Analytics underestimate the power of the Cardano community

Published 19.6.2023

Sometimes you may hear the opinion that "Cardano only has a strong community" or that "Cardano has no technology, only community". Most people who say this have probably been asleep for the last 3 years, as it is becoming more and more obvious that Cardano has top-notch tech. Everything the IOG team release works a little different than today's standard. Liquid staking on Cardano is definitely better for maintaining a high level of decentralization in the long run than competing PoS projects. The Plutus platform has already shown that you can build DeFi applications that resist hackers.

In this article, we don't want to deal with technology, but with community. We think many fundamental analysts underestimate the power and importance of cryptocurrency communities. Technology and community are the two pillars of success for any blockchain project. Both must flourish, and one of the pillars may dominate at a certain stage of a project's development. The blockchain revolution is based on technology, but it is the people who choose the technology they want to use in the future. The technology itself cannot enforce itself and there is no third party to impose the blockchain technology on you. The community is absolutely a key ingredient for success in the early stages of a project.


Cardano owes its strong community to the fact that it is perhaps the only project where we can observe TVL growth in a bear market. Technology needs a first wave of users and these are born from the community.

DeFi is not needed for success

Bitcoin doesn't have the most efficient technology, and will never have DeFi on the first layer. Yet it is successful because it has a large community. Apparently, that has been enough for success so far.

There are people who are happy with the features that Bitcoin has. They don't need (or at least don't think they need) higher scalability at the first layer. They are happy with Proof-of-Work and think that Proof-of-Stake is for some reason a worse technology. They are even happy with the single function of sending a value. Bitcoiners for some reason don't admire tokens, or smart contracts and think of DeFi as useless and doomed. It doesn't matter what the experts say. If Bitcoin has any existential problems, Bitcoin fans believe they will be solved (it doesn't matter if anyone actually addresses the problems). It doesn't matter how many people currently use or will use DeFi. The Bitcoin community is firmly convinced of their version of the truth. All doubts are (mostly) forbidden.

Does that remind you of anything? Yes, this is a faith, a religion, or a cult. We can name the Bitcoin community whatever we want, but it doesn't change the fact that Bitcoin is a successful project.

Bitcoin is 80% about religion and 20% about technology. People just want to HODL the coins and don't need to send BTC too often or use DeFi.

Cardano is a smart contract platform. Does a smart contract platform need a community? Shouldn't the technology alone be enough? Does Ethereum actually have a community, or is success built solely on technology?

Ethereum also has a strong community of loyal fans, much like Bitcoin. Some members of the Ethereum community do not need Bitcoin and are not interested in DeFi services on other platforms. The foundation of the Ethereum project's success is roughly 50% technology and 50% faith. There are many people who only hold (or stake) ETH and do not use DeFi. This group is people who believe in the potential of the platform but are not yet interested in using other tokens or decentralized financial services themselves. There are Ethereum users who use stablecoins for example or play with tokens and NFTs. For this, they do not need to hold large amounts of ETH.

Where is Cardano? Cardano is a younger smart contract platform. Nevertheless, the project has a huge and loyal community. Let's say Cardano is roughly 70% about faith and 30% about technology. Is that wrong? Shouldn't the ratio be more in favor of the technology or the number of users?

The ratio will gradually change over time. DeFi summer suggests that ADA holders are testing new DeFi services. Cardano is the only one of the larger SC platforms where we can observe the growth of TVL. On other platforms, including Ethereum, TVL is declining. Cardano can thank the community for this.

It is important to note that there are many SC platforms where we are not observing significant user activity due to the ongoing bear market. How is that possible? Many projects (especially those with VC funds behind them) have no community. Therefore, in a bear market, they don't even have many users. With the draining of the large capital artificially pumping TVL, the users also left. In the case of Cardano, TVL is growing organically. Many criticize that TVL is low in the case of Cardano, but they don't realize that it is not about TVL, but mainly about the number of users and volume. TVL must grow with the number of users. VC projects attract users by pointing out the high TVL, but in a bear market, this clearly doesn't work.

Every blockchain is completely dependent on the community in the early stages of adoption. Community members must be people who understand the project's mission and potential. They must understand where the project is going and be aware of when the project can realistically succeed. It doesn't have to be in a year or in the next bear market. It could be 10 to 20 years.

There's a difference between a short-term user who tries DeFi and fans who believe in the potential of the project and hold onto ADA because of their faith. The two groups can intermingle and both are important. When users are the majority, Cardano will be 80% about the technology.

Bitcoin will forever be about faith, which will account for 80% of success. We're talking about a protocol, not an ecosystem. The Bitcoin ecosystem, such as the Lightning Network (LN), must be 90% about the technology (people must of course believe the LN is a safe and secure network). The trust grows with the number of users.

Cardano will get to the stage where it will be 80% about technology and 20% about faith. For smart contract platforms, the ratio will be the opposite of Bitcoin.

Don't be fooled by the percentages we show. No one knows at this stage what is more important for success and it can vary within projects as we have seen with Bitcoin and Cardano. Blockchain technology is different in that it is not owned by a third party but by the community. Never in the history of mankind, it has been possible to own the infrastructure that we can use to create money or financial services. So forget about percentages, as it is possible the success of a blockchain project must be equally dependent on faith and technology.

Simply put, ADA holders must trust the coin as a financial asset that will have the ability to retain value (store of value). The Cardano user must trust the technology and be confident that they will not lose value. There is a strong link between Cardano and ADA coins. The capabilities of the protocol affect the market value of ADA coins. ADA coins are about faith and are a ticket into the Cardano ecosystem (primarily staking which is also a financial service).

The longer a project exists together with a community, the higher the chance that the project will be there for years to come. The Cardano community is growing, which is an absolute prerequisite for the existence of the project and the use of the technology by other users.

I have seen many projects that have managed to deliver interesting technology, but the teams forgot to support community building. These projects get into an awkward situation in bear markets because not many people talk about them and users don't use them.

If you hear somewhere the opinion that "Cardano only has a community" you can respond that this is the best the project needs to succeed. From the community, the first users are born. The more people trust the project, the more the reputation spreads from the bottom up.


When fundamentally analyzing a blockchain project, it is not possible to evaluate only the existing technology. This only gives a very distorted picture of the reality, as teams continue to work on the technology in most cases and are slow to implement the items on the roadmap. What is tricky is to evaluate the differences between platforms and make a good assessment of the user benefits especially as adoption increases. The analyst should consider the team's ability to conduct research and implement innovative technologies. It is important to look ahead.

We don't understand why so many analysts underestimate the importance of the community behind the success of both Bitcoin and Ethereum. The power of the community may even be so strong that an inferior technology is adopted at the expense of a better one.

It may not matter whether Bitcoin, Ethereum, or Cardano is technologically "better", as the communities (and the first wave of users) will decide their success. Let's also not forget that different people may define success differently. For someone it is the highest market capitalization, for someone else it is a large network effect, or it may be the best available technology in a given place at a given time. Technology will only show its true quality when a significant portion of the population is using it on a daily basis. We are nowhere near there yet. Before we reach the finish line, faith is important because it will determine the winner. Never underestimate the power of community.


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