Cardano’s developer IOG is building first decentralization metric, ADA in the red

  • Cardano’s builder partners with the University of Edinburgh to develop crypto’s first metric measuring crypto projects’ decentralization.
  • The Edinburgh Decentralization Index aims to rank projects by decentralization, improving blockchain industry transparency, and tracking market dynamics.
  • ADA price sustains downtrend in a long-term falling channel as whales offload their bags.

Cardano’s (ADA) developer, Input Output Global, Inc. (IOG), is partnering with the University of Edinburgh in the United Kingdom to complete a ‘decentralization index’, which will create a benchmark for measuring the extent to which crypto projects can truly be said to be ‘decentralized’. The development of the index comes at a pivotal moment for the sector as it tries to regain credibility following the FTX disaster, which brought home the risks of centralized exchanges where too much power resides in a few inexperienced hands.

The Edinburgh Decentralization Index to guard against high levels of centralization

FTX’s fall is triggering discussions around consumer protection and influencing crypto projects like Cardano to build systems that support decentralization.

According to a blog post published by IOG, the Edinburgh Decentralization Index (EDI) is being designed to promote transparency by employing “a research-based methodology to produce a framework that consistently determines the ‘decentralization’ level of public blockchain projects.” This aligns with the core principles of blockchain technology to safeguard people against highly centralized control.

The EDI will be one tool that protects and promotes the technology’s unique features, such as immutability, transparency, censorship, integrity and resilience – all of which heavily depend on decentralization.

Professor Jane Hillston, the University of Edinburgh’s head of the School of Informatics, emphasizes the need to engage research to stimulate growth and solve problems. She reckoned that while this is an exciting opportunity, it presents the department with a “challenging technical problem that has the potential to significantly benefit the blockchain market.”

Cardano’s founder and CEO of IOG, Charles Hoskinson, stated that decentralization is the core of blockchain technology and carries revolutionary potential. With decentralization, stakeholders will be giving power back to the everyday user. However, he admitted that there are not enough or cut-out acceptable industry standards showing the extent to which crypto projects are decentralized.

“By working together as an industry on these standards, we can ensure we can protect consumers without stifling some of the exciting innovation that makes our industry stand out. This is why tools like the EDI will be so important – it’s an example of the exact kind of work we should be doing to help progress our industry in the right direction, while preserving the founding ethos of blockchain,” Hoskinson’s quote expounded.

A possible release date of the EDI was not included in the announcement. However, IOG cemented its commitment by donating $4.5 million to Edinburgh University. The institution and IOG launched the Zero Knowledge Lab, which will spearhead research around the protection of personal information.

Cardano price struggles to find support as whales sell ADA

Cardano price continues to trade within a 16-month falling channel. This pattern shows that ADA is still in a long-term downtrend, with a break below its critical support at $0.30 highly likely.

Declines could gain momentum if ADA slides below the immediate support at $0.30. Although the channel’s throughline may function as support, it has been broken severally before. Therefore, a more robust support is the lower boundary line at $0.22 and $0.16, respectively.

ADA/USD three-day chart

ADA/USD three-day chart

ADA has never broken above the upper channel’s boundary, which means a break above this level could be very bullish. Traders looking for long positions must wait until ADA steps and holds above the channel. A subsequent move beyond the 50-day Exponential Moving Average (EMA) could keep the uptrend as ADA heads to $1.00.

Recovery is unlikely to occur in the coming few days as long as whales continue to sell ADA. As shown below, addresses holding between 1 million and 10 million tokens now hold 16.01% of ADA’s supply, down from 16.14% as recorded on December 7.

Cardano Supply Distribution

Cardano Supply Distribution

Cardano price has been falling alongside this metric, thus supporting the pessimistic outlook. On the other hand, the same investors selling ADA could start buying back the tokens as the price falls, a move that may create new bullish momentum. For this reason, traders should stay alert and follow the behavior of whales to ensure they are making informed decisions.

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