The Cardano network was launched at the end of 2017, so it will celebrate its seventh birthday this year. In the beginning, Cardano was talked about as an academic project. Today, it is one of the most decentralized networks with a strong community and a growing ecosystem. Cardano is getting stronger every year. What can we expect from the project in 2024? Let's look at the most important points.
The most pressing issue for Cardano right now is the absence of a USD-backed stablecoin. Incredibly, TVL is growing even under these difficult conditions. Djed and Indigo can largely compensate for the lack of a USD-backed stablecoin. However, people want a full-fledged stablecoin like USDT and USDC.
We expect the Cardano community to see a USD-backed stablecoin in 2024.
The USDA project from Emurgo has been suspended and we do not expect this project to resume. If so, it will be a pleasant surprise.
Mehen stablecoin (USDM) was supposed to launch in December 2023, but the launch was postponed to 2024. We believe that the second launch will be successful.
IOG announced the hiring of W. Sean Ford as the new CEO and David Markley as the COO for the new stablecoin-focused company. We believe that in 2024 there will be an announcement about the newly prepared stablecoin if it is not about its launch.
There is a proposal in Catalyst Fund11 that should enable higher programmability of native tokens and bring the functionality closer to tokens as we know them from Ethereum. If the community voted for this project and the team delivered, it would potentially allow USDT and USDC to be brought to Cardano natively (ie not via bridges).
It will be late, but in 2024 it will very likely see a USD-backed stablecoin.
Project Midnight and Partner Chains
At Cardano Summit 2023, people were talking about the Midnight project the most. Another topic was the Cardano PartnerChain Framework (CPF), which is built on top of Parity's Substrate.
A pioneer program for developers has been launched on Midnight. So it can be expected that Midnight will be launched in 2024. This is related to the promised airdrop of DUST tokens to be received by ADA holders.
Midnight is supposed to be a fourth-generation blockchain with many innovative features. From the beginning, there was a lot of speculation in the community about whether this project was a partner for Cardano or rather a competitor. Now it seems that it will be more of a partner.
We still know very little about the framework for building new partner chains. We only know that the framework was used to build Midnight. We don't know if the framework is ready to be released to builders. We expect a release date announcement to come in 2024. It would be a pleasant surprise if the framework was released together with Midnight.
The new framework will bring Cardano closer to projects like Cosmos or Polkadot and may enable the development of new services.
The Edinburgh Decentralization Index (EDI)
The EDI team deals with the quality of decentralization of major blockchains including Bitcoin, Ethereum, and Cardano. Last year, the team released the first tool capable of tracking the number of block producers.
It would be nice to see some more results, at least partial. Measuring the quality of decentralization is a complex topic. EDI has been talked about for a long time, and it would be good to have a concrete comparison of several projects available, at least in some category. Perhaps at the level of block producers, if not at the level of project management.
Scalability is a broad topic and a necessity if we are to talk about adoption.
The IOG team has been working on Input Endorsers for a long time. We don't expect to see implementation in 2024. What we would like to see is some major update on progress, a roadmap, or a possible delivery date.
Charles Hoskinson talked about a partial upgrade of the PoS consensus that should increase the finality of transactions. It would be a nice surprise to see at least this upgrade in 2024.
The Hydra team is diligently working on improvements that would enable wider adoption and use by at least one DeFi application. A regular user cannot currently use Hydra. It would be nice to see a real Hydra deployment for a specific use case. For example, from DEX.
Scalability is also related to the optimization of smart contracts, the use of a newer, more efficient version of Plutus scripts (V2), and a possible increase in block size (or reduction in block time).
We expect that third-party teams will migrate to newer versions of the scripts (if they haven't already) and that the IOG team will continue to work on optimizations. If the blocks are full over a longer period, which is an increasingly common phenomenon, it will be necessary to gradually increase the block size.
If the demand for block space is high, we may see a clogged Cardano network in 2024. Fortunately, the problem can be solved quickly and efficiently, but only up to a certain limit. Once the IOG team is no longer able to increase the block size, it will be necessary to accelerate the development of Input Endorsers, push the use of Hydra, or educate the community about the use of Milkomeda.
Several teams are working on ZK rollups, for example, Paima Studio. We expect at least one ZK rollup on Cardano to be launched in 2024. This can also improve scalability.
Developers and DeFi
The adoption of Cardano is primarily dependent on the success of the DeFi ecosystem. DeFi depends on developers. Developers are dependent on platform capabilities, infrastructure, documentation, tools, and funding. Sufficient liquidity is also important, which depends on the adoption by users and the security of the platform.
Aiken beat Plutus (Haskell) in a developer survey. This new programming language can attract new developers to the Cardano platform. Although Plutus is still popular, it may have been a difficult barrier to entry for some teams. We expect in 2024 new applications created through Aiken.
Many projects that improve infrastructure, tools, and support education have been (and will be) funded by Catalyst. That's positive news.
We expect the number of developers to increase in 2024.
It can be said that DeFi is successful so far if we look at it through TVL and the number of users. The growth of TVL during a bear market is an almost unique phenomenon across the various DeFi ecosystems.
Cardano even broke into the top 10 at the end of 2023 according to TVL. This is an amazing achievement.
However, in the larger context, DeFi on Cardano is still small compared to older projects.
Over 53% of the total value locked in DeFi across all platforms is locked in the Ethereum ecosystem. Although the share of Ethereum is gradually decreasing and approaching its all-time low, which was around 49%, it is still a giant. At the time of writing, Cardano has a share of just 0.72%.
No SC platform is capable of defeating the current king overnight. Gaining a larger share is a slow process. Cardano, like other SC platforms, is on the right track. The first steps were well taken.
We expect that Cardano can enter the top 5 in 2024. The competition has a larger share, but not fundamentally. Polygon has a share of 1.6%, Avalanche 1.6%, Optimism 1.6% and Solana 2.6%.
It is important to note that TVL may not be a good indicator of success. More important than TVL is the number of satisfied users. Although there is a correlation between the number of users and TVL, VC funds can artificially inflate TVL.
Media and influencers especially look at TVL, so it would be positive to get into the top 5. But it is not healthy to see it as a priority for Cardano. We are sure that once we have a USD-backed stablecoin, TVL will grow significantly.
There has been no DeFi app hack yet in the Cardano ecosystem. Many attribute this to the fact that TVL is low. A hack is bound to happen sooner or later. Cardano must maintain its status as a secure platform. Given the large number of hacks in other ecosystems, we can expect Cardano to maintain its reputation.
In 2024, we will see fundamental progress in on-chain governance. Very likely the SanchNet will be completed and it will be possible to register as a dRep on the main-net. ADA holders will be able to delegate ADA to dReps.
On-chain governance must be seen as a global experiment with which we do not yet have much experience. The responsibility for the project will gradually pass from the teams to the community. Although everyone hopes for success, there are certain risks associated with it that can slow down the development of the project.
From the point of view of the regulators, this is a necessary step. With the burning of the Genesis keys, the team will not be the owner of the protocol. This is already true to a large extent today, but it is difficult to explain the details to officials and ordinary people. Once the community is responsible for the project Treasury, changing the parameters and other things, it will be a clear signal to the world that IOG does not own Cardano even from a management point of view.
We have mentioned the most anticipated things in 2024. There will be more to come. There will be protocol upgrades through the hard-fork combinator. The Mithril network will be more decentralized and will continue to develop. Lots of interesting DeFi projects will be launched. Axo already this month. Through funding from Catalyst, other teams will work on interesting projects.
Bitcoin halving is expected in April 2024. In the following year, interest in cryptocurrencies usually increases, which entails an influx of new users and capital. 2024 may still be a relatively quiet year. Cardano still has some time to prepare for the boom. However, history does not have to repeat itself. Increased user activity may begin as early as 2024.
Most of all, Cardano now needs a USD-backed stablecoin. Everything else is secondary. It can be said that DeFi is relatively well prepared for new users and will get better with each passing month.