The argument fronted by a renowned cryptocurrency analyst is that Cardano, the smart contracts platform that will compete with Ethereum promising a high throughput and scalability, is overvalued. At press time, its native currency, ADA, has a market cap of $934 million from a circulating supply of 25.927 billion. The Proof-of-Stake consensus-based platform is founded on scientific peer-review and thorough quality control checks of its code with Charles Hoskinson, one of the six original co-founders of Ethereum, as its technical leader.

The analyst’s argument is not really the first. Borne out of the ICO boom of late 2017, most blockchain projects struggle to attract usage even after raising millions. Even without a minimum viable product and shifting roadmaps, investors, nonetheless, continue to pour their hard-earned capital to these projects in their millions. For this, the analyst is calling for caution and due diligence.

Some of these altcoin valuations are still beyond laughable.

ADA is a $1 billion market cap? Based on what?

Shameful.

When are you guys going to start investing in companies with working products, that generate cashflow and demonstrate real adoption?

— Satoshi Flipper (@SatoshiFlipper) December 1, 2019

For good reasons. There are perhaps of thousands of projects that find themselves struggling financially and despite their grand promises, are yet to come through, launching services and products. The situation was further exacerbated by the punishing cryptocurrency winter of 2018 when prices of tokens and coins plunged, with some losing as much as 99% of their previous market prices.

Many altcoins benefited from the last bull run in $BTC

Cryptomaniancs expect alts to do so again – they may be very disappointed

2000 .com bubble is analog

Following 2001-02 tech collapse, dotcoms with real value exploded

The "alt" .coms went bankrupt

— Peter Brandt (@PeterLBrandt) June 27, 2019

With a price depression biting months after 2017 peaks, projects are literally struggling, and most have folded. Meanwhile, regulators are on their back, urging them to either return funds to investors or pay heavy fines for selling unregistered securities. Most tokens dispensed via smart contracting platforms such as Ethereum or Waves, are considered securities by the US Securities and Exchange Commission (SEC).

Although supporters of Cardano came out strongly against this view, there have been times when the project disappointed investors. The transition from Byron to Shelly phases was marked by delays. In October 2018, IOHK, the development wing of Cardano, pushed back Shelly Testnet deployment.

Last week, Cardano completed the ADA snapshots of coin balances held at their official wallets, Daedalus and Yoroi, in readiness for an incentivized Testnet. Balances will operate a staking pool from where coin owners can earn rewards.