The native token of the Kadena layer 1 blockchain experienced a significant decline, dropping 60% within 90 minutes on Tuesday. This sharp decrease followed an announcement from the founding team stating their intention to wind down operations and cease all network maintenance, citing "market conditions."
In a post on X, Kadena stated that it "is no longer able to continue business operations and will be ceasing all business activity and active maintenance of the Kadena blockchain immediately." The team expressed gratitude to participants in their journey and regretted that due to market conditions, they could not continue to promote and support the adoption of their decentralized offering.
Kadena, which branded itself as a "blockchain for business," was established in 2016. It was co-founded by Stuart Popejoy, formerly the lead of JPMorgan’s Blockchain Center of Excellence, and Will Martino, who previously worked as a tech lead for the Securities and Exchange Commission’s cryptocurrency steering committee.
Martino also had a tenure at JPMorgan, where he contributed to the creation of its first blockchain.
The shutdown highlights the difficulties smaller blockchains face in cultivating a sustainable user base and achieving profitability amidst intense competition from larger networks such as Ethereum and Solana.
The Kadena (KDA) token reached a valuation close to $4 billion in November 2021. However, as of the announcement, its market capitalization stood at $30.9 million, according to CoinGecko data.
Kadena Blockchain and KDA Token to Remain Operational
Kadena indicated that a small team would remain to manage the wind-down period. Importantly, independent validators will continue to process transactions and mine blocks on Kadena’s proof-of-work blockchain.
The company clarified that the Kadena blockchain is not owned or operated by the founding company. As a decentralized proof-of-work smart-contract blockchain, the network's operations are managed by independent miners, and on-chain smart contracts and protocols are governed by their respective maintainers.
Kadena plans to release a new binary soon that will ensure uninterrupted operation without their direct involvement. They will be encouraging all node operators to upgrade to this new binary as soon as possible.
Kadena Faces Decisions on Unlocked KDA Tokens
The KDA token is expected to continue circulating. The Kadena team announced plans to consult with the community regarding the distribution strategy for the 83.7 million KDA tokens scheduled for release in November 2029.
Additionally, Kadena noted that there are 566 million KDA tokens remaining to be distributed as mining rewards, with distribution continuing until the year 2139.