A Cardano community-focused Twitter account, ADA Whale, shares an interesting post on ADA valuation. Making an update on a post he made earlier in the year, he arrived at the deduction that ADA is slightly below "fair value" relative to the market, while others remain overvalued or undervalued.
Same chart as of 18 Jan 2022— ADA whale (@cardano_whale) December 5, 2022
If you had shorted an equal-weighted basket of the red assets and longed an equal-weighted basket of the green ones (0% net exposure), YTD return would have been +21.6%
If you did the same but excluded Luna, your YTD return would have been +17.8% pic.twitter.com/t4Bb9Ck3Gv
ADA Whale drew this conclusion from a chart that plotted subreddit size versus market cap for the top 50 crypto assets. He/she notes that a user would have been able to make positive year-to-date (YTD) returns of 21.6% by shorting an equally weighted basket of the overvalued assets and longing for an equally weighted basket of the undervalued assets. With the exclusion of LUNA, which imploded in May, the YTD returns would have been +17.8%.
He says that the market remains at a different stage, and the same strategy may not work again in the next six to twelve months.
Cardano's value proposition explained
In a thread of tweets, the Cardano community reacted to a critic who questioned the value proposition of Cardano. In a series of tweets in response, ADA Whale stated that "staking on Cardano is essentially like interacting with a DeFi app."
Why Cardano? Standard wallet is a full node, network is highly decentralised and secured through 74% staked in a million wallets, we fund hundreds of projects through our own treasury and regular voting, we focus as much on governance, identity & micropayments as we do on DeFi..— ADA whale (@cardano_whale) December 5, 2022
He adds that if staking were included in TVL like those chains with custodial staking, Cardano might have ranked as the second largest DeFi platform after Ethereum.
According to DefiLlama data, Cardano ranks in a distant 29th place on DeFi chains with a TVL (total value locked) of $61.57 million.
In other comparisons, Cardano fares better as it ranks as the second largest staking network after Ethereum with a staking market cap of $8 billion, while Ethereum had a $21 billion staking market cap.
Also, a thread of tweets by crypto researcher Sooraj might suggest that Cardano has 14 times more participation in staking than Ethereum.