Are we out of the woods yet?

Q3 if you’re talking about “staking,” that’s when it’ll become fully decentralized @Risus76

Great; thanks Sean. I was just reading up on staking on the Cardano website as well as in some of the forum’s previous posts on the topic.

1 Like

Nothing will really be happening with Cardano for some time… Maybe not even this year… We will see… I mean staking is not really that big news at all… For the market it might be, because it could lead to a huge pump but in reality Its not big at all… We need The virtual machine and smart contracts, the computational layer etc for real things to start taking place… Staking does not add any significant real value to the project, but the market might pump on it anyway.

In reality Staking itself, leads to price decrease, because we now have to start paying NODEs to run the network, where as of now IOHK does it for free. Now the actual price for running the nodes is proabably minuscule at this point, and wouldn’t be noticeable at all, but the rewards are highly inflated to begin with.

If staking has 50% Participation rate and the rewards are a total sum of 8%/vs supply, and network fees make up 0.5%, then ADA will decrease 4% that year in price, regardless if we can actually notice it or not. at 100% Participation rate, it would be a 8% decrease.

If we have 100% participation rate, we all bear the cost of the NODEs (which is real cost, we would all end up negative as expected), now at 80% participation rate, the cost burden has shifted to the remaining 20% who does not participate in staking - and of course we wont see 100% staking participation, so this scenario would be what we would expect.

I guess proving POS and Ouroboros working is some sort of a success, but we already know it works since Its running already, I guess speed will be a factor when we judge what will happen running on 20 nodes instead of 1. Hopefully there will be no, noticeable decrease. And when staking is here, we know the exciting stuff is coming next.

I also guess we can put an end to all the silly comments you get around that Cardano is still centralized etc…

3 Likes

I beg to differ…if a large amount of ADA is locked for staking (taken out of the market), the effect should “shorten” or “limit” the supply…if demand stays the same on shorter supply, the price should go up…In addition, I am not sure why Nodes being rewarded for creating blocks should decrease the price…IMHO, the biggest factor influencing the price is supply and demand…

1 Like

I think the idea might be that market cap is fixed. Some people seem to think that way, not sure about jb455 though.

1 Like

That makes a lot of sense; I agree with you.

Of note, I am not sure I understand the significance of market capitalization vis-a-vis valuation of cryptos. These cannot be compared to those of traditional stocks/equities where PE ratios along with market sentiments dictate price and value. I don’t know how to gauge this except, to say, that at present market cap and value might perhaps be indicators of how in demand a crypto is. Any comments?

2 Likes

I think the thought is the value of Ada relative to itself will decrease due to the inflationary effects of minting more coins during the staking process. However I agree with your prediction that the value of Ada relative to USD will increase due to hording coins. Obviously the rate of return on staking will be crucial to the equation. I am curious to see how taxes will impact the eb and flow of crypto prices throughout the year as well.

2 Likes

It is one of the most fundamental elements of market pricing…supply and demand. Assuming the demand stays the same, the supply will be reduced due to staking, therefore, price should go up. If the demand increases, price goes up faster…should be a win-win situation for HODLERs…the inflationary effect should be negligible, since the new minted ADA would be so small compared to what is already in circulation (25,927,070,538 ADA, according to coinmarketcap.com)…in addition, I assume some of the minted new ADA will also be locked for staking (that is at least my plan for the first 2-3 years)…I would think some other people would do the same.

3 Likes

I just watched the in-car update video by Charles Hoskinson. Great to hear about all of the updates and witness his dedication/passion for the Cardano initiative.

One very basic question that I have: Given that the technological solutions that they are developing/testing are disseminated to the public and open source, what prevents other organizations from stealing Cardano’s thunder and improving their own network? Also, a related question, will others (e.g. Traxia) that want to use the Cardano platform have to “pay” fees? For example, Verizon pays a fee to use European wireless networks for their traveling customers and passes this along as roaming fees to their subscribers… As more and more companies/governments, etc. use the network, this would be a robust and predictable source of revenue that would back the growth and valuation of ADA. Perhaps I missed it and this is what is actually planned? As I currently understand it, there will be fees for each transaction and that this would be directed to the treasury for maintenance/sustainability of the network. What I’m asking is a little different. Thanks in advance.

Cardano is programmed in Haskell, the language has capabilities that others do not have, imagine programming what Haskell can do in another language (extremely difficult)…on top of it, they would need to program the enhancements on top of a running blockchain (read hard fork)…they may try, but it would be VERY difficult…

2 Likes

Nothing. That’s what open-source means :slight_smile: In one interview Charles specifically mentioned that anyone can actually try to fork it and to build anything out of it, but the question they will have to answer to the public is: “What makes you think you can do a better job than IOHK, who actually created all that stuff from the beginning?”

Anyone who wants to deploy a smart-contract to the Cardano network will have to pay transaction fees. Somewhere around 25% of those goes to the treasury, and 75% to the slot-leader (“miner”) who created the block in the moment of contract deployment.

If your question is - will they have to pay some stable “rent” - then no. And they also won’t have to pay anything to IOHK, or Cardano Foundation, or Emurgo.

4 Likes

Thank you for your quick response, @vantuz-subhuman. Very much appreciated!

Interesting perspective by Charles re: copycats. I tend to agree, but this openness also emphasizes the need for timely execution of the project (which they seem to be impressively delivering on) in order to be first out of the gate and be the go-to network. So value and revenue growth will be created at the level of the slot-leader?

Very good point, @pesuazo. Thanks!

1 Like

Not really sure what you mean by this, sorry. Do you mean, like reasons for the value of ADA growing? If so then it’s the same as with ETH, but with stake and treasury added. So, as far as I understand it, main uses for ADA coin on the Cardano platform:

  1. Stake - many coins gotta be locked out of circulation in exchange for profit.
  2. GAS - companies have to buy ADA in order to launch their code on the CL
  3. Treasury - 20-25% of all block-rewards will be automatically locked in the treasury and will be used to hire contractor developers by community. I think it brings a lot of value.
  4. Base-currency at decentralised exchange - anyone who want to exchange some token\coin X for some token\coin Y will have to move it thru ADA and to pay fees in ADA for it.

I might have forgot some other uses, tho. Will be glad if someone adds to it.

2 Likes

Perfect! Thank you, @vantuz-subhuman. I just wanted to get an understanding of the points of use/staking of ADA over the network.

What’s this?

I think it means you can actually use the Cardano Blockchain to trade other Crypto, and ADA is used to pay for the transaction fees…the concept is called sidechains…the Cardano Blockchain capable of doing this (compatible with other cryptocurrencies)…I think I got this right, somebody correct me if I am wrong please…

3 Likes

This is how I understand it as well. You would be using the Cardano platform as a means of transacting value between the two chains - fees payable in ADA. In a different thread I discussed with @vantuz-subhuman about developing a simple smart contract for ADA over-the-counter peer-to-peer trades. In fact he gave some interesting examples that included multiple currencies, time stamps etc.

When CL is up and running with side chains, that’s going to be my first learn-by-doing project. Might have to ‘donate’ some ADA to @vantuz-subhuman and the like to review my work though. I’m thinking Marlowe might make this much easier for non-devs like myself to work on smart contracts. Should be fun.

1 Like

Will sidechains be able handle fiat to ADA/Crypto as this would eliminate the middle man i.e. current exchanges

At some point, if there is banking integration - yes. But I don’t see that happening soon. Love’em or hate em Ripple - as a side chain - may be the answer to flip into fiat in the short term if they continue to get traction in the banking and money transfer sector. If banks start to use XRP as a quick transfer mechanism in some cases then you should see this as a solution of sorts. But in the short term you’ll probably have to use liquid and established currencies like BTC or ETC as a cross into fiat on exchanges like Coinbase, Kraken etc to flip into fiat.

2 Likes