Wave Financial Group recently partnered with Cardano (ADA/USD) on an in-depth report, Cardano: From Ideation to Manifestation, with outlooks and insights on key trends in blockchain and crypto. The report covers the DeFi landscape and the ‘three horsemen’ of blockchain – scalability, interoperability, and sustainability as well as Cardano’s solution through Wave’s unique cFund. This is an early-stage, crypto-native hedge fund that takes a venture capital approach to drive Cardano expansion.
Achieving inclusion worldwide
Development of Cardano was launched by Input Output Global (IOG) with the mission to bring about worldwide financial inclusion. IOG’s goal in building and testing the blockchain has been to ensure scalability, interoperability, and sustainability of the network. A lofty goal indeed, but if it’s achieved, the network can transform into powerful new economic infrastructure, giving the world’s unbanked and underbanked population unprecedented access to critical financial services.
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Ethereum (ETH/USD) has a hegemony in the DeFi space at the moment, but the number of limitations in this network’s infrastructure is increasing. Gas prices have risen along with Ethereum’s market share in DeFi. Escalating demand has made it very costly to process even the smallest transactions on Ethereum’s network.
Cardano functions as a decentralized application (DApp) development platform, which is equipped with smart contract support and a multi-asset ledger. It aims to address the performance issues that Bitcoin (BTC/USD) and Ethereum’s blockchains struggle with.
First- and second-generation blockchains run on a Proof of Work algorithm, which slows network speeds a great deal because the nodes have to complete complex computations in order to achieve consensus. The Visa network can process around 65,000 transactions per second, compared to 15 for Ethereum and seven for Bitcoin. This makes these blockchains too expensive for everyday use and impedes mainstream adoption of crypto as a payment means.
As users cannot use Bitcoin in Ethereum-based DeFi protocols, they can’t earn yield on their Bitcoin either. The absence of accessible liquidity causes difficulties in collateralizing loans and high price slippage between assets, creating problems for lending platforms, decentralized exchanges, and other DeFi apps.
After a malware attack deprived the Ethereum community of an enormous amount of funds, the network underwent a hard fork, from which Ethereum Classic was born. Before they could adjust to the new network size, both networks struggled with processing transactions on time.
Cardano is working on a solution to equip blockchains with an effective system of governance. This starts with establishing a reliable method of proposing improvements. The ultimate goal is to make the Cardano network into an entirely self-sustaining system. In the cryptocurrency’s Shelley era, a scheme was created to reward network participants to stake their ADA tokens in Cardano’s liquidity pools. Likewise, the last era, Voltaire, intends to allow these same participants to improve or govern the network.
An innovative voting and financing mechanism
IOG plans to introduce a voting mechanism, according to which users can stake ADA as voting rights to determine how the network will develop moving forward. They will propose and vote on proposals to improve the network. IOG will start a pooled development fund to finance the improvement proposals. With every transaction on the Cardano network, part of the transaction fees will flow into the fund. This is how Cardano can become a fully self-sustainable network and achieve full decentralization. Once the community controls it, IOG will no longer need to intervene.
Wave Financial’s role
IOG turned to Wave Financial for support in finding suitable investment opportunities. Wave launched cFund, a crypto-native, early-stage hedge fund. Wave invests in innovative projects that can accelerate Cardano ecosystem growth. The company evaluates firms, in which cFund might invest, taking the potential synergies with Cardano into account.
The General Partner of cFund has extensive venture experience as the founder and Managing Partner of Wavemaker Partners, which manages $470 million across a portfolio of over 350 companies. Thanks to IOG’s vast network, excellent reputation, and plentiful resources, IOG positions cFund to gain access to unique opportunities. Finally, cFund has the support of an exceptional research tool, which plays a key role in seeking out potential investments. IOG and Wave can conduct deep technical diligence on opportunities, identify companies that meet the industry’s needs, and spot tendencies early on as active participants in the blockchain industry.
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