Cardano sees US$10M inflows as big investors switch to proof-of-stake coins

Cardano and its native cryptocurrency, ADA, saw institutional inflows of US$10 million last week, a sign that investors may be actively choosing proof-of-stake coins based on environmental considerations, according to a digital asset fund flows report by CoinShares, Europe’s largest digital asset investment firm.

Fast Facts:

• Digital asset investment products saw another consecutive week of net outflows, with a total of US$97 million, another new record for outflows, according to CoinShares. But the outflows, at 0.2% of total assets under management, remains low compared with net inflows of US$5.5 billion in the year to date (11.8% of assets under management). “Regardless, it represents a net change in sentiment following increasing regulatory scrutiny and concerns over Bitcoin’s environmental credentials,” the report said.

• Despite declines in Bitcoin and Ethereum, altcoins — typically coins other than Bitcoin — saw continued positive sentiment, with inflows totaling US$27 million. Multi-asset and Polkadot investment products saw inflows of US$7 million and US$5.5 million, respectively.

• Bitcoin had outflows of US$111 million and Ethereum saw minor outflows of US$12.6 million following a long run of record-breaking inflows totaling US$924 million in the year to date (8% of assets under management).

• Proof-of-work and proof-of-stake are two differing consensus mechanisms that can be used to secure a blockchain network. Both Bitcoin and Ethereum run on PoW systems, in which miners solve complex algorithms and are rewarded with cryptocurrencies, requiring huge amounts of energy. PoS is a more energy-efficient method in which validators lock up their cryptocurrency to secure the network. Ethereum is moving towards a PoS consensus with Ethereum 2.0, and its total energy use is expected to fall by at least 99.95%.