At the end of this month, a hard fork called Vasil will be executed on Cardano’s blockchain. What does this mean and will it have an impact on ADA’s share price?
29 June important date for Cardano
Previous upgrades, such as the Alonzo hard fork, have made Cardano’s blockchain a lot more robust and the network can handle smart contracts. It is time for the next hard fork. We know that since yesterday Vasil is being tested on a public test network. If all goes well, the real hard fork will be carried out on 29 June 2022.
Average transaction size on Cardano across all transaction types is currently 3206 bytes. We expect this number to significantly drop after Vasil hard fork event on 29th June. Now the drop may not be immediate, dApp developers will have modify code so that average tx size sinks. pic.twitter.com/7f7eOszdQf
— Cardano Blockchain Insights (@InsightsCardano) May 30, 2022
That’s enough time for Cardano and founder Charles Hoskinson to turn on the marketing machine. Sooraj, one of Cardano’s developers, preceded Hoskinson in sharing more details about Vasil on Twitter.
This makes the transactions bigger
Larger transactions result in higher fees and decreased throughput
CIP 33 (Cardano improvement proposal) changes this
It is one of the updates coming with the Vasil HFC event in June 2022 pic.twitter.com/8MxlTiXgRW
— Sooraj (@SoorajKSaju) April 18, 2022
In a series of tweets, Sooraj explained how Cardano’s hard fork will affect the overall stability and connectivity of the network. He further explained that CIPs (Cardano improvement proposals) related to the implementation of the Plutus script will be prioritised.
Four improvement proposals
Vasil includes four such Cardano Improvement Proposals (CIPs). These include CIP-31, which introduces a “new type of input, a reference input, which allows an output to be looked at without issuing it”, as well as CIP-32, which allows “easier communication of date values between users”.
Another improvement proposal is CIP-33, which proposes to add reference scripts to outputs, and to use reference scripts to meet script requirements during validation, rather than having the issue transaction do so. CIP-33 will “make transactions with commonly used scripts much smaller.”
Finally, the hard fork includes CIP-40, which ensures that a wallet no longer requires a minimum amount. If you would like to read through everything in more detail, check out the following links:
- CIP-31
- CIP-32
- CIP-33
- CIP-40
How will this affect Cardano’s (ADA) stock price?
You can say a lot about Cardano, but they are good at marketing! Every time an update comes out, which is basically just boring dry stuff, Charles Hoskinson manages to boost ADA’s share price. This is also noted on InvestAnswers’ YouTube channel.
“It always rallies before a hard fork. It’s pretty clear that the spike right now is due to the Vasil hard fork, which has reportedly delivered a lot of great things: a lot more transactions per second, a lot more smart contract functionality, a lot more DeFi capabilities, etc.”
Next, the host of the video (from minute 09:20) looks at what previous hard forks did for the stock price.
“If you look back in history, you can look at the Shelley hard fork in July 2020, Cardano went up 500% and then was, I think, Mary in March 2021, ADA went up 1.100%. Then kwa the Alonzo update and the price went up about 135%.”
Cardano rose to 0.63 euros on June 1, the highest point since the price fell to a low of 0.42 euros on May 28. The youtuber thinks Cardano will outperform Bitcoin and Ethereum.
“We’re currently around $0.65, so it’s not broken, but it deviates and is no longer correlated to the other assets. If you look at the Cardano/Ethereum pair and the Cardano/Bitcoin pair it really breaks out.”
In March, we also wondered what Vasil will do to ADA’s share price. On 17 March, ADA was worth 0.80 euros, which has since fallen to 0.53 euros.
