By Nathan Ferguson
Cardano and Solana both have experienced explosive growth in 2021. Cardano has gained more than 900 percent in value, whereas Solana has gained more than 13,000 percent. Cardano and Solana are pretty much equal in the top 10 at the time of this writing, and they seem to be swapping ranks every week or so.
Suppose you want to invest in any one of them and understand them. In that case, you should have a better understanding of both protocols by the time you finish reading this article and will be able to make an informed decision about investing. And, to be honest, I find it a little irritating when a presenter concludes by suggesting that both are equal.
Cardano
Cardano was designed by Charles Hoskinson, a co-founder of Ethereum who formed IOHK (Input Output), a blockchain research business, in 2015. Input-Output (IOHK) is a blockchain research organization that specializes in decentralization. Cardano was the brainchild of this organization, which was co-led by Jeremy Wood and was founded in 201In order to accomplish this, the business set out to develop blockchain infrastructure solutions for both public and private clients.
One of the most intriguing features of the protocol, perhaps, is the mechanism that underpins it. It intends to boost its transactional throughput by implementing a technique known as Recursive InterNetwork Architecture(RINA), which divides the primary network into numerous subnetworks in order to increase its transaction throughput. These subnetworks can communicate with one another as a result of this.
Key Features Of Cardano
- Mechanism Of Consensus
As previously stated, Cardano uses the Ouroboros consensus method, which is a validation mechanism established by the Cardano Foundation and is described in more detail below. This mechanism allows users to invest their ADA (Cardano ecosystem native token) and engage in the transaction verification process as part of the transaction validation process. Users can either run their personal staking pools or delegate their ADA to a current pool of stakes.
One feature that distinguishes this approach from the PoS (Proof-of-stake) is that the users’ stake is only required to be present during the “snapshot” of the network rather than at any other time. Their prerogative is to shift their staked ADA around again and participate in DeFi during that snapshot. That’s not the case with standard PoS because once coins have been staked, they may only be withdrawn until the unbinding period has expired.
- Programmability
Cardano lacked a critical feature until this year: it could not be programmed. It was a significant improvement. Before the Alonzo hard fork, the blockchain was primarily used to transfer money from one location. However, since the implementation of smart contracts capability earlier this year, there has been a resurgence of interest in the blockchain, as more and more people realize the potential it holds. With the development of the DeFi ecosystem on Cardano, which has been virtually non-existent so far, we are hopeful that it will take off quickly.
- Upgrades
It is expected that one of the most significant modifications to the protocol is to the Cardano base layer, which will be separated into two parts: the CSL (Cardano Settlement Layer) and the CCL (Cardano Computation Layer). The purpose of this divide is to provide an additional layer of explanation that will aid in the comprehension of why operations are being migrated. It contributes to creating a blockchain that is more transparent and traceable.
Pros And Cons Of Cardano
First and foremost, it is a compelling, robust, and peer-reviewed solid foundation. That has been years in development and has been well planned.
Number two, the Cardano cryptocurrency has a large and active community of investors. In addition, you’ll observe that when there is a slump, the price of Cardano appears to be highly resilient. When compared to other products, such as Solana, the price does not drop as much. And, last, Cardano has a great deal of potential in the future. In addition, it will be very intriguing and see how it all develops over the next few years.
The major issue of Cardano is that it is a very slow-moving cryptocurrency. So it took more than five years to bring smart contract capability to the public and when it comes to initiatives and advancements.
Solana
Solana is believed to be a Layer 1 blockchain system that relies on the PoH Proof of History consensus method for its consensus. In essence, it revolves around the verification of the time difference of two events that take place on the blockchain. This technique operates prior to the PoS (Proof-of-Stake) consensus, resulting in an increase in transactional capacity on the network to more than 50,000 transactions per second, potentially scaling up to 100,000 transactions per second. Because all of this computational capacity can be simply achieved at the blockchain’s base layer, Solana doesn’t really require Layer-2 scaling methods to function properly.
Key Features Of Solana
Here are some of the most critical characteristics of Solana that distinguish it from the competition:
- Currently, it has more than 1000 verifiers in the system, a figure that has increased by about 100 percent in just a few months.
- More than 75% of the $SOL tokens are staked, indicating that the network is now exceptionally resistant to any attacks of any kind.
- The DeFi ecosystem on Solana has grown significantly faster than the ecosystem on Cardano. Due to the fact that it increases the overall transactional throughput, this is understandable. There are now over 200 projects that have been developed on the Defi ecosystem, with some more in the planning stages.
- Recent developments, such as the announcement by FTX.US of the formation of a specialized NFT market on the blockchain, are also assisting it in gaining ground compared to the competition. In itself, the fact that a significant exchange, such as FTX, is striving to establish a specialized marketplace for the protocol speaks volumes about the protocol’s popularity.
Pros And Cons Of Solana
When it concerns Solana’s most significant advantages, the first is that it is lightning quick. Furthermore, it is the fastest blockchain currently available on the market. The second point to mention is the price. You can’t argue with the fact that it’s fractions of a penny, making it one of the lowest transaction costs available on the market. And the third thing to mention is its applications. It is already making a significant dent in the Defense Department, and it is progressing at a breakneck pace.
The fact that it did fail several months ago is the most significant flaw in the system. As a result, there is some uncertainty about the decentralization and reliability of the network.
Proof Of History vs. Proof Of Stake
Bitcoin and Ethereum were the first cryptocurrency exchanges to use blockchain technology and smart contract networks. On the other hand, both have come under fire for their inability to scale and consume excessive amounts of energy. The Proof of Work (PoW) consensus approach is responsible for the majority of the scalability issues. Proof of Stake is a method that eliminates the bottlenecks generated by Proof of Work while also providing security.
Alternatively, Solana is capable of processing up to 50,000 operations per second utilizing the Proof of History (PoH) consensus mechanism to identify the passage of time, hence significantly lowering the amount of data required for consensus to occur.
Because it makes it easier to encode time itself into a blockchain, the purpose of the Proof of Work algorithm is to reduce the effort on validator nodes (data points) that process blocks. The importance of time stamping cannot be overstated because it informs the system that transactions have occurred in a specific sequence.
The Ouroboros system, a Proof of Stake system unique to Cardano, is used to validate transactions. It operates by rewarding validators with a sequence of random and specified incentives, which are distributed through the use of a staking system. Ouroboros, the world’s first secure PoS protocol, was developed through peer-reviewed research. Ouroboros is a unique combination of cutting-edge technology and mathematically validated processes that ensure the security and long-term viability of the blockchains that rely on its services.
DeFi Ecosystem Of Cardano And Solana
Ethereum, the world’s most popular technology for DeFi (decentralized finance), has opened the door to a new era of financial solutions that were previously unavailable. In 2021, Decentralized finances are experiencing explosive expansion at an unprecedented rate. However, Ethereum’s inability to grow and its hefty transaction costs make it difficult to see the DeFi market expanding further. Blockchains such as Cardano and Solana, which provide better throughput and lower transaction costs, can take advantage of this and continue to accelerate the broad adoption of DeFi.
With Cardano’s recent inclusion of smart contracts, the project now has a better chance of playing a substantial part in the evolution of the DeFi cryptocurrency ecosystem. In order to grow its market share in the DeFi domain, the project is presently on a quest to do so. This goal will be achieved through the investment of $100 million by EMURGO, the venture capital arm of Cardano, in order to accelerate the growth of the Cardano DeFi ecosystem. SundaeSwap, comparable to Uniswap, is a DEX (decentralized exchange) that aspires to be the top DEX on the Cardano cryptocurrency network.
Solana is quickly emerging as a focal point for the DeFi dApp utility. Solana’s total value-locked (TVL) assets increased from $900 million to more than $10 billion this year. Solend and Port Finance are two projects situated in Solana that are competing to act as decentralized banks, according to the project’s website.
Aave and Compound protocols are similar in functionality to Port Finance, one of the most popular Solana’sDeFi dApps with a TVL of approximately $200 million and operate similarly. Solend is also one of Solana’s DeFi banks, although it has a lesser TVL of roughly $90 million, making it a more conservative investment. Users can borrow against a much wider variety of assets on Solend, which includes most of the same products as Port and Raydium and Ethereum.
Cardano vs. Solana Market Capitalization
Solana and Cardano each have market capitalizations in the billions of dollars. Experts feel that a more significant market capitalization provides a safer and more convenient token investment than a token with a smaller market capitalization. Although stability is not assured in the unpredictable cryptocurrency markets, price projections are notoriously incorrect in this environment.
At the moment of typing, Cardano is ranked 4th by market capitalization ($69,794,037,548), three spots ahead of Solana, which is ranked 7th ($44,936,785,160) at the moment of typing. Consequently, before Solana can reach Ethereum in market capitalization, it must first beat Cardano in market valuation.
Both tokens have market capitalizations that are less than half of Ethereum’s, indicating that they have a lot of potentials to expand in the future. Because Cardano and Solana are now ranked 4th and 7th in terms of market capitalization, respectively, they still have a long road ahead to go before surpassing Ethereum’s market capitalization of almost $400 billion.
Where To Get Solana And Cardano?
Since Solana is a recognized cryptocurrency, there are no requirements for obtaining it. It is possible to purchase the SOL and ADA tokens on cryptocurrency trading platforms such as Coinbase Global Inc, SoFi Technologies Inc, and Crypto.com. Coinbase, a controlled exchange, is simple to use and is a fantastic choice for new to the cryptocurrency markets. It would be smart to investigate many different exchange platforms because each has its own advantages to offer users.
The Utility Of Cardano And Solana
The utility of ADA inside the Cardano ecosystem is extensive, and it encompasses a variety of functions such as rewarding nodes, staking, and peer-to-peer transaction processing. This token aims to serve as a worldwide asset similar to cash, perform any function, and make use of any services provided by the Cardano blockchain network. As a result of this functionality, ADA can simplify the transfer of wealth and be used like Ethereum and Bitcoin.
Cardano offers a stake pool n which the token holder can delegate its tokens in order to earn incentives for contributing to the network’s security and thereby increasing its value. The ADA coin is critical to the management of the Cardano ecosystem, and it is used to facilitate transactions.
The ADA coin allows users to cast votes on proposed changes or financing proposals made by the Cardano team or the Cardano community. The creation of smart contracts and applications on the Cardano blockchain is only possible with the use of ADA tokens. Developers require the ADA cryptocurrency in order to perform their smart contracts on the blockchain.
SOL is the native cryptocurrency of Solana, and it serves as a utility token in the game. The SOL token has two significant use cases: staking tokens and payment for the transaction as part of the PoS consensus method, both of which are supported by the token. The network has to burn SOL to generate heat to keep up with its deflation model. SOL holders have the option of becoming network validators.
SOL is required by developers in order to implement smart contracts and launch initiatives on the blockchain. The development of Solana dApps also results in the creation of new SOL usage. Chainvote is developing a DeFi voting tool for corporate governance to allow users to vote with SOL tokens.
Which One Has More Room For Development?
Although Cardano has restricted upside potential because of its enormous market capitalization ($70 billion), it has plenty of opportunity to develop compared to Ethereum, which has little room to grow. Projects such as the construction of a digital identity system based on blockchain for students and instructors in Ethiopia are examples of initiatives that can aid in the expansion of Cardano.
Solana’s market capitalization ($45 billion) is far lower than Cardano’s, although it now has almost 400 projects based on its protocol. Solana has tremendous development prospects in the coming years due to this factor. Solana’s significant initiatives include SolAPE, a decentralized exchange (DEX) designed to appeal to the general public by providing easier access and a lucrative and exciting ecology.
Even if cryptocurrency markets continue to rise and Ethereum continues to suffer from scalability and high transaction fees, Solana and Cardano are pretty well to become two of the most popular smart contract blockchain protocols in the near future.
Final Thoughts
Because of the hundreds of projects being developed in its ecosystem, Solana is establishing itself as a serious Ethereum contender. It is because Solana provided smart contract capabilities long before Cardano. Developers in the Cardano ecosystem, on the other hand, can now launch dozens of DeFi dApps. More DeFi and NFT applications will probably be created on its blockchain.
Suppose the Hydra and Cardano scaling technologies are deployed on time. In that case, a significant movement of developers from Solana and Ethereum to Cardano may occur shortly. Meanwhile, Solana appears to be miles ahead of Cardano regarding technological advancement. On the other hand, Cardano has more considerable financial backing and a more outstanding market capitalization.