1. Introduction

1.1 Background and Purpose

In recent years, with the rapid development of the cryptocurrency market, ADA, as the native cryptocurrency of the Cardano blockchain platform, has received widespread attention. ADA’s encrypted reserves play an important role in the entire cryptocurrency field, and its scale, composition, and management methods have a profound impact on the stability, market performance, and the entire cryptocurrency ecosystem of ADA cryptocurrency.

2. ADA Cryptocurrency Overview

2.1 ADA Basic Introduction

ADA is the native token of the Cardano blockchain platform, and its creation is closely related to the development of blockchain technology and the demand to overcome the limitations of existing crypto assets. The Cardano project was initiated in 2015 and developed by Input Output Hong Kong (IOHK), led by Charles Hoskinson. Charles Hoskinson, a co-founder of Ethereum, left the project with the determination to build a more advanced, sustainable, and highly scalable blockchain platform, which is the origin of the Cardano project.

The name ADA is derived from Ada Lovelace, a British noblewoman from the 19th century who is recognized as the world’s first programmer. It is named after her to pay tribute to her pioneering contributions to computer science, symbolizing ADA’s spirit of innovation and breakthrough in the field of Crypto Assets.

At the inception of the project, the Cardano team was committed to building blockchain technology architecture using rigorous scientific research and academic methods. Through peer-reviewed processes, they conducted in-depth research and development on various technical aspects of blockchain, striving to create a blockchain platform that excels in security, scalability, and sustainability. This unique development concept sets Cardano apart from many other blockchain projects and also lays a solid foundation for the development of ADA crypto assets.

2.2 Technical Features

The underlying blockchain Cardano of ADA adopts a unique layered architecture, dividing the blockchain system into the Settlement Layer and the Computation Layer. The Settlement Layer is mainly responsible for handling the transactions and ledger records of ADA crypto assets, ensuring the security and efficient execution of transactions; the Computation Layer focuses on running smart contracts and developing decentralized applications (DApps), providing a flexible and powerful development environment for developers. This layered architecture enables Cardano to achieve better performance optimization and feature expansion, effectively improving the scalability and flexibility of the entire blockchain system.

Cardano uses the consensus mechanism Ouroboros, which is a proof-of-stake (PoS) consensus algorithm and the first academically validated PoS consensus mechanism. Compared to traditional proof-of-work (PoW) consensus mechanisms, Ouroboros has significant advantages. It does not require the massive energy consumption for computational competition to determine block producers like PoW does. Instead, it selects block producers based on the stake held by nodes (i.e., the amount of ADA held). Nodes with more stake have a greater probability of being selected to produce new blocks. This approach not only greatly reduces energy consumption, improves the efficiency of the blockchain, but also enhances the security and decentralization of the system.

The Ouroboros consensus mechanism ensures that only one legitimate block producer is selected in each time slot through carefully designed random number generation and node election algorithms, and this process is provably secure. At the same time, it also has the ability to dynamically adjust the block generation time, automatically optimizing the block generation speed according to the actual network load, ensuring that transactions can be processed in a timely manner, further enhancing user experience.

In addition to the layered architecture and Ouroboros consensus mechanism, Cardano has also made technological innovations in multiple aspects. For example, in terms of smart contracts, Cardano has introduced the Plutus language, which is a functional programming language designed specifically for blockchain smart contract development. Plutus has strong expressive power and a strict type system, which can provide higher security and verifiability, effectively avoiding common vulnerabilities and security risks in smart contracts. Through Plutus, developers can more easily create complex smart contract logic and implement the development of various decentralized applications.

In addition, Cardano also focuses on the sustainable development and interoperability of blockchain. In terms of sustainability, by adopting an energy-efficient PoS consensus mechanism and optimized network architecture, it reduces the impact on the environment; in terms of interoperability, Cardano actively explores interoperability with other blockchain systems, aiming to build a more open and inclusive blockchain ecosystem, enabling free flow of value and data between different blockchains.

2.3 Market Performance

In the cryptocurrency market, ADA has long held an important position. According to Gate.io’s data, as of 2025-3-5, ADA’s market value is approximately $34.1 billion, ranking 8th among many cryptocurrencies. This achievement reflects the widespread recognition of ADA in the market and the high level of attention investors pay to its value.

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3. ADA included in the strategic reserve of crypto assets event

3.1 Event Review

On the evening of March 2, 2025, the then U.S. President Trump announced on the social media platform Truth Social that he instructed the President’s Working Group to advance the Crypto Assets Strategic Reserve Plan, specifically including ADA (Cardano), XRP (Ripple), and SOL (Solana) in the strategic reserve of Crypto Assets. Subsequently, Trump reiterated that Bitcoin (BTC) and Ethereum (ETH) will obviously, like other valuable Crypto Assets, become the core of the reserve.

The announcement of this news is like a heavy bomb dropped into the crypto asset market, instantly causing a huge stir. Prior to this, the crypto asset market had gone through a period of adjustment and volatility, with investors being relatively cautious. Trump’s statement undoubtedly injected a shot in the arm for the market, triggering widespread attention and heated discussions among market participants.

As early as January 2025, after Trump took office as President of the United States, he issued an executive order to establish the Presidential Digital Assets Market Working Group, aiming to strengthen the US’s leadership in the digital finance field, including assessing the feasibility of establishing a strategic national digital asset reserve and formulating a federal regulatory framework for managing digital assets, including stablecoins. The advancement of the strategic reserve plan for cryptocurrencies is a further implementation and specific action of this executive order.

During the 2024 US presidential election, Trump received strong support from the crypto assets industry, and his attitude towards encryption has undergone a significant change, from previous doubts and criticisms to enthusiastic embrace. This move to include a variety of crypto assets in the strategic reserve is seen as an important step of Trump’s support for the crypto assets industry and a fulfillment of his election promises.

3.2 Market Reaction

After Trump announced the advancement of the cryptocurrency strategic reserve plan, the cryptocurrency market ushered in a round of intense price fluctuations, with significant increases in the prices of major cryptocurrencies. The price of Bitcoin once surpassed the $95,000 mark, rising by more than 10% compared to the previous day, demonstrating strong market influence and capital attraction. As the largest cryptocurrency by market capitalization, the price fluctuations of Bitcoin often lead the entire cryptocurrency market. The significant increase in the price of Bitcoin this time has boosted the overall market sentiment, attracting more funds into the cryptocurrency market.

ADA’s performance was particularly prominent after the news was announced, with the price swiftly rebounding from $0.63 to over $1, a surge of over 60% in 24 hours. This increase is very significant in the cryptocurrency market, reflecting the market’s high recognition and positive expectations of ADA being included in strategic reserves. Investors generally believe that ADA’s inclusion in strategic reserves will enhance its position and recognition in the market, increase its market demand and liquidity, thereby driving up the price.

Other competitive coins such as XRP and SOL have also risen one after another. XRP once rose above $3, with a 24-hour increase of over 20%; SOL’s price once approached $180, with a 24-hour increase of over 18%. The rise in the prices of these competitive coins is driven by the overall market sentiment on one hand and also reflects the market’s positive response to the strategic reserve plans for crypto assets, believing that this will bring new development opportunities to the entire crypto asset industry.

However, this upward trend in the market did not last long. Due to the many doubts in the market about the details and implementation of the policy, coupled with macroeconomic concerns brought by Trump’s tariff policy, investor sentiment quickly changed. After a brief celebration, the prices of crypto assets began to fall sharply. Bitcoin prices fell by over 9% in the next 24 hours, giving back most of the gains; Ethereum fell by over 15%, returning to the level before Trump’s post; Ripple and Solana almost completely retraced their gains, and ADA also gave back most of the gains. Such significant price fluctuations fully reflect the high uncertainty and sensitivity of the crypto asset market, where policy news and market sentiment changes can have a huge impact on prices.

3.3 Perspectives of All Parties

Among Bitcoin supporters, some are concerned about the inclusion of ADA and other cryptocurrencies in strategic reserves. They believe that Bitcoin, as a pioneer and leader in the field of encryption, has a unique position and value, making it the most suitable cryptocurrency for strategic reserves. Including other cryptocurrencies in strategic reserves may dilute market attention and capital investment in Bitcoin, weakening its dominant position in the cryptocurrency market. They are concerned that this move may lead to capital diversion in the market, affecting the stable rise in Bitcoin prices and potentially causing confusion in cryptocurrency investments, making it difficult for investors to judge the truly valuable cryptocurrencies.

Industry experts have different views on this event. Some experts believe that including ADA and other cryptocurrencies in strategic reserves is a recognition and support from the U.S. government for the cryptocurrency market, which will help promote the development of the cryptocurrency industry, stimulate innovation, and investment. They pointed out that this move will attract more institutional investors and traditional financial institutions to enter the cryptocurrency market, bringing more funds and resources to the market, accelerating the maturity and standardization of the cryptocurrency market. At the same time, different cryptocurrencies have different characteristics and advantages. The diversification of reserves can reduce the risk of a single asset and increase the stability and risk resistance of the reserves.

However, some experts have questioned this move. They believe that the cryptocurrency market still carries many risks and uncertainties, such as sharp price fluctuations, inadequate regulation, and technical security vulnerabilities. Including cryptocurrencies in strategic reserves may pose potential risks to national financial security. In addition, some experts cast doubt on the motives behind including crypto assets like ADA in reserves, suggesting possible links to political donations and exchanges of interests. It has been reported that the development teams of SOL and XRP have sponsored Trump’s related funds and lobbied heavily during his campaign, while ADA’s foundation has reportedly reached agreements with Republican lawmakers privately, promising to promote legislation favorable to the token. Such politicized actions could undermine the seriousness and impartiality of strategic reserves, raising concerns in the market about the rationality and transparency of policies.

4. ADA’s Competitiveness Analysis as a Reserve Asset

4.1 Project Development

The Cardano blockchain has made significant progress in technological upgrades. In 2024, Cardano completed the Chang hard fork upgrade, which brought about a major transformation. The Chang hard fork introduced on-chain governance, allowing ADA holders to directly participate in the network’s decision-making process, voting on important matters such as the network’s development direction and parameter adjustments. This measure greatly enhances the decentralization of the network, increases the community’s control over the network, and aligns the Cardano blockchain more closely with its design principles and development goals.

In terms of smart contract development, Cardano has also made significant progress. Plutus, as the smart contract platform of the Cardano blockchain, continues to improve and expand its functionality. As of 2024, the number of smart contracts deployed on Plutus has exceeded 100,000, an increase of over 150% from the previous year. These smart contracts cover various areas such as finance, supply chain, and identity verification, providing developers with a rich selection of application development and laying a solid foundation for the prosperity of the Cardano ecosystem. For example, in the financial sector, smart contracts based on Plutus have realized functions such as decentralized lending and trading, providing users with more convenient and efficient financial services; in the supply chain sector, smart contracts can achieve functions such as tracking and traceability of goods, improving the transparency and security of the supply chain.

The progress of the stablecoin Djed has attracted much attention. Djed is a decentralized stablecoin pegged to the US dollar, aiming to provide a stable value store and medium of exchange for the Cardano ecosystem. Djed is backed by crypto assets rather than fiat currency, developed in collaboration between a company named Coti and the Cardano chief developer InputOutput. After more than two years of development, Djed successfully launched on the mainnet in January 2025. Djed adopts an over-collateralization mechanism, requiring at least $4 worth of ADA reserve for each Djed issued to ensure a 1:1 price peg to the US dollar. This mechanism effectively reduces the risk of stablecoin decoupling, enhancing the stability and reliability of Djed. The launch of Djed fills the gap in the Cardano ecosystem in the stablecoin field, providing users with more diversified financial tools and contributing to the development of the Cardano ecosystem in the decentralized finance (DeFi) sector.

4.2 Community Support

Cardano has a large and active community. According to statistics, by the end of 2024, the number of Cardano community members has exceeded 5 million, covering more than 180 countries and regions worldwide. Community members include developers, investors, enthusiasts, and other different groups, who actively participate in the development and promotion of the Cardano project through various channels. On social media platforms, Cardano-related discussion groups and community pages have a large number of followers and active discussion atmosphere. For example, on Reddit, the official Cardano community board r/Cardano has over 2 million subscribers, with a large number of posts discussing Cardano’s technological progress, project updates, investment analysis, and high user engagement on a daily basis.

The developer community is an important part of the Cardano community, providing strong support for the project’s technological innovation and ecosystem development. As of 2024, the active developer community of Cardano has exceeded 10,000 developers from around the world, with rich technical experience and professional knowledge. These developers actively participate in the development and maintenance of the Cardano blockchain, continuously contributing new code and features to the project. At the same time, the developer community also organizes various technical exchange activities and hackathon competitions to promote communication and cooperation among developers, stimulating innovative vitality. For example, the annual Cardano Global Hackathon attracts excellent developer teams from around the world to participate, showcasing many innovative applications and solutions based on the Cardano blockchain, injecting new momentum into the development of the Cardano ecosystem.

The community’s support for ADA is reflected in several aspects. During the project’s development, community members actively participate in voting and decision-making, providing suggestions and opinions for the direction of the project. For example, in Cardano’s on-chain governance mechanism, ADA holders can express their support or opposition to project proposals through voting, thereby influencing the project’s decision-making and development. This community-participatory governance model closely connects ADA holders with the project’s interests, enhancing their sense of identification and loyalty to ADA. In terms of marketing, community members actively promote the Cardano project and ADA cryptocurrency through various channels such as social media and offline activities, attracting more potential investors and users’ attention. Many community members also voluntarily become volunteers for the Cardano project, contributing their time and effort to promote and popularize the project, further enhancing ADA’s visibility and influence in the market.

5. The Challenges and Risks Faced by ADA Cryptocurrency Reserves

5.1 Market Risk

The cryptocurrency market is known for its high volatility, and ADA is no exception. Market sentiment, macroeconomic factors, and major industry events can all have a significant impact on the price of ADA. When the global economic situation is unstable and investors’ preference for risk assets decreases, the cryptocurrency market often suffers heavy losses, and the price of ADA also drops significantly. For example, during periods of heightened global economic recession expectations, investors tend to sell off risk assets and turn to traditional safe-haven assets, causing a massive outflow of funds from the cryptocurrency market, and ADA’s price may experience a decline of 30% - 50% in a short period of time.

Major events in the market, such as a country’s policy adjustments towards Crypto Assets, security vulnerabilities in large cryptocurrency exchanges, can also trigger investors’ panic selling of ADA, leading to sharp price fluctuations. If a country suddenly announces a comprehensive ban on cryptocurrency trading, it will raise concerns about the future prospects of ADA in the market, and investors may quickly sell their ADA holdings, causing its price to drop by more than 20% in a matter of hours. This high volatility makes it difficult to stabilize the value of ADA crypto reserves, increasing the difficulty and risk of reserve management. For institutions or investors holding a large amount of ADA reserves, significant fluctuations in asset value may have a major impact on their financial situation, potentially leading to asset depreciation and financial distress.

5.2 Regulatory Risks

There are significant differences in regulatory policies on crypto assets among different countries and regions worldwide, which has brought great uncertainty to the ADA encryption reserves. Some countries have a positive and open attitude towards crypto assets, establishing clear regulatory frameworks and providing a relatively stable policy environment for the development of crypto assets. However, many countries also hold a cautious or even strict attitude towards crypto assets, and any changes in regulatory policies may have a significant impact on ADA.

In some countries, Crypto Assets are considered illegal financial instruments, and trading, holding, and issuing Crypto Assets all face severe legal sanctions. In these countries, the circulation and trading of ADA are strictly restricted, and its market share and value may significantly decrease. In other countries, although cryptocurrency trading is allowed, regulatory policies are constantly adjusting and tightening, such as increasing trading thresholds, strengthening tax supervision, and limiting the use of cryptocurrencies. These policy changes may increase the trading costs and compliance difficulties of ADA, reduce market demand for ADA, leading to a decrease in its price and reserve value.

The uncertainty of regulatory policies is also reflected in the difficulty of policy coordination among different countries and regions. Due to the global nature of crypto assets, their trading and circulation are not restricted by borders, while regulatory policies vary greatly among different countries and regions, posing many challenges for the operation and development of ADA globally. When a country strengthens its regulation of crypto assets, ADA may move its operations to regions with relatively loose regulation, but this may also trigger chain reactions in other countries, leading to further tightening of the global regulatory environment. This regulatory policy uncertainty makes it difficult for holders of ADA crypto reserves to predict the future direction of policies, increasing investment risks and the complexity of reserve management.

Conclusion

Looking ahead, ADA is expected to usher in new development opportunities in the strategic reserves of Crypto Assets. With the accelerated global digitization process, the position of Crypto Assets in the financial sector will become increasingly important. As an innovative and promising cryptocurrency, ADA is expected to play a greater role in strategic reserves. ADA’s cryptographic reserves hold an important position and potential in the cryptocurrency market, and its future development is full of opportunities and challenges. Market participants need to closely monitor ADA’s technological development, market dynamics, and changes in regulatory policies to address future uncertainties and make wise investment decisions.