Understanding Cardano's two-layer structure

A lot of people still treat Cardano like a company where Charles Hoskinson is the CEO and the founder must answer for the price. That mental model does not match how ADA actually works. You have to separate Cardano into two layers.

The upper layer contains three independent organizations. Input Output Global, or IOG, is the development arm where Charles works, writing code and building technology. The Cardano Foundation, based in Switzerland, executes the results of on-chain votes but cannot influence the vote itself. Emurgo is the commercial and investment arm, focused on bringing projects and adoption. These three are parallel and independent; no single entity controls the others.

The real decision-making power sits in the lower layer, Voltaire, Cardano's on-chain governance system. Voltaire has three voting groups: DReps, the delegates elected by ADA holders; stake pool operators, who maintain the network; and a constitutional committee that checks whether proposals meet the rules. Those three groups vote, not a single board of directors.

Charles is only one developer in the upper layer. He cannot force a fork, change protocol parameters, or use treasury funds to pump the price. He can submit a proposal, but it only passes if DReps approve it.

This design is quite radical, and I actually see it as classic decentralization: no single boss can hijack the project. That is what Web3 has always been about. But decentralization cuts both ways, and that becomes important later.

Why the price collapsed: five fronts hitting at once

ADA now trades around $0.14, a five-year low and roughly 95% below its all-time high of $2.8. DeFi total value locked has fallen about 90% from its peak. But the price chart is only the surface.

Inside the ecosystem, things are breaking. TapTools, a data analytics platform that operated on Cardano for four years, shut down after funding dried up and five core team members left in a single year. JPG Store, the largest NFT marketplace on Cardano and a top trading venue since 2021, closed on May 23. Charles himself has publicly said more projects will not survive the second half of the year.

Then there was the security incident. On June 23, an application in the Cardano ecosystem disclosed a flaw in its wallet key generation, which effectively weakened entropy by a factor of 18. Around 16 million ADA were stolen. For a project already under pressure, that kind of hit shakes confidence.

Governance is also in a tug-of-war. IOG wanted to allocate 32.91 million ADA from the treasury for cryptographic research. DReps voted against it with opposition exceeding 80% at one point, calling the proposal opaque. Charles responded that blocking research funding would cost Cardano experienced researchers. The opponents had their reasons too, but the real cost is that every treasury decision now turns into a slow political fight. Sometimes that is healthy; other times it drains the project's energy.

Put these together: no single person is accountable, projects are closing, security is under question, internal governance is fighting itself, and the price keeps testing lows. That is the vicious cycle ADA is stuck in right now.

The technical fix: Leios and the speed problem

One single factor will not turn ADA around. Several lines need to move in the right direction at the same time.

On the technical side, Cardano launched the Leios public testnet on June 23. This upgrade could increase Cardano's processing speed and security by tens of times. Cardano's biggest weakness for years has been speed. Because it is slow, speed-sensitive applications such as order book exchanges or prediction markets cannot run on it. That is a direct reason why ecosystem TVL has stayed low.

If Leios successfully reaches mainnet before the end of the year, Cardano finally closes that gap and can compete with fast chains like Solana. That would be a real turning point for the ecosystem.

The catalyst dates: August 9 and the ETF question

Another key date is August 9. At that point ADA completes a six-month trading window, and Grayscale's Cardano spot ETF could move into the SEC review process. This is still not confirmed, but it is an important regulatory milestone. You remember what happened after spot Bitcoin ETFs were approved in the United States: it opened a whole new source of demand. A Cardano ETF would follow the same logic.

Then there is Charles himself. His public behavior has become a variable. This is not his first retreat. He stepped back in 2023, said he would take a full rest in 2024, and earlier this year locked down his Twitter and deleted the app. Now he is doing it again. Every time he withdraws, community confidence gets eroded. Founder credibility matters, and right now it is adding to the uncertainty instead of reducing it.

The one factor nobody controls

The most fundamental driver is the broader market. ADA is an altcoin, and its price action stays highly correlated with BTC and the overall crypto cycle. If Bitcoin does not start a new upward cycle, ADA will struggle to move independently.

That said, the institutions are still there. The Cardano Foundation continues to work. I have also seen more companies adopting ADA, especially in Germany; when I was in Berlin I met teams already using it. The building is not dead. But for now, saying ADA has bottomed is too early. A drawdown this deep, with so many holders underwater and ecosystem issues still unresolved, cannot be fixed by a tweet or a single rally.

What I am watching now is whether the positive signals line up in the same window: Leios testnet data, the August 9 ETF review progress, and Charles's public posture. Those three signals will tell us more than any short-term price bounce.

My honest take: analysis, not a recommendation

I am not here to tell you ADA is dead or that it is a buy. I do not hold a meaningful ADA position, and I have no stake in arguing one way or the other. My channel has always been about facts and analysis, not hype or fud.

What I see is a project with a genuinely decentralized structure, a serious technical upgrade in testing, and a possible ETF catalyst, all fighting against a brutal drawdown, ecosystem closures, security damage, and a founder who keeps stepping back at bad moments. The next few months will show whether the positive forces can overcome the negative spiral.

Except for Bitcoin, I do not blindly favor any single project. See the truth clearly, then make your own decision. Do your own research.