Key Points:
- Cardano plans to offer DeFi yields to XRP holders through its Midnight sidechain.
- Derivatives data shows bearish sentiment for ADA & XRP.
- On-chain activity is down, with falling user engagement.
Cardano (ADA) founder Charles Hoskinson has proposed using Midnight, Cardano’s upcoming privacy-focused sidechain, as a DeFi layer for XRP holders to earn higher yields. Midnight, currently in testnet, supports private smart contracts and plans a mainnet launch later this year, along with the Glacier Drop airdrop to XRP wallets. Cardano is also considering using a portion of its $1.2B treasury to purchase Bitcoin and stablecoins, with the possibility of converting some ADA holdings to generate yield, which could then be used for ADA buybacks.
Moreover, Uphold (exchange) also announced a partnership with Flare (L1 network) to offer XRP-based yields. Hoskinson has also hinted at future XRP integrations with Cardano’s non-custodial Lace wallet and potential support for the Ripple-issued RLUSD stablecoin, describing it all as part of a “complete package” for XRP utility.
Cardano and XRP have shown limited price movement following the announcement. Cardano is down more than 15% over the past month, potentially driven by net shorts, declining trading volume, and a weakening MVRV ratio.
As of June 16, 2025, ADA’s short positions ($299K) heavily outweighed longs ($33K), indicating bearish sentiment across major exchanges. Most traders appear to be anticipating further downside in the short term.
Cardano’s daily token trading volume has dropped by approximately 59.1%, marking one of its lowest levels since March 2025. This decline reflects weakening market activity and reduced investor participation in the short term.
Cardano’s 60-day MVRV ratio has dropped to -8.71% as of June 16, 2025, indicating that most ADA holders are currently at a loss. Since MVRV shows whether investors are in profit or loss, a negative value like this often suggests a possible undervalued zone where accumulation may occur if sentiment improves.
Additionally, according to Cardanians on X, Bloomberg terminal reported a 75% probability of a Cardano ETF receiving approval.
In addition to Cardano, XRP is also facing pressure from weakening on-chain metrics, including a drop in daily active users and growing bearish sentiment, with the rise in net short positions across the market.
At the time of reporting, XRP shows strong bullish sentiment with long positions totaling $231.7K, significantly outweighing shorts at $1.51M across major exchanges.
At the time of reporting, XRP’s daily active users have dropped by over 35% from their May peak, signaling a decline in on-chain engagement.
Conclusion
While bearish derivatives data likely stems from the broader market downturn driven by the Iran-Israel conflict, declining on-chain activity points to potentially lower demand. Cardano’s DeFi capabilities being extended to XRP holders could boost XRP’s ecosystem utility, but actual DeFi participation will ultimately depend on investor sentiment amid ongoing market uncertainty.
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