In September, there were two big tech upgrades in the crypto world. One, of course, was The Merge from Ethereum (ETH -2.54%). The other was the Vasil Hard Fork from Cardano (ADA -3.79%). Unlike The Merge, there was little to no hype before Cardano's big upgrade. And there has been little to no hype after the upgrade. In fact, Cardano is currently trading at $0.43, which is almost exactly the price that it was trading at before the upgrade on Sept. 22.

So was Cardano's tech upgrade a big nothing burger, or are analysts discounting what the upgrade means? Maybe analysts are suffering from post-Merge fatigue, or maybe they were simply caught sleeping by Cardano's upgrade, but there are two reasons to believe Cardano could be undervalued right now.

New growth in the Cardano ecosystem 

The most common complaint about Cardano is that the Cardano ecosystem just isn't big enough. Developers aren't building on top of the Cardano blockchain, they say. As a result, there isn't much happening on the Cardano blockchain. If you look at Total Value Locked (TVL), which is a key metric for measuring blockchain activity, Cardano does trail far behind other Layer 1 blockchain rivals. And Cardano does not yet have a "killer app" that is attracting users in droves. That is one big complaint that billionaire investor Mark Cuban has made about Cardano.

Excited investor looks at financial charts on computer.

Image source: Getty Images.

However, this ignores the impact that earlier tech upgrades have had on the Cardano ecosystem. According to one report, the number of developers for Cardano soared by 90% in 2021. And Cardano co-founder Charles Hoskinson has become increasingly vocal about the hundreds of new projects that have appeared on the Cardano blockchain after the big Alonzo tech upgrade in September 2021. That was when Cardano formally introduced smart contracts to the Cardano blockchain and made it much more viable to build decentralized applications. 

Potential expansion into new areas

While some Cardano analysts have pointed out the "massive opportunities" made possible by the new tech upgrade, the market is taking a prove-it-to-me approach. After all, even with new improved functionality, many Cardano decentralized applications still are not fast or robust enough when compared to similar applications on rival blockchains. For example, analysts have specifically pointed out that the first decentralized exchanges (DEXes) and non-fungible token (NFT) marketplaces on Cardano have been, well, kind of clunky.

That's one area where the new Vasil Hard Fork upgrade could help. Even among Cardano skeptics, it is agreed that Cardano smart contracts will run better and more efficiently than in the past. One goal of the Cardano upgrade was to change the way smart contracts are processed on the blockchain, with the goal of making them easier, faster, and more efficient to use. As a result, one key beneficiary of the upgrade could be decentralized finance (DeFi), an area that is based around the concept of smart contracts. Given that DeFi has always been a key component of TVL, any gains made in DeFi would immediately show up in TVL metrics.

Too little, too late?

There are definitely encouraging signs from Cardano. For example, Cardano recently passed an important milestone: 50 million transactions. And it has boosted the number of transactions on its blockchain to nearly 50,000 per day. While people might complain about the slow pace of development on the Cardano blockchain, Cardano is routinely lauded for its security, stability, and eco-sustainability. 

At the end of the day, it's important for investors to consider Cardano within the context of what other Layer 1 blockchains are doing. As noted above, one key metric to watch is TVL, which is a popular metric for tracking how much activity is happening on a blockchain. Right now, Cardano ranks No. 28, which is far behind larger and more popular rivals such as Avalanche (AVAX -6.86%)Solana (SOL -5.02%), and Ethereum. So if you are thinking about investing in Cardano, keep a careful eye on this metric. If Cardano starts to move up the ranks in TVL, then there might still be time to buy Cardano on the cheap before other investors figure out what's going on.