Cardano is days away from receiving an upgrade. How will it impact ADA pricing? The change will take place in conjunction with the new governance model the network will soon implement.
Cardano’s upcoming Chang update includes proposal CIP-0069, which aims to facilitate the development of decentralized applications (dApps) on the network. Charles Hoskinson, founder of Cardano, commented that he does not believe adding this update will add “a significant delay to the delivery of Chang,” scheduled to take place at the end of June.
Chang Hard Fork
Chang is the name of the upcoming hard fork. It will add community governance to Cardano, thus increasing network decentralization. Everyone who owns ADA, Cardano’s native cryptocurrency, will be able to participate in the decision-making and development of Cardano. In Hoskinson’s view, it is critical to understand that unforeseen changes are always “disruptive and introduce additional risks.” However, he said they will work to find a way to implement CIP-0069 in Chang.
I saw the requests coming in for CIP-69. I spoke with the IOI delivery team, and they spoke with the folks at Intersect. There seems to be a lot of community demand for it, and the CF also has been pushing for CIP-69 to be included in Chang.
— Charles Hoskinson (@IOHK_Charles) May 9, 2024
I don't think it will add a…
The Cardano developer forum had previously postponed the update because, for some time now, everyone building on top of the network has been “struggling with the mutual dependency problem.” The forum refers to the situation where two validating nodes need each other’s hash to function. The mutual dependency is a problem when designing dApps, as this feature limits the flexibility of construction and security of protocols in the network.
Why does Cardano need Chang?
The reason for implementing the update is due to a common problem that developers face when creating scripts in the Cardano network. The problem stems from the way people design tokens and scripts. In the Cardano network, scripts are snippets of code that play a critical role in the security and functionality of transactions. They are instructions that define the conditions under which you can spend or transfer a digital asset.
The new CIP-0069 proposal seeks to eliminate the mutual dependency between scripts in Cardano. The scripts will no longer need to “know” each other to function. Developers would use a single validation script for multiple functions. For example, you can use one script to mint and spend tokens and simplify dApp development, improving the security and possibly the confidence of developers working over the Cardano network.
In addition, should the change be successful, it could start to give strength to the ecosystem of decentralized applications on this network, which is far from being able to compete with the existing one in ecosystems such as Ethereum (with its mainnet and rollups), BSC, Solana, and Polygon.
Is it a good time to invest in ADA?
While Cardano is close to an upgrade that could boost ADA’s price, it experienced a demotivating performance for its investors with a 50% correction in April. However, analyst firm Santiment believed since last week that ADA shows a slightly better buying opportunity than other digital assets, according to its relative strength index (RSI).
The RSI is a technical analysis indicator to measure the strength and direction of an asset’s price movements to identify whether the asset is overbought or oversold. This metric is the result of dividing the average gain by the average loss in a given period. It delimits that when it is below 30, on a scale ranging from 0 to 100, it may be at oversold levels. Meanwhile, when it is above 70 it suggests an overbought situation.
In the case of ADA, it had the lowest RSI value among the major cryptocurrencies, around 32.4, as seen in the chart below. Thus, ADA seems to be providing a good entry point so far. Something similar is the opinion of market analyst Ali Martinez, who assured that Cardano is ready for a “parabolic bull run,” according to historical trends. The drop in ADA’s price last month “could be a golden opportunity,” he suggests.