Dogecoin, Cardano… the biggest marriage between two crypto-currencies begins. Charles Hoskinson, the co-founder of Cardano, asked for the community’s opinion on a major project. It would stem from a historical operation. Last weekend, he offered to invite Dogecoin to leave his blockchain for his. From a proof-of-work infrastructure, the cryptocurrency would transition to proof-of-stake. It would not be a question of merging Cardano and Dogecoin but of creating a “sidechain”, to make both evolve on the same blockchain.
Proof-of-stake, compared to proof-of-work, allows for greater performance and a way to see further and more broadly. Currently, Dogecoin is based on the same principle as Bitcoin, and follows its philosophy of a cryptocurrency as a store of value. The move to Cardano infrastructure would transcend Dogecoin into an exchange token, potentially opening up to NFTs and other projects in decentralized finance. A path that drives the co-founder of Cardano as well as the 80% of survey respondents, who approved of the idea on Twitter.
Should we pitch to Twitter a post-quantum ultrafast, and identity enabled doge sidechain of Cardano custom built for social networks? #QuantumDoge
—Charles Hoskinson (@IOHK_Charles) October 29, 2022
Dogecoin on the Cardano Blockchain
Why should Dogecoin change its model and acquire a more efficient blockchain for transactions? To understand this, we have to talk about the takeover of Twitter by Elon Musk. Indeed, thanks to him, the social network opens up to a new strategic plan, far from the simple vision of micro-blogging and social network. The rumors surrounding the creation of a great app likely to integrate crypto-graphic transaction functionalities are intrinsic to the redemption. In anticipation, some wonder if Dogecoin would not be the lucky one to become the official currency. A favorite of Elon Musk, Dogecoin has grown 100% in the past seven days.
Usually, the creation of a “sidechain” does not serve to invite other cryptocurrencies on a blockchain. But the general idea is reminiscent of the project with Dogecoin. Creating a sidechain increases the scalability of a blockchain, allowing it to streamline cumbersome tasks. By definition, Dogecoin would remain Dogecoin but would transition from being a cryptocurrency to a token. Tokens, such as the SAND of The Sandbox platform for example, are qualified as tokens as long as they evolve on a blockchain that does not belong to them (in this case Ethereum in our example).
Cardano, born in 2017, is one of the blockchains that are described as competitors to Ethereum, as they seek to push the limits of the number 1 blockchain in the decentralized finance ecosystem. Charles Hoskinson, the co-founder of Cardano, had also participated in the creation of Ethereum. First in vogue, for its performance, its popularity is now in sharp decline, as is the price of its cryptocurrency (-80% in one year). In the meantime, Ethereum has undergone a historic operation called “The Merge”, which has allowed it to gain in efficiency and fill in its gaps.
Who will decide on this crypto-marriage?
That the project remains at the stage of a simple survey, created by an entrepreneur in search of profitability and recognition, the arrival of Dogecoin on the Cardano blockchain, in anticipation of a Twitter 2.0, is not trivial. On the one hand, it will be necessary for Elon Musk to confirm his intentions to integrate cryptographic exchanges, and for him to choose Dogecoin, just as it will be necessary for the Dogecoin Foundation to find its interest in the exchange. On paper, the marriage seems like a win-win. But the bulk of the opportunity falls on Cardano. If Dogecoin takes the gamble, and Elon Musk turns his back on it, then Dogecoin will lose its independence and character as a store of value akin to the idea of Bitcoin.
One thing is certain, the Cardano blockchain is losing momentum as fewer and fewer investors are looking into it. Symbolic detail, Dogecoin now weighs heavier in capitalization. In eighth position in the ranking, at $17 billion, Dogecoin is ahead of Cardano, in ninth position and at $13 billion. The difference in trading volume is also impressive. In recent days up to the equivalent of 12 billion dollars were traded on Dogecoin, in 24 hours. Cardano has very rarely exceeded $1 billion in the past six months.