Is Cardano Due for a Major Overhaul? Expert Weighs In

Amidst the thriving landscape of blockchain technology, Cardano stands out as a prominent choice for developers. Yet, its limitations have raised concerns, prompting a crypto expert to suggest that a comprehensive structural overhaul could enhance its efficiency.

The decentralized finance (DeFi) ecosystem of Cardano is under fire, facing significant critique from the crypto expert Fallen Icarus. He has pinpointed critical issues at the heart of the blockchain's performance. His remarks, which primarily addressed the platform's internal inconsistencies, were circulated by Andrew Throuvalas, co-founder of Charmsdevs, amplifying the call for change.

Icarus argues that the DeFi framework of Cardano necessitates a total reconstruction. Known for his innovative peer-to-peer (P2P) DeFi model, Icarus believes that Cardano's current strategy of mimicking Ethereum's “all-in-one” decentralized application (dApp) model—designed to encompass a wide array of functionalities, including high throughput, liquidity, quick settlement, optimal price enforcement, and resistance to censorship—has led to missteps.

This approach has contributed to what Throuvalas describes as fundamental issues within the blockchain, including high operational costs and inadequate scalability. He emphasizes that the existing model is ineffective in practice. The proposed solution revolves around a layered scaling approach, which could cater to various market niches more effectively.

This model allows users to make trade-offs without compromising on essential features. For instance, slower but censorship-resistant final settlements could be managed by a Cardano Layer 1 smart contract, while high-throughput applications could be handled by a faster, albeit less censorship-resistant, Layer 2 solution such as DeltaDeFi, the pioneering Hydra DEX.

Throuvalas points out that this innovative model is already functioning effectively within the realm of Traditional Finance (TradFi). In a typical trade execution, the Depository Trust & Clearing Corporation (DTCC) acts as a Layer 1 for TradFi order books, merely updating account balances. Meanwhile, Layer 2 solutions enhance market liquidity and facilitate speedy trading through brokers like Fidelity.

Interestingly, Throuvalas notes that this is the model that Bitcoin enthusiasts have been advocating. No one is attempting to scale Layer 1 or modify its core structure; rather, Layer 2 solutions are effectively managing high-throughput applications, such as the Lightning Network, which have been adopted by leading centralized exchanges (CEXs) despite their challenges. Currently, these solutions are actively utilized for token transactions and Bitcoin transfers.

In this framework, it is unnecessary for Layer 1 to address every issue simultaneously. Both Bitcoin and Cardano were designed as secure and decentralized foundational networks, regarded as benchmarks for Proof of Work and Proof of Stake security. “We must allow space for Layer 2 innovations to flourish. It’s a long journey ahead, but it’s the only logical path,” Throuvalas remarked.

With ongoing key updates and developments, Cardano is striving to solidify its position as a frontrunner in the blockchain sector. Crypto analyst LaPetite has provided insights into the ongoing evolution of Cardano, highlighting its efforts to remain relevant and competitive.

As the industry continues to evolve, the call for a reset in Cardano's DeFi structure could serve as a pivotal moment for the platform, enabling it to tackle existing challenges and enhance its overall functionality.