Caradano’s native gas-paying token, ADA, received a big blow at the start of June when the United States Securities and Exchange Commission (SEC) regarded it as a security in its lawsuits against Binance and Coinbase.
The lawsuit triggered a 42.5% drop in ADA’s price from $0.37 to a two-year low of $0.21 within a few days.
Additionally, the token faced further downside selling pressure due to delisting on U.S.-based trading apps Robinhood and eToro.
However, under the hood, the network has been making progress with an uptick in decentralized finance (DeFi) activity after a scalability upgrade in May.
The technical and on-chain analysis of the token also shows potential for a positive recovery.
Cardano’s DeFi ecosystem is blooming
Over the years, Cardano has come under some criticism for continued delays and network updates.
Cardano’s founder, Charles Hoskinson, attributed these setbacks to “betting on the wrong technology and being a bit ambitious with the roadmap“ in an interview with Cointelegraph, acknowledging that 85% of the initial roadmap had been completed.
Nevertheless, the network recorded an uptick in activity after the implementation of the long-awaited scalability upgrade Hydra, launched in the first week of May 2023.
The total fees paid on Cardano surged to a one-year high after the upgrade before collapsing amid the SEC’s lawsuit. However, the activity has been on a consistent uptrend over the last few weeks.
Cardano total fees paid on the network. Source: Messari
The total ADA deposited in DeFi applications on Cardano has risen strongly, reaching two times its peak value during the bull market of 2021, per DefiLlama data. The trading volumes on Cardano decentralized exchanges has also recorded a major uptick since May’s Hydra upgrade.
Hydra is a layer-2 scaling solution that is designed to increase the throughput and scalability of the Cardano blockchain by processing transactions on a sidechain.
The TVL and DEX volumes on Cardano. Source: DefiLlama
Additionally, a Jarvis Labs report found ADA is one of the most “decentralized L1s out there” based on the Nakamoto coefficient,…