The “cryptoeconomy” has exploded in recent years, creating a huge amount of wealth in the process. But few blockchain projects have generated as much excitement as Cardano (CRYPTO:ADA) and Solana (CRYPTO:SOL), which rank as the seventh and eighth most valuable cryptocurrencies, respectively.
Cardano and Solana aim to improve Ethereum’s scalability issues, creating an open ecosystem of decentralized software and services. Both blockchains have a lot of potential and both cryptocurrencies could make great long-term investments, but it’s almost certain that one will outperform the other in the years to come. Which ?
Cardano is a smart contract platform powered by the ADA coin. It was launched in 2017 by Ethereum co-founder Charles Hoskinson, and it features the only peer-reviewed consensus protocol in the industry: Ouroboros. It’s a smart name. The ouroboros is an ancient infinity symbol that appears in several cultures and depicts 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 Related: Bitcoin, Ethereum, and Dogecoin Expected to Remain Stable Ahead of Lunar New Year – Is It Time to Buy These Cryptos?.Proof of Stake (PoS) consensus mechanismmeaning that validators compete for the right to verify transactions (and earn rewards) based on their participation in the network. By comparison, Ethereum relies on proof-of-work consensus, an energy-intensive solution that pits miners against each other based on their computing power.
Cardano’s evidence-based approach is a key element of its attraction. 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. Although the ecosystem is still in its infancy, hundreds of projects are in the works, including a series of decentralized applications (dApps) and decentralized financial services (DeFi).
Next, Cardano will address the issue of 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’s not much compared to Visa’s theoretical 24,000 TPS.
To boost scalability, Cardano’s developer team is working on implementing Ouroboros Hydra, an upgrade that will allow multiple sidechains (i.e. additional blockchains that spread the computational load more efficiently). This update could occur as soon as this year and could theoretically increase the flow to 1 million TPS while allowing an almost instantaneous finality.
Solana is a smart contract platform powered by the SOL coin. See the article: Unusual: You can buy the mansion of this rock legend with… cryptocurrency.. It was launched in 2017 by former Qualcomm software engineer Anatoly Yakovenko and features a mechanism for consensus that mixes PoS and 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 helps keep 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 more than 1,300 blockchain projectsincluding dApps like Magic Eden and Solanart, the fifth and sixth most popular non-fungible token (NFT) marketplaces by total number of operators. Solana is also the sixth largest DeFi ecosystem, with $8.7 billion invested in blockchain. It just launched Solana Pay, a platform that will allow consumers to send digital payments to merchants using stablecoins like USD Coin, a crypto pegged to the price of the US dollar. As 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.
Cardano and Solana are both blockchain projects See the article: Mark Zuckerberg’s Facebook cryptocurrency project: a bank is buying the intellectual property!.innovative that could disrupt the modern software and financial services industries. Also, each platform has unique features 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 all the more important as Ethereum has a scalability solution in the works, but it will not be operational before 2023. For this reason, Solana seems to be the best investment right now.