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Aside from new partnerships, Cardano is still all about utility

On July 5th, Input Output Hong Kong, the organization behind the Cardano (CCC:ADA-USD) blockchain, announced two partnerships of interest to owners of ADA.

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The first sees them Nexo exchange Listing of Cardano’s native cryptocurrency.

This means that owners of ADA can buy and sell through the exchange, earn interest on their existing coins, and borrow against the coins in US dollars or one of the other 40+ fiat currencies.

The second partnership is a collaboration with the decentrally funded (DeFi) liquidity aggregator Orion Protocol. As far as I can tell, Orion allows you that Best price on your crypto purchases and sales on all global crypto exchanges.

I go a long way from the two partnerships to argue that the latter is more important to Cardano than the former.

Here’s why.

Cardano and Celsius network

Let’s say I own 30,000 ADA. Assuming a price of $ 1.42 (trading just below that this morning) that’s about $ 42,600.

The first partnership means that I can take my ADA and transfer it to mine Nexo wallet. I would then earn up to 12% of the value of my assets.

At the same time, I could use the assets as collateral to borrow US or Canadian dollars or any of the other available fiat currencies.

So, based on the $ 42,600 in ADA, I could borrow $ 18,073 for one price annual percentage rate (APR) of only 6.95%. Let’s say my line of credit doubles to $ 85,200, my line of credit increases to just over $ 36,000.

Just to keep my crypto in a Nexo wallet.

I could use Nexo. Or I could go with the undisputed crypto exchange champion and put my $ 42,600 ADA in a Celsius wallet.

The only problem is that ADA is not yet available as a collateral for Celsius. Additionally, I was able to borrow only $ 14,058 for the same interest rate of 6.95% based on a 33% loan-to-value ratio.

The addition of ADA to Nexo is therefore a small business for Cardano lovers.

What about the Orion Protocol?

Imagine you had 10 investment accounts with 10 different stock brokers. Just everyone had their own independent valuation of stocks.

You could buy 10 shares of Stock A in all 10 companies and no two listed prices would be the same.

That is the problem that crypto buyers have. It is referred to as that Kimchi premium.

The theme first became known in late 2017 when the price of Bitcoin (CCC:BTC-USD) in South Korea was 30% higher than on crypto exchanges in other countries, including the US. This opened the door to arbitrage games from dealers.

“The key to Orion’s worth is his built-in liquidity aggregator, which gives its users automatic access to multiple exchanges to get the best spot price for each supported cryptocurrency, and which embodies the best features of both centralized and decentralized exchanges, ”states the Orion Protocol whitepaper.

So in theory I could use Orion Protocol’s price aggregator to buy some ADA and then transfer it to my Nexo wallet to earn interest or borrow money for it.

From where I sit, it’s a lot like the chicken or egg argument. I want to own Cardano, but I don’t want to pay an outrageous price based on an exchange’s above-average purchase price.

The Orion Protocol makes sure this doesn’t happen to me. The same cannot be said when buying through Nexo or Celsius.

The bottom line

Unfortunately, the two partnerships are important steps in Cardano’s development, but by no means decisive for the future.

Cardano’s success is all about smart contracts and benefits. If there is any benefit, the value of ADA increases. If it doesn’t, the price of ADA will go down.

I am cautiously optimistic about the latest developments at Cardano. None of the partnerships are groundbreaking in my opinion. However, they will be useful as case studies for future Cardano applications.

I continue to believe that ADA is the cryptocurrency that is not called Bitcoin or ether (CCC:ETH-USD) with the most tangible opportunity. The partnerships should be good to convince others of this.

On the day of publication, Will Ashworth had no positions (either directly or indirectly) in any of the securities referred to in this article. The opinions expressed in this article are those of the author, subject to the Publishing guidelines.

Will Ashworth has been a full-time investing writer since 2008. Publications he has appeared in include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in the United States and Canada. He is particularly fond of creating sample portfolios that will stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing, Will Ashworth had no position in any of the above securities.

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