Almost half of Cardano’s nodes went offline for a short while this past weekend, following an irregularity before the network made a quick recovery, based on reports from Cardano developer Input Output Global (IOG).
In an announcement on Telegram, IOG said that the issue briefly affected block production, adding that the incident may have been provoked by a temporary irregularity that caused one of two reactions in the node: Some disconnected from a peer, and others threw an exception, and restarted.
Notably, during the design of the Cardano node and consensus, the developers considered these kinds of transient issues taking into account the possibility of affecting all nodes. With this in mind, it happened that the systems behaved exactly as expected. Block production was only transiently impacted, with a segment of the network falling out of sync for an estimated https://cardanoscan.io/block/8300569 before nodes restarted.
As such, the impact was minimal, similar to the delays that happen during normal operations and often witnessed at epoch boundaries, with the telegram announcement noting, “most nodes automatically recovered.”
The lead operator of Digital Fortress, Rick McCracken, echoed the telegram announcement saying, “Most of the impacted nodes recovered immediately/automatically.”
not down, but impacted, most nodes recovered immediately / automatically
— Rick McCracken DIGI (@RichardMcCrackn) January 22, 2023
It is worth noting that Digital Fortress is the Cardano stake pool. The assurance came after McCracken stated:
Last night, during the anomaly on the Cardano network, the entire network did not go down. There was a brief period of degradation. Most nodes impacted had gracefully recovered. No network restart was required.
Tom Stokes, also a Cardano stake pool operator, congratulated the network’s response, highlighting that it was a testament to the importance of decentralization.
— Tom Stokes (@eUTxO_pro) January 22, 2023
The details of the incident were well discussed on GitHub.
Impact of the Incident on Cardano’s native token ADA
The incident was detrimental to the reputation of the network as one that is reliable and efficient. Cardano’s native token, ADA, seems affected by the news. At the time of writing, ADA was trading at $0.36, down 10% since the incident on January 22. The price has lost 6.2% in the last day, with a 24-hour trading volume of $405.6 million. The ADA token has a live market cap of $12.4 billion, which puts it at #8 on the CoinMarketCap list.
ADA/USD Daily Chart
Based on the daily chart above, it appears the weekend blockchain failure broke Cardano’s price uptrend after bulls took over the market on January 19, raising the price from $0.32 to the local high of $0.39 on January 22 before bears took over the control of the market.
The ADA price currently sits on the support at $0.358 after bulls flipped it from the resistance during the January 20 trading session. A daily candlestick close above this level could set ADA price up for an increase. To record further gains, the Cardano price would have to break through the resistance offered by the 200-day Simple Moving Average (SMA) at $0.3966.
The relative strength index (RSI) at 64 in the positive region showed that the market still favored the upside. In addition, the moving average convergence divergence (MACD) indicator was moving in the positive region above the neutral line, adding credence to the positive outlook.
Following the blockchain failure, however, it appears certain bulls decided to book profits to avoid further losses. This led to an increase in selling pressure and, consequently, a drop in ADA price.
If selling pressure increases below current levels, ADA price could drop to tag the support offered by the 100-day SMA at $0.32 or the 50-day SMA at $0.29. In extreme cases, the price could drop further toward the $0.24 swing low.
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