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6 December 2023
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Cardano’s Staking Surge and Tax Proposal Signal ADA’s Bull Rally

At the reported time, Cardano’s ADA staking has witnessed a -97 % decline over the last 24 hours, despite witnessing an over 50% surge on Nov. 7 that propelled the staked value to $8 billion. This significant uptick mirrors the burgeoning investor confidence in the Cardano network in a month where ADA’s value soared by 31%. However, the recent drop in staking might be due to profit-taking by investors who may have gained on the previous spike.

Staking Dips Amid Price Rally

Cardano, currently the third-largest player in the staking market cap arena, has solidified its position with $8.16 billion of capital now staked. This sum equates to 22.98 billion ADA tokens, now under the watch of validators and delegators within the protocol. With 63% of all ADA in circulation now staked, the market capitalization of Cardano stands at $11.83 billion.

Everything happening with Cardano suggests $11 per ADA in the next bull cycle might actually be playing it safe.

$400 billion market cap is conservative.— Dan Gambardello (@cryptorecruitr) November 7, 2023

This dynamic, as well as the 103% increase in trading volume, demonstrate the rising interest and trust in Cardano’s staking strategy. As more ADA coins are staked, the protocol becomes more secure and decentralized, cementing Cardano’s market position.

Analyzing Cardano’s Price Trajectory

Cardano’s monthly chart paints the picture of a crypto asset in demand, with ADA trading at $0.34 at the time of writing, reaching a high of $0.37. Despite suffering a 4.3% intraday loss, ADA has experienced weekly gains of 16% thanks to a $2 billion boost in market capitalization. The $0.40 resistance zone now looms large, a critical threshold for ADA to breach if investors are to see further gains.

ADA/USD 24-hour price chart (source: CoinStats)

Recently, a proposal has emerged that could redefine the Cardano ecosystem’s economic landscape. Stakeholders in the Cardano community are mostly in favor of the proposal, which would reduce the treasury tax from 20% to 5%. If passed, it could reduce the monthly ADA allocation to the treasury, currently swelling by 30 million ADA, bringing the total to approximately 1.39 billion ADA.

This initiative aligns with the ethos of Cardano’s treasury, designed to fund and foster ecosystem development and community-led projects. The proposal seeks not only to lower the tax rate but also to gain clarity on the determinants of the “tau” parameter and its adjustment frequency.

The Cardano treasury tax is 20% instead of 5% planned initially.

In practice the effective treasury tax rate is currently closer to 33%. So approximately 30 million $ADA is added to the Treasury each month.

Should we reset it to 5%?

This is what this PCP (Protocol Change… pic.twitter.com/NJ6oMdS84F— 竜 SM₳UG (@SmaugPool) November 7, 2023

The implications of this proposal extend to the backbone of the Cardano network—the stake pool operators (SPOs). By potentially boosting the transaction fee share that goes to SPOs from 80% to 95%, the change could incentivize more SPOs to join the fold. This move, in turn, could lead to increased network security and robustness, given Cardano’s proof-of-stake nature that relies on SPOs for transaction verification.

As interest in ADA picks up, the community awaits the verdict on the treasury tax proposal. Should it pass, it may catalyze a wave of on-chain activity, potentially elevating Cardano’s appeal and utility.


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