Despite Cardano's ‘smart contract' upgrade, ADA falls during the cryptocurrency selloff

 Despite the blockchain's long-awaited Alonzo upgrade, which enables "smart contract" functionality, Cardano's ADA token, the world's third-largest cryptocurrency by market capitalization has dropped 8% in the last 24 hours

 According to Coinmarkercap, the token is recently trading at $2.42.The drop in ADA coincides with a broader selloff in cryptocurrencies. Bitcoin was trading at $44,636, a 2.9 percent decrease over the previous 24 hours. Ether has lost 5.3 percent in the last 24 hours, and is currently trading at $3,238.

The drop in ADA may be due to a “buy the rumor, sell the news” dynamic, but analysts believe the upgrade will boost ADA's price in the long run.

Analysts believe that as decentralized finance, or DeFi, and nonfungible tokens, or NFT, grow rapidly, Cardano's ability to support smart contracts will allow it to compete more effectively with other blockchains such as Ethereum.

·         “We expect to see the first simple smart contract scripts deployed on Cardano within hours of the HFC (hard fork combinator) the event,” Tim Harrison, marketing and communications director at Cardano creator Input Output, wrote in a blog post on Saturday.

·         The Alonzo upgrade will “significantly increase Cardano’s functionality” and “lead to a material increase in its value,” Nick Spanos, co-founder of smart contracts marketplace ZAP Protocol wrote to MarketWatch through email.

·         Founded by Ethereum’s co-founder Charles Hoskinson and launched in 2017, Cardano is a “proof-of-stake,” or POS blockchain, which means a person can mine new tokens or validate block transactions based on the number of coins they hold. Different from bitcoin’s “proof-of-work” system, which requires a lot of computational efforts to add a new block, the POS system claims to be more environment-friendly. Ethereum is in the process of transitioning from “proof-of-work ” to “proof-of-stake.”