Cardano’s ADA Joins US Digital Asset Stockpile: Will It Create Value?

In a surprising move, President Donald Trump’s March 6 executive order unveiled the inclusion of Cardano’s ADA token into the United States’ strategic crypto reserve. This decision raised eyebrows within the cryptocurrency community, with some expressing skepticism about ADA’s place in a government-managed portfolio. While the token has a dedicated base of loyal investors, many questioned its value proposition and overall utility. So, does Cardano’s blockchain and ADA token have the necessary fundamentals to support this surprising inclusion?

The Case for ADA in the US Digital Asset Stockpile

Launched in 2017 via an ICO, Cardano has established itself as one of the oldest smart contract platforms. Unlike many other cryptocurrencies, Cardano stands out through its research-driven design and unique hybrid consensus mechanism, which combines delegated proof-of-stake (dPoS) with an extended UTXO (Unspent Transaction Output) accounting model.

At the heart of Cardano’s appeal is its ambition to create a decentralized and scalable smart contract platform. According to the prominent Cardano advocate, X ‘Cardano_whale,’ the blockchain’s strengths lie in its “non-negligible fees, voting power, decentralized consensus, and all-native token trading.” The post emphasizes ADA’s practical utility, highlighting the coin’s role in governance, staking, and network fees, as well as the platform’s decentralized approach to decision-making. 

In fact, Cardano’s Project Catalyst has emerged as one of the largest decentralized funding initiatives in the crypto space. Through this initiative, treasury funds, derived from transaction fees and inflation, are democratically allocated to community-driven proposals. This approach contrasts with Ethereum, which still relies on off-chain governance for major upgrades. Cardano aims to transition fully to on-chain governance, a milestone the platform began to reach with the Jan. 29 Plomin hard fork, which marked the shift toward “full decentralized governance.” This hard fork granted ADA holders the ability to vote on critical decisions like network parameters, treasury withdrawals, and future upgrades.

The utility of ADA is evident in its dual role as both a governance tool and a means to pay for transaction fees on the Cardano network. With a capped maximum supply of 45 billion ADA, the coin’s inflation rate is gradually decreasing. The initial distribution saw 31 billion ADA released, with 26 billion sold to the public and 5 billion allocated to the development teams, IOHK, Emurgo, and the Cardano Foundation. The remaining 14 billion ADA will be released gradually via minting. As of now, the inflation rate hovers around 4%, with a circulating supply of 35.95 billion ADA.

While Cardano’s capped supply may lend support to ADA’s value, other metrics raise doubts about its ability to generate substantial activity and drive long-term value. 

The Concern Over Cardano’s Lagging Activity

Despite being a long-established player in the smart contract space, Cardano has struggled to gain significant traction. A key concern surrounding ADA’s future in the digital asset stockpile is the token’s limited adoption and relatively low activity within the crypto ecosystem.

Data from Messari’s Q4 2024 State of Cardano report revealed that the blockchain processed an average of 71,500 daily transactions, with 42,900 daily active addresses. In comparison, Ethereum processed $552 million in fees during the same period, highlighting Cardano’s relative lack of transaction volume and ecosystem activity. Cardano’s quarterly fees totaled just $1.8 million—a far cry from Ethereum’s massive fee generation.

Additionally, Cardano’s staking yields also fall behind those of competitors like Ethereum. In Q4 2024, Cardano’s annualized real staking yield, adjusted for inflation, was a modest 0.7%, compared to Ethereum’s 2.73%. These relatively low yields may fail to attract significant staking participation, limiting ADA’s role in driving network growth.

Cardano’s developer activity also lags behind that of other blockchains. With 449 developers working on the Cardano ecosystem, the platform ranks just 12th among all blockchains in developer count, according to Electric Capital’s developer report. Furthermore, Cardano’s stablecoins represent only 0.01% of the total $224 billion stablecoin market, and its decentralized finance (DeFi) ecosystem claims just 0.3% of the $169 billion DeFi market.

Even Cardano’s decentralized application (DApp) activity is limited, with the network averaging only 14,300 daily DApp transactions in Q4 2024—well outside the top 25 blockchains. Notably, this figure represents a 73% decline from the previous year, a concerning trend for a blockchain still in its developmental phase.

Is ADA’s Potential Enough to Justify a US Government Investment?

While Cardano has a strong vision and unique features, such as its capped supply and focus on decentralization, the case for ADA’s inclusion in the US Digital Asset Stockpile is far from clear-cut. Unlike Ethereum and Solana—both of which dominate the crypto landscape in various categories—Cardano’s low activity, limited adoption, and comparatively weak staking incentives raise doubts about its long-term value.

That said, Cardano’s future potential shouldn’t be discounted entirely. The platform’s focus on decentralization and its capped supply may position ADA as a valuable asset in the long run. Furthermore, initiatives like Atrium Lab’s exploration of Cardano’s compatibility with Bitcoin through its eUTXO system could open new doors for DeFi applications on Bitcoin and drive increased activity to the Cardano network.

As venture capital portfolio manager David Nage succinctly stated, the success of Cardano ultimately depends on its ability to attract developers and create applications that resonate with a broader audience. “Like the rest of crypto,” Nage said, “Cardano needs to find and support developers to create products and applications that millions of people enjoy and depend on. Then, they need brilliant storytellers to solidify the narrative behind it.”

If Cardano can successfully cultivate these elements, ADA’s inclusion in the US national reserve may one day make more sense. Until then, its place in the Digital Asset Stockpile remains a subject of debate, with many questioning whether it has enough to offer in the present to justify such a significant government investment.