“Cardano doesn’t measure up to competing smart contract platforms, despite all the talk,” said Arcane Assets CIO Eric Wall.
Cardano dives in as critics point to the launch of the smart contract, complaining that the blockchain was not fit for the purpose of a decentralized finance platform ( defi ).
It comes just days after the ADA hit new highs in anticipation of launch, solidifying its place as the third-largest cryptocurrency by market capitalization. At the time, the cryptocurrency was trading at $3.09. At rock bottom today, the ADA dropped to $2.58.
The highly anticipated launch of smart contracts will allow developers to build decentralized financial applications to lend, borrow and trade assets without intermediaries. The feature will allow Cardano to take on other smart contract platforms, such as the market leader Ethereum .
But critics are not so sure that Cardano is up to the task.
“Cardano was not built for the current DeFi landscape.”
Eric Wall, investment director of the crypto-active fund Arcane Assets told Decrypt.
“In its current state, it’s going to require tons of workarounds for developers to build certain types of common DeFi apps,” he explained.
- Cardano dives in as critics point to the launch of the smart contract.
Most of the criticism was about the so-called “competition” by Cardano.
Difficulties around multiple users interacting with the protocol at the same time arose when developers launched the long-awaited Alonzo test network, which introduces smart contracts to the platform for the first time.
It is a pity that we have to temporarily shut down our test network. We’ve gathered enough data from our testers to improve our DEX fundamentals. In the next few days, we will publish our post-mortem, our scaling solution and when the testnet will open again.
It’s unfortunate that we have to shut down our testnet temporarily. We have gathered enough data from our testers to improve the fundamental of our DEX. In the next few days, we’ll publish our post-mortem, our scaling solution and when the testnet will be open up again.
— Minswap | FISO live! 🚀 (@MinswapDEX) September 5, 2021
These concurrency issues meant that the first Cardano dApp – a decentralized multi-pool exchange (DEX) called Minswap – was forced to prematurely shut down its testnet.
Cardano held responsible
The public testnet is live! Minswap is the first Dapp on Cardano public testnet! Cardano has arrived! Use our testnet and earn airdrops! Please retweet and spread the word!
Read more here: https://t.co/jnIbC1sKGH
— Minswap | FISO live! 🚀 (@MinswapDEX) September 3, 2021
Critics claim that the concurrency difficulties that Minswap has experienced are the result of Cardano’s use of “unspent transaction outputs”, or UTXO , which are used to track users’ funds.
They claim that future DEXes looking to build on the network will also face similar problems, making the network impractical for use by Uniswap, the market-leading manufacturer, which processes more than 10,000 transactions daily.
Seriously 6 years of peer-reviewed research and a $90bil+ market cap later and the first dapp on Cardano can’t even do concurrent transaction processing (aka the very thing you need for DeFi).https://t.co/mcmTjQEKbb
— Anthony Sassano 🦇🔊 (@sassal0x) September 4, 2021
“Six years of ‘peer-reviewed’ research and a market capitalization of $90 billion later and the first dapp at Cardano can’t even do simultaneous transaction processing (aka the very thing you need for the DeFi)” tweeted Ethereum supporter Anthony Sassano.
Cardano developer IOHK did not respond to a request for comment from Decrypt.
However, on Twitter, the company defended the use of eUTXO, the model “extended” from UTXO, claiming that “offers greater security, allows rate predictability and offers more powerful parallelization”.
Responding to one of the prevailing criticisms, that Cardano is flawed because it only allows one transaction per block, the IOHK said there were workarounds. For example, a service or application can be designed using multiple UTXOs. The company has published a new blog post detailing some of the reasons behind the smart contract design.
Sundaeswap, another Cardano-based trading application, also refuted the one-deal and one-block claims. “In fact, it’s just the opposite. Cardano allows many hundreds of transactions per block ”, said the DEX.
In a blog, Sundaeswap stated that many UTXOs can be governed by the same smart contract and that many solutions are possible. He promised to publish his own soon.
“Centralization is one way to solve this problem, but it’s not the only way.”
SundaeSwap said in response to criticism of Cardano’s approach.
Maladex, another DEX building in Cardano, also tweeted in defense of Minswap, pointing out that it is not a finished product.
Smart Contracts and Beyond https://t.co/tORiMhAxhb
— Charles Hoskinson (@IOHK_Charles) September 4, 2021
Meanwhile, Cardano founder Charles Hoskinson’s response was to call the accusations “noise and FUD“.
Cardano overpromised and achieved little
Critics were not appeased and Wall poured more cold water into Cardano’s Hydra scale solution. It features multi-party state channels, which he compared to Bitcoin’s layer two scaling solution, the Lightning Network, “but for smart contracts”.
He stated that Cardano’s effort is “plagued by big UX challenges” and added that the problems inherent in multi-party state channels led to the approach abandoned by Ethereum.
“Cardano doesn’t measure up to competing smart contract platforms, despite all the talk about scientific research and discoveries.”
“They overpromised and underdelivered. The $90 billion market capitalization doesn’t seem deserved at the moment. The platform still has a lot to prove before that number is justified. ”
Since Monday, when he made his crushing comments, Cardano’s ADA token has dropped 6.4%, and its market value has dropped to $85.4 billion.