When Cardano’s founder, Charles Hoskinson, started teasing fans about smart contracts on the network, it led to increased buying pressure that led to ADA forming a new high past $3. Hoskinson has even predicted that because of the launch, ADA will hit $150 by the end of 2021 because of increased use cases.
However, the Cardano smart contracts have greatly underwhelmed fans, and it no longer carries the hype that it did in August.
Cardano Smart Contract Launch Flops
The highly anticipated Cardano smart contracts launch did not meet users’ expectations, which has led to critics slamming Cardano’s network, stating that it is not suitable as a decentralized finance (DeFi) platform.
When launching the smart contracts, Hoskinson planned to allow developers to build DeFi projects on the Cardano network. As such, the network could support lending, borrowing, and trading assets while eliminating intermediaries.
By launching this capability, Cardano would have the same use cases as Ethereum. If it is more scalable than Ethereum, it could become a major competitor to the leading DeFi network.
However, critics in the crypto space have stated that Cardano cannot meet the huge demands of the DeFi sector. A report by Decrypt points to an interview with the chief investment officer at Arcane Assets, who states that, “in its current state, it’s going to require tons of workarounds for developers to build certain types of common DeFi applications.”
Another issue that has been raised about Cardano’s smart contracts is “concurrency.” As developers launched the Alonzo testnet, they discovered there was a problem with multiple users using the protocol at the same time.
Because of these issues, the first dApp on Cardano, Minswap, shut down its testnet prematurely. In its statement, Cardano stated that they had gathered ample information from testers to help improve the nature of the DEX.
Cardano Accountable for Issues
One of the main reasons that have been attributed to the failure of Cardano’s smart contracts is the network’s use of “unspent transaction outputs (UTXO).” These outputs are used to keep track of user funds on the network.
According to critics, this issue will be faced by the other DeFi projects that launch on the network, which will be a major flop for Cardano. The issue would also make it impossible for Cardano to compete against major networks in this sector, such as Uniswap, Ethereum, and Solana. These networks have a high level of efficiency and usability.
While Cardano has yet to respond to the matter, the company has stated that the issues did not have to do with the eUTXO model. According to the company, it uses an extended model of UTXO, stating that it offers enhanced security, is convenient in fees, and allows powerful parallelization.
Another issue that IOHK, the developer team for Cardano, has raised is that the network can only process one transaction per block. The team stated that it was formulating solutions to this problem. The firm also recently published a blog post explaining how smart contracts were designed.
Sundaeswap, another exchange application on the Cardano network, has defended the allegations that the network can only process one transaction per block. According to the exchange, Cardano can process hundreds of transactions per block, making it scalable.
Sundaeswap also published a blog post stating that many UTXOs are governed by similar smart contracts that could deliver real solutions. “Centralization is a way to solve this problem, but it is not the only way,” the exchange said.
On the other hand, Charles Hoskinson has disregarded all the claims, stating that they were mere “Noise and FUD.” A major critic of Bitcoin on Twitter, Hoskinson, stated earlier that the network would be a market leader with the smart contracts launch.