"Cardano, funds draining and collapsing"...Upgrade expectations rendered moot

▲ Cardano (ADA)

Cardano (ADA) is facing growing concerns about ecosystem contraction due to a sharp decline in decentralized finance (DeFi) assets under management, despite expectations for network performance improvements.

On May 4 (local time), crypto media outlet Coingape reported that Cardano's Total Value Locked (TVL) in DeFi has recently decreased significantly, weakening market confidence. The deposited assets, which once exceeded $600 million, have now shrunk to around $210 million, indicating an accelerating outflow of funds.

The Leios upgrade, being pursued by the development team, is expected to significantly boost transaction processing speed and scalability, but the market reaction has been cold. Investors are more sensitive to actual ecosystem utilization metrics than technical advancements, and the decline in deposited assets is overshadowing these efforts. In particular, as users migrate to competing networks such as Solana and Ethereum, the activity of Cardano-based decentralized exchanges and lending platforms has slowed down.

This trend is directly putting pressure on the price. With the $0.45 support level at risk, additional downward pressure is increasing, and if key support levels collapse, a further decline to around $0.38 is possible.

Market analysts point out that Cardano needs to move away from its technology-centric strategy and implement policies that attract real users. Whale investors are also showing signs of reducing their positions, fearing liquidity contraction. On-chain data showing a more than 15% decrease in active addresses compared to the previous month suggests a weakening of the ecosystem's growth momentum.

Cardano's future direction is assessed to depend on the speed of actual service adoption after the Leios upgrade. If technical achievements do not translate into real demand, a rebound is likely to be limited.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*