The crypto-economy has exploded in recent years, creating a huge amount of wealth. But few blockchain projects have generated as much excitement as gimbal (ADA 0.36% ) and Solana( GROUND 0.64% )which rank as the seventh and eighth most valuable cryptocurrencies, respectively.
Cardano and Solana aim to improve Ethereum, creating an open ecosystem of decentralized software and services. Both blockchains have a lot of potential, and both cryptocurrencies could reward long-term investments, but one will almost certainly outperform the other in the years to come. Which?
Cardano is a smart contracts platform powered by the ADA coin. It was launched in 2017 by Ethereum co-founder Charles Hoskinson, and it features the industry’s only peer-reviewed consensus protocol: Ouroboros. It’s a smart name. The ouroboros is an ancient infinity symbol that appears in several cultures, representing a dragon eating its own tail. In the context of Cardano, the name alludes to the highly scalable and sustainable nature of the platform.
Specifically, Ouroboros is a type of Proof-of-Stake (PoS) consensus mechanism, which means that validators compete for the right to verify transactions (and earn rewards) based on their stake in the network. By comparison, Ethereum relies on proof of working consensus, an energy-intensive solution that pits miners against each other based on computing power.
Cardano’s evidence-based approach is a key part of its appeal. The developer team frequently publishes peer-reviewed research detailing the blockchain’s technical specifications, and the project itself is divided into five phases: foundation, decentralization, smart contracts, scalability, and governance. As part of the third phase, Cardano launched support for smart contracts in September 2021. And although the ecosystem is still in its infancy, hundreds of projects are underway, including a range of decentralized applications (dApps) and decentralized finance (DeFi).
Next, Cardano will address scalability. The network currently supports 250 transactions per second (TPS), with a completion time of two minutes. For context, this is much better than Ethereum’s 14 TPS and six-minute finalization time. But that pales in comparison to Visa24,000 theoretical GST.
To increase scalability, Cardano’s developer team is working on implementing Ouroboros Hydra, an upgrade that will enable multiple sidechains (i.e. additional blockchains that spread the load computer more efficiently). This update could happen as soon as this year and could theoretically increase throughput to 1 million TPS while allowing for near-instantaneous finality.
Solana is a smart contracts platform powered by the SOL coin. It was launched in 2017 by former Qualcomm software engineer Anatoly Yakovenko, and it has a consensus mechanism that pairs PoS with proof of history. Specifically, Solana timestamps incoming transactions, creating a verifiable order of events, which speeds up network throughput.
Solana can theoretically handle 50,000 TPS, and these transactions are finalized in just 13 seconds. This incredible scalability keeps network costs low. The average transaction on Solana costs a fraction of a penny, far less than the $0.44 currently charged on Cardano, and orders of magnitude less than the $20 you might expect to pay on Ethereum. In short, the Solana blockchain is already fast and cheap, and this has resulted in significant adoption.
The platform has over 1,300 blockchain projects, including dApps like Magic Eden and Solanart, the fifth and sixth most popular non-fungible token (NFT) marketplaces by total number of traders. Solana also ranks sixth among DeFi ecosystems, with $8.7 billion invested in blockchain. It has just launched Solana Pay, a platform that will allow consumers to send digital payments to merchants using stablecoins like USD coin, a cryptocurrency tied to the price of the US dollar. Because Solana Pay is powered by blockchain technology, it eliminates the need for banks and credit networks, which means merchants are charged a fraction of a penny for transactions.
Both Cardano and Solana are innovative blockchain projects that could disrupt modern software and financial services industries. Moreover, each platform has unique characteristics that have created loyal fanbases.
However, Solana is faster, cheaper and more developed. Its ecosystem of dApps and DeFi products easily eclipses that of Cardano, and it is better positioned to gain ground on Ethereum in the short term. This is especially important because Ethereum has a scalability solution in the works, but it won’t be live until 2023. For this reason, Solana seems like the best investment right now.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end consulting service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.