Kadena crypto has shown massive growth in the past 12 months which makes it more fascinating for investors. But it could be a crypto bubble and you may lose a lot by betting on it. So today we are going to analyse it both technically and fundamentally to figure out is it worth investing in it or not.
As always we will start with technical analysis because it helps in understanding market emotions. But you can also start with fundamental analysis if you want answers to all your questions with a detailed explanation.
Technical analysis of Kadena
First of all, have a look at the market situation of Kadena:
|Market Capitalization||$1.13 Billion|
|Average volume||$55 Million|
|Returns in last 1 year||+1480%|
The market situation of Kadena changes with time. So you can visit coinmarketcap for its current technicalities. Don’t get excited after seeing a return of 1480% in the last 1 year because Kadena is a very new cryptocurrency and in recent times, it also loses more than half of its value over a period of 2-3 months.
Almost every popular cryptocurrency experiences a major price hike in its initial years and so does Kadena. So it is always better to compare it with returns given by other cryptos in their initial years.
Kadena vs Vechain
As the chart shows, returns given by Vechain and Kadena from August 2018 till February 2022. For your information, Vechain is very similar to Kadena but its motive is different. So Kadena made an outstanding performance as compared to a cryptocurrency similar to it.
If you are finding a good investment then you should definitely consider Vechain because it has very strong fundamentals.
Kadena vs Neo
Analysis of Kadena with Neo becomes more interesting because they are the competitors of each other. Both Neo and Kadena are like better versions of Ethereum. I don’t know whether you noticed or not but their price graphs are also very similar. Let’s make it easier for you:
This is the price chart of Neo from May 2016 to September 2017, and
This is the price chart of Kadena from its launch to 24 Feb 2022.
I was shocked to see how symmetric these two graphs are. These two graphs are so similar that someone can get confused by seeing both the graphs at one time. This could be very helpful to calculate the future performance of Kadena.
Kadena Price Prediction
Since Kadena and Neo graphs are very similar, I will try to predict Kadena’s future performance by analysing Neo’s performance over time.
Neo sees its first peak at about $50, afterwards, it loses ⅔ of its value and experienced a dip at $17. Afterwards, its price raised rapidly over 6-7 months and it experienced its all-time high at $185 which is 3.7 times more as compared to its first peak.
If we compare it, then Kadena saw its first peak at about $25 and now its price falls by 80% to $5. So if we take into account, Kadena will see its next peak of about $112.5 in the upcoming 9-10 months. I am writing this article in Feb 2022 and according to my technical analysis, Kadena’s price will rise above $100 at least once before the completion of the year 2022.
I also did a technical and fundamental analysis of Neo, you can read it if you want to know more about Neo.
We can infer that technically Kadena is a very good investment. But technical analysis tells us about the past performance of an investment and helps in predicting its future price, whereas fundamental analysis tells us about the crypto and its purpose from which we can calculate the accuracy of our prediction. So you must understand the fundamentals of Kadena before making an investment decision.
Fundamental analysis of Kadena
What is Kadena?
“Kadena is a smart contract crypto token based on a layer-1 blockchain that use proof of work with sharding to reduce transaction time and fees.” Don’t worry that is just a technical definition of Kadena and I will explain to you all the complex bold terms for a better understanding.
What is a smart contract?
It is a program or a code on a blockchain technology that automatically executes when certain conditions are met. Life if the condition is “ Record temperature of New York city after every 5 minutes” then smart contract automatically record the temperature of New York after every 5 minutes.
I will not answer some of your queries like “ How did that smart contract get to know about the temperature of New York City?” and stuff like that here because I already explained the concept of a smart contract in detail by giving many examples while discussing Vechain and Neo, and I don’t want to repeat that same thing every time.
What is layer-1 blockchain?
Currently, all the cryptocurrencies work on blockchain technology and they are divided into two-layer, Layer-1 and. Layer-1 includes all the cryptos that have their blockchain networks like Ethereum and Bitcoin. On the other hand, layer-2 includes all the cryptos that do not have their blockchain network and are made on the blockchain network of any other crypto like Pancakeswap is made on Binance smart blockchain network, Uniswap is made on Ethereum blockchain network.
For better understanding, you can compare it with a house and a flat. If you buy a house, you also get the ownership of land which means you have complete ownership of the house and no one can live on the 1st floor of your house without permission. On the other hand, if you buy a flat, you won’t get the ownership of land and anyone can live one flat upwards or downwards from your flat without your permission. So in blockchain language, the house is layer-1 crypto and flat is layer-2 crypto.
In the real world, there are a lot of pros and cons of layer-1 and layer-2 cryptos which we will not discuss here because it will just make it very complex. But I hope you understood the basic concept of layer-1 and layer-2 blockchains. Comment, if you want me to write a separate blogpost on layer-1 and layer-2 blockchain.
What is Proof of Work and Proof of Stake?
You may remember your old school days when sometimes your maths teacher asks a question from the whole class and rewards the first one to solve it. In most cases, the most intelligent boy or girl in the class gets the reward. Proof of work also works like this, the first one to add a new block or verify a transaction in blockchain will get a reward.
Anyone can become a verifier in Proof of work and the first one to solve the blockchain will get a reward. Proof of work has a major con that it consumes a lot of energy since verifiers will get rewarded only when they solve it first otherwise they will get nothing and electricity used by their computers will get wasted. Additionally, it also increases transaction time because all the people are trying to solve a single block. Ethereum also uses a Proof of work system which is why it can only make 15 transactions per second with very high fees (since more energy is consumed which makes fees higher) which makes it unsuitable for mass adoption.
To solve this problem, some crypto uses Proof of stake instead of Proof of work. Continuing with the above example, sometimes your maths teacher asks a question from a particular student and rewards him if he solves it correctly and punishes him if he solves it wrong. Proof of stake works on this principle, where a person who has a stake in crypto can be selected to solve a problem.
Anyone who has a minimum stake in cryptos can be selected for solving a blockchain. Staking simply means locking the cryptos in the blockchain. So in this way, only one person is solving the blockchain which saves energy but it makes the blockchain centralised because the person who has more stake is more likely to be selected most of the time.
I hope you understood the concept of Proof of Work and Proof of stake. Kadena was started to provide all the features offered by Ethereum(i.e smart contract) with very transaction time and fees by keeping its blockchain decentralized. Kadena achieved that by using sharding with Proof of work.
What is Sharding?
Sharding means dividing the block into smaller parts (shards), verifying them individually. Let’s understand this with our maths example:
This time your maths teacher wrote a question on the board which has 10 parts and asks the whole class to solve them in any manner like a student can start solving from part 2 while another student may start with part 3 or any other part of his choice. First-person to solve any part will get a reward like if A solves part no, 8 before any other student, he will get a reward. Post that if B or any other student( including A) solves part 5 before the whole class then he will also get the same reward. In this way, all parts will be solved and the final answer to the question will be figured out by combining all 10 parts.
In the above example, no student will try to solve part 8 once it is solved by A which saves the time and energy of the whole class. Sharding works in the same way and when all shards combine at the end to form a single block, the structure looks like a web of chains which is also known as Chainweb or you can say Chainweb is an architecture which is formed by combining many proofs of work blockchains or shards.
Currently, by implementing sharding and Chainweb Kadena could do 4,85,000 transactions in a second with almost negligible transaction fees by remaining completely decentralized.
I want you to again read the technical definition of Kadena which I discussed earlier. I am sure, now it is like a piece of cake for you because you learnt about many complex terms like Proof of work, smart contracts, layer-1 blockchain and sharding. Believe me, this knowledge will help you to understand the fundamentals of other cryptocurrencies too.
Should I invest in Kadena?
Yes, you should invest in Kadena because it is a very strong cryptocurrency both technically and fundamentally. I don’t know whether it cross $100 in future or not because getting 20x is very difficult but I am sure that the market price should be more than $20, so if the current price of Kadena is below $20, you should invest in it.
Note: Kadena’s price is around $6 when I am writing this article.
Frequently Asked Questions
Is Kadena Private blockchain?
No, Kadena is a public blockchain and anyone can buy it.
Is Kadena worth mining?
Yes, Kadena mining is still very profitable because its price can cross $100 in the upcoming months.
Is Kadena a good buy?
Yes, Kadena is a good buy.
Is Kadena limited supply?
Yes, Kadena has a maximum supply of 1,000,000,000 tokens
Is Kadena based on Proof of Stake?
No Kadena blockchain is based on Proof of Work.