Linda: Cardano DeFi Launched Before Its Infrastructure Was Ready

Linda CryptoFly has published a new analysis of how Cardano moved from one of crypto’s most anticipated DeFi ecosystems to approximately $61 million in total value locked. She attributes the decline to tokens and investment arriving before working products, stablecoins, liquidity and the development infrastructure required to support them.

Cardano DeFi Grew Before the Products Were Ready

Cardano’s DeFi TVL climbed from almost nothing to more than $300 million within the first months of 2022. Another expansion began in early 2024, followed by a larger increase around the end of 2024 and beginning of 2025, when TVL approached $800 million.

Almost five years after smart contracts arrived on Cardano, Linda showed TVL declining to approximately $61 million. The previous low was close to $50 million.

She compared that performance with the wider DeFi market and Solana. Both experienced an initial boom, a bear market contraction and another cycle of expansion, but neither returned as close to its earlier lows. Solana had just under $6 billion in DeFi TVL at the time of her analysis, still well above its previous low of approximately $250 million.

The difference was also visible in application activity. Data presented in the video showed Solana applications generating approximately $9 million in fees over 24 hours, compared with around $9,000 on Cardano. Cardano DEX volume was slightly above $1 million, while Solana was approaching $2 billion.

DeFiLlama listed approximately 63 Cardano protocols, although projects including DeltaFi, Yamfore and JPG Store had already closed. Only a small number displayed measurable fees or revenue during the observed period. The more substantial activity was concentrated around Minswap, Liqwid and Strike, with smaller figures associated with SundaeSwap and WingRiders.

Linda noted that analytics providers do not always report the same figures. Indigo, SURF, FluidTokens and other applications generate activity that may not be fully represented by a single data source, but she argued that the overall comparison still illustrates Cardano’s position relative to larger DeFi ecosystems.

She traced the origins of the current position back to 2021. The Mary hard fork enabled native asset creation in March, approximately six months before smart contracts arrived through the Alonzo upgrade in September.

During that interval, ADA rose from a few cents to more than $3. Tokens appeared for projects promising decentralized exchanges, lending platforms, synthetic assets, stablecoins and launchpads modeled on products that had succeeded on Ethereum.

Capital and communities formed around those tokens before development teams could confirm whether their proposed applications could be built with the available Cardano infrastructure. Some legitimate teams underestimated the technical complexity, while others discovered that the network could not yet provide the capabilities their original designs required.

Large amounts of ADA were therefore exchanged for ecosystem tokens that still represented development plans rather than operating products. When the bear market arrived, ADA declined and many Cardano DeFi tokens fell more sharply.

Linda used MIN, the token of Cardano’s largest DEX, as an example. Its early valuation was followed by a sustained decline, and it never returned close to its initial levels. Similar movements across other ecosystem assets removed a substantial amount of the wealth that had entered Cardano during the previous cycle.

Expectations surrounding smart contracts also differed from the experience developers encountered. The wider perception was that financial contracts could be assembled from reusable components, potentially allowing people without extensive programming knowledge to create applications.

When smart contracts launched, developers instead faced limited tooling, incomplete infrastructure, fragmented information and changing technical requirements. Linda recalled attempting to establish stronger communication channels between projects and Input Output, but said the organization did not consider additional channels necessary at the time.

In her assessment, Cardano’s leadership was then more focused on other priorities, including financial inclusion and initiatives in Africa. Ecosystem developers had to learn how to build Cardano applications while simultaneously creating many of the tools and infrastructure required to support them.

Linda described the result as a DeFi ecosystem that opened before its technical foundation was complete, with early investors financing much of that development period through their exposure to project tokens.

Stablecoins Arrived After Cardano’s First Liquidity Cycle

The absence of stablecoins increased the impact of the downturn. During the 2021 market expansion, users had no simple way to retain profits within the Cardano ecosystem while reducing their exposure to volatile assets. Their practical options were to move capital away from Cardano or remain exposed while waiting for prices to recover.

Cardano’s first native stablecoins, iUSD and Djed, arrived in late 2022 and 2023. Linda participated in the early work around Djed and helped develop incentives intended to encourage its use.

Djed is an overcollateralized algorithmic stablecoin whose economic model depends on users minting and burning it. Fees from that activity are intended to support incentives for participants providing ADA to the reserve system connected with Shen.

Linda argued that the model entered an ecosystem without enough applications and transactions to support its intended use. Djed was not designed only as a passive place to preserve gains. Its system required regular activity, while a related payment initiative that could have expanded its utility never materialized.

The same broader constraint affected iUSD. Users lock crypto collateral to mint the synthetic asset, making it another stablecoin designed for active financial use rather than simple fiat-backed storage. It also experienced serious difficulty maintaining its dollar peg.

USDM arrived in 2024 as Cardano’s first native fiat-backed stablecoin. Linda connected the initial growth of Cardano’s stablecoin market with the recovery in ADA’s price, although its peak near $0.77 remained far below the level reached in 2021. Many holders were still below their previous entry prices or waiting for a stronger recovery, reducing the amount they were willing to convert into stablecoins.

Another increase followed in early 2025, with a larger expansion after USDCx launched in February 2026. Even after that growth, Cardano’s total stablecoin capitalization remained below $70 million.

Linda identified liquidity depth as another obstacle. During a demonstration on Minswap, she entered a proposed swap of 100,000 ADA, worth slightly less than $20,000, into USDCx. The interface displayed a price impact of approximately two percent, representing more than $400 in slippage.

She said conditions had improved compared with her previous experiences, but described the remaining cost as too high for users moving meaningful capital. The potential loss increases as the size of a trade rises.

Linda also described the current USDCx interface as unappealing and cumbersome. According to the process presented in the video, bridging USDCx away from Cardano can take 12 hours, limiting the ability to move quickly into opportunities on other networks.

Peras could shorten part of that process through faster finality, although native USDC has not been presented as an imminent addition to Cardano. Under Linda’s assessment, substantial organic stablecoin growth would require another strong market cycle, additional incentives and a better user experience. Larger institutional agreements could provide another route by bringing capital and demand directly onto the network.

Leios, Peras and New Capital Face a User Acquisition Test

Cardano is now preparing infrastructure and capital programs that were unavailable during its first DeFi cycle. Linda first highlighted Leios and Ouroboros Peras.

Leios has completed its first public testnet, with the result presented in the video reaching approximately 6.6 times the throughput of the current Cardano mainnet. Development and testing continue, while mainnet deployment is targeted for the end of 2026.

Peras is designed to provide faster transaction finality. Linda said some Cardano DeFi transactions can currently take minutes in situations where users expect settlement within seconds. Peras is intended to reduce that delay and improve processes that depend on rapid confirmation, including bridge operations. Phase two of its current roadmap is targeted for the second quarter of 2027.

Cardano is also supporting two major capital initiatives. The Orion Fund, managed by Draper Dragon, is targeting at least $80 million for Cardano-native and Cardano-integrated companies. Its focus includes institutional adoption, real-world assets, institutional DeFi, increased on-chain utility and the development of ecosystem businesses.

The second initiative is Cardano PRIME, operated by AlphaGrowth. The program received authorization for a 120 million ADA Treasury allocation and is targeting at least $200 million in net qualifying DeFi TVL growth over 12 months.

Linda emphasized that PRIME is not intended only to pay users for temporarily moving liquidity into Cardano. Its objective is to develop organic APR through transactions, accounts, activity and fees that can continue supporting liquidity providers after initial incentives decline.

The program begins with an assessment of Cardano DeFi across approximately 25 categories, followed by a prioritized gap analysis and then incentives and capital deployment. Approximately 90 million ADA remains behind a separate release mechanism. An Operating Group that includes Input Output, Midgard Labs and other participants must approve the deployment of those funds. If the required approval is not secured, the capital returns to the Cardano Treasury.

Linda does not expect improved infrastructure and available funding to solve the user problem by themselves. She repeated an estimate that approximately 90 percent of ADA is held in Japan and described many of those holders as long-term investors without a strong interest in active DeFi participation. The video did not provide a source for that geographical estimate, so it represents part of Linda’s user acquisition argument rather than independently verified ownership data.

She described much of the remaining holder base as people who treat ADA as one component of a broader crypto portfolio rather than capital intended for Cardano yield strategies. Some active users also left after the ecosystem’s early technical difficulties and moved to other networks.

Current market conditions further reduce the amount of new capital entering DeFi. Linda therefore expects that a significant part of the required liquidity would have to come from users already operating on Ethereum, Solana, Arbitrum, Base and other established ecosystems.

Those users already have access to applications with deep liquidity, attractive yields and multiyear operating histories. Moving to Cardano would require them to learn another ecosystem, install different wallets and leave products they already understand.

Competitive yields alone may therefore be insufficient. Linda argued that Cardano needs an application users cannot already find elsewhere, combined with enough economic value to justify moving their capital. Institutional funding and deeper liquidity would need to support that product rather than substitute for market demand.

In the final part of the video, Linda identified Cardano’s accounting model, security, decentralization and predictable transaction execution as properties that could benefit financial applications. The technical approach that slowed Cardano during its first DeFi cycle is now operating alongside better tooling, existing applications, fiat-backed stablecoins, access to USDCx liquidity, planned scaling and faster finality.

Linda presented the next two years as a direct test of that model. If Leios, Peras, improved development tools and large incentive programs fail to attract users, fees and sustainable liquidity, DeFi may not be the area in which Cardano establishes its strongest position. If they succeed, Cardano will enter its second DeFi cycle with products, infrastructure and capital arriving together rather than in the sequence that defined the first one.