ADA is a speculative, risky asset even for crypto - why Cardano is overvalued and overhyped relative to peers

It is really hard to come up with a fair market price for cryptocurrency. They don't have cashflows, don't pay dividends (although thats not so true anymore with staking rewards taking off), and don't have balance sheets to peruse. That doesn't mean we shouldn't try though! We can use transaction volume, number of wallets, dApp proliferation, total asset value hosted on a given chain (in terms of NFT), and thanks to proliferating defi tools, we can assess the total USD value of assets locked in smart contracts on a given chain.

Because this is a post about ADA, a so-called "eth killer", I will be largely comparing cardano to ethereum (main comparison), algorand, and tezos. I'm not here to shill those coins, but based on my limited knowledge those are the projects that cardano has the most overlap with in terms of what they claim to want to do.

Background: According to their website: " Cardano is a blockchain platform for changemakers, innovators, and visionaries, with the tools and technologies required to create possibility for the many, as well as the few, and bring about positive global change. " Cardano is a proof-of-stake blockchain, much like the other projects I will compare to (eth will be soon enough).

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Metrics: (most of these are from the very useful website messari.io

1. Transaction volume:

ADA: 42,395 in the last 24 hours

ETH: 1,297,889

ALGO: 540,000 last 7 day average

1. NVT (ratio of current network value to transaction volume, lower is better)

ADA: 12.20

ETH: 30.73

ALGO: couldn't find the transaction volume in dollars so couldn't calculate

1. median Fees (lower is better)

ADA: $0.240

ETH: $3.98

ALGO: couldn't find official info but its pennies

1. Developer activity (one-year commits) (higher is better)

ADA: 1313

ETH: 793

ALGO: 745

1. DEFI net value

ADA: 0

ETH: 63.77 B

ALGO: couldn't find it - they do claim 4.5 million "Algo standard assets" on chain

1. smart contracts/ dAPP capable?

ADA: No

ETH: Yes

ALGO: yes

1. L2 scaling

ADA: No

ETH: yes

Algo: no?

1. Market capitalization

ADA: 54.8 billion USD

ETH: 305 billion USD

ALGO: 2.82 billion USD

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I've got to do actual work so I'm not gonna add Tezos but here are my take-aways from this exercise:

In terms of NVT, ADA holds up very well compared to peers - lots of money is being transacted on ADA - thats relatively bullish. The rest of the functionality that delivers value for these projects is lacking: no defi, no smart-contracts, no gaming, no NFTs, no L2s to handle scaling in the future

The bull case for ETH to continue to build on its quite high valuation is that the DEFI / DE-insurance / De-gaming industries will blow up and the value of the ETH network will explode as a result.

What is the bull-case for ADA to coninue to grow? I think its basically the same as for eth - which means that the bull case for ADA relies on technology they haven't implemented yet! thats what makes it so speculative relative to its peers. Even a small-cap like Algo is already running a pretty expansive NFT marketplace and boasts more transaction volume than you see on Cardano.

It is possible that ADA will continue to outperform peers and take over the world just based on continued good marketing and the overwhelmingly positive sentiment they have built-up but I'd rather not risk funds in a project that relies so heavily on sentiment to prop up the price.

My instincts tell me that the current price of cardano is already baking in a lot of good news down the line - seemless smart contract rollout, L2 scaling that makes cardano scalable to a much much much larger transaction volume etc. Why would you invest in a project that requires so much to happen just to justify where it already is even relative to other speculative crypto projects?

On their website they claim that cardano is a third-generation blockchain, intelligently developed and the only proof-of-stake protocol "backed by science". I'm not about to do a blockchain lit review to evaluate that claim but it strikes me as marketing hoopla with very little substance. As a scientist myself my bullshit radar goes up to 10 whenever something claims to be "backed by science".

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TLDR: If you want to invest in a next-generation blockchain project, invest in one that actually delivers a next-gen product now: Matic/Eth, Algo, Tezos, instead of one that hopes to deliver a next-gen product someday (ADA).

Edit: be safe out there- army of shills patrolling the comments.