Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche


Can the Adadao (ADAO) make money from Stablecoins?

The Adadao (ADAO) is a protocol that creates fully collateralized stablecoins on the Cardano (ADA) blockchain. In addition, Adadao is a decentralized finance (Defi) protocol that leverages native Cardano Assets.

Interestingly, they claim Adadao is the first stablecoin project based on interest free borrowing. To elaborate the Adadao uses smart contracts to build AUSD stablecoins. I do not think they have released the AUSD stableccoin.

A smart contract is a digital robot or app that performs a task on the blockchain. A stablecoin is a cryptocurrency that contains a smart contract. The stablecoin smart contract makes payment in fiat currency when somebody spends the token. For example, AUSD will make payment in US dollars.

A New Kind of Stablecoin

They claim onchain collateral backs each AUSD stablecoin.That’s important because AUSD recipients can know they will receive US Dollar payment.

They call the AUSD stablecoin a soft-pegged stabelcoin.” I think that means they store the AUSD dollars on the blockchain rather than a bank account. Hence, AUSD could make payment from blockchain.

In contrast, traditional stablecoins; such as USDC (USDC), Tether (USDT), and BUSD (BUSD), make fiat currency payments from a bank account. Hence, those stablecoins do not contain fiat currency.

Conversely, the AUSD could be the first stablecoin that contains actual fiat currency. Each AUSD could be a dollar. In contrast, each Tether is a promise to pay a dollar from a bank trust account.

What is the Adadao?

The Adadao is the decentralized autonomous organization (DAO) building the Adadao protocol and the AUSD stablecoin.

The ADAO token is the utility and governance token for the Adadao ecosystem. In particular, Adadao will reward ADAO token holders with profits from the Adadao.

Adadao users could create and collateralize Adadao vaults. Generate AUSD from the vaults, pay down debt and stability fees. Users can also withdraw collateral as cash.

They plan to release the AUSD stablecoin in the second quarter of 2022 once basic protocol design is done. They also plan a staking and protocol launch for the second quarter of 2022. They hope to the decentralized autonomous organization (DAO) and finalize voting in the third quarter of 2022. Adadao could release more stablecoins and begin “real world commercialization” in the fourth quarter of 2022.

What Value does the Adadao have?

Mr. Market has a strong interest in the Adadao. CoinMarketCap named Adadao the third most-trending cryptocurrency on 27 March 2022.

In contrast, Coinmarketcap lists Adadao (ADAO) as the 3,034th largest cryptocurrency, with a 5.695₵ coin price on 28 March 2022. CoinMarketCap estimates Adadao had a $1.034 million Market Cap, a $28.095 million Fully Diluted Market Cap and a 24-Hour Market Volume of $2.146 million on 28 March 2022. They base those numbers on a Self-Reported Circulating Supply of 18 million ADAO, a Maximum Supply of 500 million ADAO, and a Total Supply 500 million ADAO.

In contrast, Coinbase gave Adadao a Coin Price of 5.7₵ and a 24-Hour Market Volume of $2.1 million on 28 March 2022. I consider Adadao unstable because Coinbase reports it had an all-time high Coin Price of 12₵.

I think Adadao (ADAO) could obtain enormous value and make money if they can create an on-blockchain stablecoin. Hence, all of Adadao’s potential value comes from the AUSD stablecoin. If the AUSD stablecoin does not work, Adadao will never make money. However, if AUSD works, Adadao could make money.

Therefore, speculators and investors need to wait and see if the AUSD stablecoin works before buying Adadao (ADAO). Until they release AUSD, Adadao’s value is purely theoretical.

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