<p>Leaving aside the fact that ADA is exactly as hard as bitcoin, that is, it's hard capped, just happens to be a lot more of them. In a single word: utility. As all business enterprises adoption creates demand for the currency to pay for services of the chain.</p>

CC BY-SA 4.0
2021-05-07T23:13:10.087Z
2021-05-07T23:13:10.087Z
clicea
<p>What is the economics behind the value of ADA in fiat currency? Assuming that bitcoin will dominate 100% of the &quot;store-of-value&quot; market, and taking speculation out of the equation, I don't understand where the intrinsic value of the token will be pegged to in the future. For example, if the price of ADA jumps from 1 USD to 10 USD, what are the immediate effects in the blockchain? Does anything happen that pressures the price back down to 1 USD?</p>
<p>It is my understanding that ADA will be useful to fuel smart contracts by collecting transaction fees. These fees are currently fixed by the network and there is no auction dynamics such as in bitcoin, where if you want your transaction to be included in the blockchain fast enough, you need to pay more. But in Cardano, this mechanism doesn't seem to be there.</p>

CC BY-SA 4.0
2021-06-13T21:59:25.170Z
I'd like to mention that IOHK just published an article discussing this issue from the perspective of infrastructure maintenance: https://iohk.io/en/blog/posts/2021/06/10/stablefees-and-the-decentralized-reserve-system/
Thomas Lima
CC BY-SA 4.0
2021-05-07T06:20:38.823Z
This seems to be a question asking for opinions rather than facts.  Probably better asked on reddit than here. It needs to be re-worded to be a more factual question or perhaps nominated for removal.
gRebel
CC BY-SA 4.0
2021-05-07T17:19:44.707Z
I’m not sure I agree. I’m asking what mechanisms are there for price/value regulation. It was probably studied in research papers but I haven’t seen it. I was hoping someone with better knowledge could point me in the right direction. In other words, is the blockchain efficiency predicted to be independent of the market value of the ADA token? In other words, if the price goes down and stake pools decide to retire, that will pose a security risk for the blockchain and therefore apps like ATALA Prism. What would be the mechanism that would encourage stake pools to stay active?
Thomas Lima
CC BY-SA 4.0
2021-05-08T01:02:04.657Z
You could ask this question about any other currency, including USD, EUR, CNY and BTC. What could you reasonably expect of ADA? Central bankers to control rates like for fiat currencies? Armies and diplomats to enforce agendas like in the case of fiat? Government departments to restrict how ADA can be traded? Who gets to decide what the price should be in a way that does not breed centralization or corruption? ADA is just ADA and people do whatever they want with their fiat, which is outside the system of Cardano. I think the short answer to the question is basically a  ¯\\_(ツ)_/¯.
Joshua Chia
CC BY-SA 4.0
2021-05-08T01:09:49.963Z
You may get fewer stake pools and greater centralization, but I think the key is not to manipulate the price but to increase and sustain the usefulness of the blockchain, i.e. build up the ecosystem of builders and users. If the blockchain is useful, the price will be sustained. I think if Cardano has to worry about the negative impact of a low price, then Cardano has failed in other aspects like being useful.
Joshua Chia
<smart-contract><fee><governance>
Price regulation of the ADA token
# Price regulation of the ADA token

(Asked by: username_0 on 2021-05-07)

What is the economics behind the value of ADA in fiat currency? Assuming that bitcoin will dominate 100% of the "store-of-value" market, and taking speculation out of the equation, I don't understand where the intrinsic value of the token will be pegged to in the future. For example, if the price of ADA jumps from 1 USD to 10 USD, what are the immediate effects in the blockchain? Does anything happen that pressures the price back down to 1 USD?

It is my understanding that ADA will be useful to fuel smart contracts by collecting transaction fees. These fees are currently fixed by the network and there is no auction dynamics such as in bitcoin, where if you want your transaction to be included in the blockchain fast enough, you need to pay more. But in Cardano, this mechanism doesn't seem to be there.

**Tags:** smart-contract, fee, governance
> **Comments:**
> **username_1**: This seems to be a question asking for opinions rather than facts.  Probably better asked on reddit than here. It needs to be re-worded to be a more factual question or perhaps nominated for removal.  
> **username_0**: I’m not sure I agree. I’m asking what mechanisms are there for price/value regulation. It was probably studied in research papers but I haven’t seen it. I was hoping someone with better knowledge could point me in the right direction. In other words, is the blockchain efficiency predicted to be independent of the market value of the ADA token? In other words, if the price goes down and stake pools decide to retire, that will pose a security risk for the blockchain and therefore apps like ATALA Prism. What would be the mechanism that would encourage stake pools to stay active?  
> **username_2**: You could ask this question about any other currency, including USD, EUR, CNY and BTC. What could you reasonably expect of ADA? Central bankers to control rates like for fiat currencies? Armies and diplomats to enforce agendas like in the case of fiat? Government departments to restrict how ADA can be traded? Who gets to decide what the price should be in a way that does not breed centralization or corruption? ADA is just ADA and people do whatever they want with their fiat, which is outside the system of Cardano. I think the short answer to the question is basically a  ¯\\_(ツ)_/¯.  
> **username_2**: You may get fewer stake pools and greater centralization, but I think the key is not to manipulate the price but to increase and sustain the usefulness of the blockchain, i.e. build up the ecosystem of builders and users. If the blockchain is useful, the price will be sustained. I think if Cardano has to worry about the negative impact of a low price, then Cardano has failed in other aspects like being useful.  
> **username_0**: I'd like to mention that IOHK just published an article discussing this issue from the perspective of infrastructure maintenance: https://iohk.io/en/blog/posts/2021/06/10/stablefees-and-the-decentralized-reserve-system/  

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## 1 answers

### Answer by username_3 on 2021-05-07. Score: 1

Leaving aside the fact that ADA is exactly as hard as bitcoin, that is, it's hard capped, just happens to be a lot more of them. In a single word: utility. As all business enterprises adoption creates demand for the currency to pay for services of the chain.


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