Can Chang Hard Fork Rescue Cardano? 🍴
Can Chang Hard Fork Rescue Cardano? 🍴
$12B layer 1 blockchain Cardano shifts to decentralised governance. Bitcoin's September blues. Crypto losses to hacks exceed $313M in August. K33 Research calls crypto liquidation data inaccurate.
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Cardano goes fully decentralised governance.
The $12B layer-1 blockchain founded by Charles Hoskinson, has successfully launched its Chang hard fork.
The upgrade, which began on September 1, 2024, introduces a new governance model that empowers ADA token holders to participate directly in the decision-making process.
First major blockchain: To implement a token-based governance system.
Decentralisation: Shifts control from founding entities (Cardano Foundation, Input Output Global, EMURGO) to the broader community.
Community empowerment: Every ADA holder can contribute to the ecosystem's evolution.
The Chang Hard Fork aims to transition Cardano from centralised control to a community-led governance model.
Will that boost the declining stakes for Cardano?
Despite the successful implementation of the Chang hard fork, ADA's price has declined.
ADA is trading at approximately $0.33 to $0.35.
It experienced a 24-hour decline of about 4-5%.
Over the past week, ADA has fallen by around 13%.
The cryptocurrency has fallen out of the top 10 largest by market cap, now ranking behind TRON (TRX), with a market capitalisation of approximately $12 billion.
Significant decline from ADA's all-time high of $3.10, reached on September 2, 2021, representing an 89% drop.
Following the successful Chang hard fork, some analysts remain optimistic, predicting that ADA could reach $1 in the near term.
Implemented in two phases
First phase: Launched on September 1, 2024, it introduces initial governance features and sets up the framework for decentralised decision-making.
Second phase: Expected to activate in about 90 days, this phase will fully empower the new governance structures.
Key features
On-chain governance: ADA token holders can now propose and vote on governance issues directly on the blockchain.
New governance bodies
Constitutional Committee
Delegate Representatives (DReps)
Stake Pool Operators (SPOs)
Liquid democracy: ADA holders can vote directly or delegate their voting power to trusted representatives.
Plutus enhancements: Improved smart contract capabilities and cryptographic primitives for more sophisticated voting mechanisms.
Challenges and considerations
The Chang Hard Fork marks Cardano's entry into the "Voltaire era," focusing on achieving full decentralisation and community-driven decision-making.
Potential risks: Decentralised governance can lead to excessive budgets or control by powerful stakeholders.
Technical hurdles: Cardano still faces challenges like the UTXO problem, which can affect DeFi scalability.
Cardano's UTXO (Unspent Transaction Output) model can lead to concurrency issues when multiple users try to interact with the same smart contract simultaneously.
This "UTXO problem" occurs because each UTXO can only be spent once, potentially causing transaction failures or requiring complex solutions for parallel processing in decentralised applications.
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Block That Quote 🎙️
Co-founder of Liqwid Labs, Cardano lending protocol, Florian Volery.
“Without a central authority controlling the network, it is much harder for governments or corporations to censor information or transactions.”
Volery reckons that decentralised governance will make Cardano more attractive for institutions looking to dip their toes into decentralised finance — or DeFi.
Frederik Gregaard, CEO of the Cardano Foundation.
“Every ADA holder can contribute to the ecosystem’s evolution. The community will collaborate, innovate, and govern by mutual agreement.”
Cardano doesn’t want to be associated with actual DAOs and the problems that come with it.
“In a DAO, decisions are typically made by the governance token holders that vote on proposals, often with only few checks or balances.”
Bitcoin’s September Struggle
Bitcoin (BTC) dropped over 2% on September 1, reaching lows of $57,230, a level not seen since August 16.
August performance: Finished down 8.6%, below its historical average gain of 1.75%, indicating a disappointing monthly close for bulls.
September outlook: Historically, September has been a tough month for Bitcoin, with average losses of 4.5%, leading to cautious sentiment among traders.
Technical Analysis
Crypto Chase: Warns that losing the $55,000 level could lead to further declines to around $51,000.
Rekt Capital: States Bitcoin must close above $58,450 weekly to confirm support at the channel bottom.
CrypNuevo: Anticipates potential liquidity hunts, with a target of $61,300 for upside movement.
Market liquidity: CoinGlass data shows Bitcoin slicing through multiple liquidity layers in its downward trajectory over the past week.
Short selling activity: "Aggressive" short selling has been noted at local lows, contributing to the overall bearish market sentiment.
In The Numbers 🔢
$313.86 million
The amount crypto hackers stole in digital assets in August 2024, PeckShield’s monthly report.
Phishing attacks accounted for 93.5% of the stolen funds. The crypto industry has lost $1.21 billion to hacks and rug pulls year-to-date in 2024.
Is Crypto Liquidation Data Underreported?
K33 Research Senior analyst Vetle Lunde reports that major exchanges like Binance, Bybit, and OKX have changed their liquidation data reporting since 2021, now recording only one liquidation per second.
“Liquidation data from exchanges are bogus and a vast underrepresentation of actual liquidation volumes in the market. Liquidation data has been wildly underreported in the past 3 years. For now, liquidation data are mostly erroneous entertainment and not actionable.”
Speculated motivations: Exchanges may limit data for public relations purposes or to maintain an information advantage, as some have ties to investment firms that could exploit this data.
Impact on market understanding: Liquidation data is essential for gauging risk appetite and understanding leverage ratios, and its inaccuracy could result in traders having a "blurry picture" of the market.
Alternative metrics: Lunde recommends monitoring open interest to assess market leverage, although he notes that this method does not account for traders opening new positions during volatile periods.
The Surfer 🏄
Bitcoin miners’ revenue dropped to $827.56M in August 2024, the lowest in 11 months. The figure slumped 10.5% from July, as mining difficulty hit an all-time high. The number of mined BTC dropped from 14,725 to 13,843.
Bitcoin wallets holding 100+ BTC reached a 17-month high, with 283 new wallets added in August. The total number of such wallets has now risen to 16,120, indicating increased accumulation by whales amid retail uncertainty.
Crypto executives are hosting a $100,000 fundraiser for Vice President Kamala Harris on September 13. The fundraiser by Blockchain Foundation is in Washington, DC, with tickets priced between $500 and $5,000, Reuters.
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