Cardano vs. Ethereum: Who is winning the smart contract race?

Cardano and Ethereum are both giants in the blockchain tech-sphere and Decentralized Finance (DeFi) world. Both of them have revolutionized the way people viewed cryptocurrency and custom assets.

Cardano, founded by Ethereum co-founder Charles Hoskinson is a blockchain platform that is based on research-oriented development and allows transactions in crypto through their very own cryptocurrency ADA.

Ethereum on the other hand is a similar open-source block-chain platform allowing creators worldwide to trade in their cryptocurrency Ether (ETH). It’s the second-largest cryptocurrency after Bitcoin and isn’t limited to just being a custom asset but also allows its owner to use ETH as leverages in other De-Fi services.

Ethereum and Cardano are due with some serious upgrades in the coming months and both have seen massive updates and developments recently. While Ethereum develops its technology putting practice before theory, Cardano prefers to rigorously test things before it actually comes live.

Today, we are going to compare two of the most relevant smart contract blockchains in the market on the basis of their blockchain protocols, smart contracts, staking/mining rewards, and will try to come out with a conclusion about which one may come up on top.

Let’s start with the market cap of Cardano and Ethereum.

Market Cap of Cardano and Ethereum :

• Ethereum has always had a higher market cap than Cardano, currently boasting a massive $564 Billion market cap, regardless of the extremely volatile market conditions. Ethereum increased its market cap by over 600% in 2021 itself from an $83 Billion market cap in January 2021.
• Cardano currently holds a 54 Billion dollar market cap which has rapidly increased over the last few months. Though lacking in both popularity and quantity when compared to Ethereum, Cardano still has shown tremendous growth of more than 1000% in 2021.
• Data source: Coinmarketcap.com

History of Cardano and Ethereum: Why they were created, what protocols they use:

Ethereum was initially developed by Vitalik Buterin in 2015 as a platform to allow developers to build and publish smart contracts, distributed apps, and a program-oriented blockchain system that is not bound by any third-party authority and is safe from hacks, thefts, and other mal-practices.

Ethereum uses the original Proof-of-work protocol to verify transactions and reward with a certain amount of the currency for doing that work.

On the other hand,

Cardano was developed by Jeremy Wood & Charles Hoskinson in 2017 with the view to “provide a more balanced and sustainable ecosystem” for cryptocurrencies. Identity management and traceability are Cardano’s main forte. It implements its original Proof-of-Stake consensus mechanism with the help of the new Ouroboros System.

Cardano pushed a research-oriented and ever-evolving ideology to back up its platform and assured its users about the stability and security of the ADA currency.

Supply of Cardano and Ethereum and what drives its price?

Crypto assets can either have a limited supply or an infinite supply depending on their design, and their price is also determined based on the availability of the cryptocurrency.

• Currently, Cardano is available in the market with a limited supply of 45 Billion ADA, out of which 33 billion ADA is in circulation and only 12 Billion is yet to be mined. ( Get the latest data here )
• Compared to Ethereum (ETH) who has an infinite supply of ETH coins but as of now, 117 million ETH is in circulation, as per Etherscan data.

What drives their value?

1. Use cases & Adoption :

The utility and flexibility of the currencies are what make their value outshine the rest.

Ethereum is presently the widely used Blockchain.

• It hosts the most expensive ecosystem in the entire crypto space. Many Stable coins, thousands of ERC-20 tokens, NFT marketplaces like — Rarible, Opensea, Decentralized games like — Decentraland, Alien Worlds, all leverage Ethereum blockchain.
• Basically, Ethereum is more focused on developing Private sector use cases in Europe and North America.

The ecosystem of Cardano is still nonexistent.

• Its applications and use cases are relatively small compared to Ethereum. SundaeSwap, OccamFi, Cardstarter are a few under development decentralized finance protocols that are building on Cardano.
• Charles Hoskinson is more focused on underdeveloped nations especially Government and public Institutions. They have signed a deal with the country of Ethiopia for providing Cardano-based Ids to 5 million children.

This is something highly appreciable as instead of pushing for a direct adoption, they are providing permissioned Infrastructure to prove their utility.

2. The protocols implemented :

Cryptocurrency is famous for being extremely volatile and the only thing that allows the users to trust crypto are the protocols.

• Cardano uses dual blockchain architecture from the very start. In the Settlement layer, it keeps track of all the token balances and transfers, and the Computational layer will execute all the smart contracts. Its Hydra Blockchain solution is estimated to handle 2.5 million TPS.

On the other hand,

• Ethereum has planned to switch from the PoW to the PoS protocol with the introduction of ETH 2.0, a major update to their entire platform which would revolutionize the entire Ethereum network, apparently making it more secure and stable.
• This will introduce Shard chain architecture in Ethereum which if combined with a secondary scaling product called “Rollups” will empower Ethereum to process 100,000 TPS and too with lower Gas fess.

So these protocol upgrades will play some role in deciding their future prices.

3. Smart contracts :

• Ethereum already has smart contracts integrated into their system which allows users to make instantaneous transactions and it was a major factor behind Ethereum’s price boom.
• Whereas Cardano is released its Smart contracts services with its Alonzo upgrade in September 2021 and this started a new era for Cardano.

Besides this, they have a plan to introduce an ERC-20 converter that will help other protocols to shift the platform from Ethereum to Cardano seamlessly. If implemented properly, it can grow the Cardano ecosystem relatively faster.

4. Mining process and rewards

Mining and staking are the consensus mechanism used in blockchain to settle any transaction.

• Ethereum1.0 uses the Proof of Work (PoW) consensus model which integrates the Ethash algorithm. That time it was huge as it addressed the scalability issue of Bitcoin by reducing the use of ASIC mining rigs.
• The rewards are paid in a first-come, first-serve method, making it extremely competitive and those with better networks and GPUs are most likely to be awarded. The current block reward is 2 ETH. A GPU or Integrated App-specific circuit is a must for mining Ethereum presently. Check the current mining profitability for ETH here.
• With Ethereum2.0, its consensus algorithm will change to PoS which consumes 99% less energy compared to PoW. Validators will have to stake 32 ETH to participate in the staking process & it will be locked for one year.

In terms of Rupees, that amount is huge.

Whereas

• Cardano works via staking your already owned ADA to verify transactions.
• The current staking reward (APR) is around 5.74%. There is no lock-in period and no minimum amount needed for staking $ADA.

This makes Cardano the most staked blockchain. Currently, 71% of all the $ADA is at stake that is somewhere around $38.13 billion.

This is more beneficial than ETH mining since it saves huge costs on energy and mining equipment.

All Time Values since Inception:

• Cardano’s all-time high (ATH) price has been reached $3.1 on 21–09–2021
• Ethereum’s all-time high ( ATH) price is $4859 on 10–11–2021
• Check their Current Prices here.

Pros and Cons of Ethereum & Cardano :

Have a look at the below infographics to understand the pros & cons of using Cardano and Ethereum.

Pros & Cons of Cardano, Ethereum

Investor Inclination :

World’s richest man Elon Musk, who is an avid crypto investor, stated that he owns only 3 cryptocurrencies and one of them is Ethereum. Billionaire Mike Novogratz of Galaxy Digital is another big supporter of Ethereum. In a recent tweet, he called Ethereum a “Currency of Culture” and expressed his bullishness on it. It came into news that, few countries have planned to test their pilot CBDC project on Ethereum.

Though Cardano is fairly new to the market, it has always maintained a top position in terms of market cap. Besides this, it is also the 3rd most traded pair on Coinbase Exchange. Recently Grayscale digital cap funds added Cardano as their 3rd biggest component. So now, these large-cap funds hold 67% BTC, 25% ETH, and 4.26% ADA.

So, Both Ethereum and Cardano are equally competent cryptocurrencies, with two different approaches to their acquisition methods. So it’s very early to say who will dominate the Smart contract space in the future.

If Ethereum is the Smart contract king right now, Cardano is the Queen, in the womb. There is a high chance that no single platform is going to win this race, probably a combination of platforms will. Only time will tell.

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