Web 3.0 use cases.”
It added that Cardano “has successfully settled over $1.6 trillion in total on-chain transaction value over the Last Twelve Months… which some may view as an important indication of the network’s security.”
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In July, Grayscale added Cardano — ADA — to its Digital Large Cap Fund
. It is about 5.1%
of the $495 million
fund, making Cardano its third-largest component. That said, Bitcoin makes up 62%
and Ethereum 26%
, so Cardano remains a relatively small investment.
Founded in 2015 by Ethereum co-founder Charles Hoskinson and Jerry Wood, Cardano is one of the three so-called “Ethereum killer” blockchains that have powered their way into the top 10 cryptocurrencies this year.
The others are Solana, with a $50 billion market cap, and Polkadot, with a market cap of nearly $31 billion. All offer faster and cheaper transactions than Ethereum, and are far more scalable.
Cardano even has its own celebrity supporter, Kiss rock star Gene Simmons, who in February announced
on Twitter that he had bought $300,000
worth of Cardano — and was already up 20%
in a week.