In this new series, we compare some key crypto assets and how they have fared recently. While doing so, we ask this question - if an investor has Rs.1,000 to spare today, how can he/she allocate the capital between these assets? Today, we aim to compare Cardano and Solana, both strong competitors of Ethereum.
Cardano is a smart contract based Layer 1 platform offering high scalability and transaction speeds. It was launched in 2017 by the Ethereum co-founder, Charles Hoskinson and is currently the largest blockchain to operate on the Ouroboros Proof-of-Stake (PoS) consensus mechanism.
Its native token – ADA, has managed to stay within the top ten crypto list over the past year. Its current market capitalization is $32.4 billion.
Cardano uses an evidence-based approach and mathematically guided model. It is one of the few networks to frequently publish peer-reviewed research about the technical details of the blockchain and the roadmap well defined into distinct phases. It supports hundreds of dApps and Defi platforms.
It provides a solution to Ethereum's limitations of scalability, high transaction fees, and high processing time. Ethereum network process about 15 transactions per second (TPS), whereas Cardano is built to handle 250 TPS.
In September 2021, Cardano soared to an all-time-high of $3.10, giving its early investors an ROI of almost 16,000%. However, since the start of this year it has dropped more than 25% in value against the dollar and 13% against Ethereum.
ADA v/s ETH and SOL v/s ETH
Source: Binance, TradingView
Solana is another smart contract based Layer-1 solution launched by the former Qualcomm software engineer Anatoly Yakovenko in 2020. The Solana network uses a dual consensus mechanism that combines the Proof-of-Stake (PoS) and Proof-of-History (PoW) mechanisms.
Solana's Defi ecosystem has been growing at a much faster rate than on Cardano. It is the sixth-largest DeFi ecosystem, with $8.7 billion invested in the blockchain. It hosts over 1300 projects, dApps, Defi platforms, and NFT marketplaces.
Solana can handle over 50,000 TPS compared to 250 and 15 TPS recorded on the Cardano and the Ethereum network. Solana blockchain is already fast and cheap, translating into significant adoption and an increase in market cap.
SOL, the native token of the platform, has dropped nearly 40% value against the dollar in 2022 and 28% against Ethereum. The gains are likely to be higher once the market resumes bullishness. SOL is the seventh-largest cryptocurrency by market cap today just above Cardano.
Both are innovative blockchain projects with cutting-edge technologies and were able to bag massive returns in the past year. While Cardano utilizes peer-reviewed academic research and is pioneering decentralization with a slower development process, Solana is a better technological product and is one of the fastest and cheapest blockchains but with a quasi-decentralized network.
We believe that investing in Solana (SOL) today is slightly better than investing in Cardano (ADA) and have allocated a 60% share to SOL. If an investor has Rs.1,000 to invest today, he may allocate Rs.600 to SOL and the remaining to ADA.
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Disclaimer: This article was authored by Giottus Crypto Exchange as a part of a paid partnership with The News Minute. Crypto-asset or cryptocurrency investments are subject to market risks such as volatility and have no guaranteed returns. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.