Among the many blockchain projects that exist today that seek to dethrone the powerful Ethereum and its cryptocurrency Ether from its second place hold among the list of most popular crypto assets, there are two that stand out above the others: Solana and Cardano.
In recent months, these two projects have grown in popularity, attracting the attention of more and more investors. Naturally, this sudden interest in both projects has caused both SOL and ADA – the respective cryptocurrencies of these blockchains – to have increased in value significantly, reaching their all-time high prices and a market capitalization of around $50B and $80B respectively.
Based on this, the million-dollar question is:
Which of the two is better?
In this post, “Solana Vs Cardano”, let’s explore and find out.
What is Solana?
Solana is an open-source blockchain project that aims to drive the development of next-generation DApps. The people behind the Solana (SOL) project want to offer a highly scalable, secure, and decentralized platform, which also doesn’t require powerful hardware or a large amount of power to operate.
For this, Solana is based on a third-generation Proof of Stake (PoS) consensus in which it integrates a unique mechanism to achieve a reliable and secure system based on determining the time of a transaction; this is known as Proof of History (PoH).
Solana has been developed from the ground up to be a highly scalable blockchain and through the PoH system, it’ll be able to support thousands of transactions per second (tps) – its developers speak of 50,000 or more.
What is SOL?
As usual, Solana has its native cryptocurrency called SOL, which works as a utility token. SOL is used to pay transaction fees and to display and interact with smart contracts, allowing its holders to become network validators as well.
At present, different DApps are being developed for Solana that seek to provide new uses for SOL, including a DeFi voting mechanism.
What is Cardano?
Cardano is an open-source smart transactions platform that aims to offer scalability and security solutions under a layered design. This feature gives the system great flexibility and makes its maintenance much easier with updates through soft forks.
Cardano is a blockchain with a scientific approach and a rigorous and robust design that will allow the execution of a high volume of financial transactions with a high level of cryptographic security using a PoS consensus mechanism called Ouroboros.
This third-generation blockchain will also allow the development of smart contracts and DApps, and can be used by individuals, organizations, companies, and governments around the world to develop tailored solutions.
What is ADA?
ADA is the cryptocurrency of the Cardano project and it’s the coin that allows users to operate on the network. The ADA token also acts as a management token, as it allows users to vote in order to decide on possible changes to the way the project will work and develop.
According to its developers, ADA represents the future of money, since it’ll make direct and immediate transfers possible, at almost no cost.
How Solana compares to Cardano
Let’s take a look at the differences and similarities between Solana and Cardano, taking into account several key aspects of what is expected of a third-generation blockchain.
50,000 tps possibly up to 500,000 tps
250 tps possibly up to 5,000 tps
Yes, Wormhole project will interact with blockchains outside of Solana and Ethereum
Yes, KMZ Sidechains will allow interoperability with blockchains outside of Cardano that use the same KMZ protocol
Sealevel is Solana's smart contract protocol that will execute and validate smart contracts transactions in parallel.
Smart contracts now active with Alonzo update. Marlowe feature allows no-code smart contract development for non-tech users.
Almost 500 DApps are on Solana
Around 130 DApps are currently in development on Cardano
489 million tokens
45 Billion tokens
The Proof of History consensus algorithm used by Solana is a solution that saves time and resources when confirming transactions. PoH is actually an addition to the PoS consensus that helps to validate the order of transactions in extremely short periods of time, making the network much faster.
Through this mechanism, transaction validators have less information to process in each block, which combined with Solana’s ability to execute processes in parallel – as I’ll explain later – significantly increases the scalability of the network. Although it currently supports 50,000 tps, Solana could theoretically support up to 500,000 tps.
For its part, Cardano has the KMZ Sidechains protocol. Using KMZ, Cardano can handle a whole series of parallel chains to increase its scalability as needed.
In this way, Cardano allows the movement of funds between its different layers safely as well as external blockchains, thus sharing the workload and speeding up transactions exponentially.
This feature, combined with Cardano’s consensus mechanism called Ouroboros, currently allows it to process between 50 and 250 tps, but according to its developers, upcoming network updates would allow to validate up to 5,000 tps.
Currently, Solana has the Wormhole protocol, a technology provided by Certus One, a provider of distributed ledger technology (DLT) that offers a secure and decentralized bridge that for the moment, will allow Solana to connect with Ethereum.
However, Wormhole will allow Solana to communicate not only with Ethereum but also with many other projects and platforms to move crypto assets without the need for intermediaries to take advantage of the speed and efficiency of its network.
Introducing sidechains interoperable with Cardano’s main chain – very soon – will give Cardano immense potential to expand its network capabilities. This will allow the introduction of new features from external projects without affecting the security of the main blockchain.
In combination with the KMZ protocol, it’ll make it possible to move funds safely from Cardano to any blockchain that uses the same protocol, creating interactions without the need to share private data.
3. Smart contracts and DApps
Solana has the ability to execute smart contracts and validate transactions in parallel. Sealevel is the name given by the developers to this feature.
Sealevel allows Solana to read, execute, and write instructions in parallel within the execution layer of smart contracts. In this way, a single smart contract would be capable of executing multiple tasks at the same time. This is a major difference from Ethereum, which can only handle one task at a time.
Regarding DApps, the idea behind Solana is to provide more efficient support for them, but also for DeFi. To date, the Solana ecosystem has almost 500 projects available, some of which are already operating, while others are still in the development stage.
It’s a healthy ecosystem where you can find all kinds of apps, DeFi, exchanges, NFTs, games, and more.
The next era of Cardano, Goguen, will add smart contracts and the ability to build DApps on Cardano’s strong foundation of high-security research, peer review, and development.
The best thing about this will be that any type of user, with or without technical knowledge, will be able to create and execute functional smart contracts on the Cardano network thanks to Marlowe, a high-level language specific for smart contracts – try writing your own Marlowe smart contract here.
In turn, part of this mechanism will also make the creation and interaction of DApps with smart contracts within and outside the network easier.
Speaking of DApps, Cardano recently received the Alonzo update, which already allows it to run smart contracts and DApps on its network, as promised.
However, due to a series of technical problems that have arisen, a large number of developers have delayed the launch of their projects and at present, Cardano doesn’t yet have a robust ecosystem full of DApps, something that has negatively influenced the value of ADA in the market.
SOL, Solana’s native token, is currently in the top 10 most popular cryptocurrencies in the world, with a market capitalization of $48B, according to CoinMarketCap.
The maximum supply of this asset is 489 million, somewhat low compared to other similar coins. Naturally, this makes SOL’s price higher, especially when compared to ADA.
SOL has a planned inflation with an average rate of 1.5% per year, starting at 8% in 2021. This is good to motivate the adoption of the cryptocurrency, but it causes the price to tend to fall frequently, which is inconvenient for holders.
For its part, ADA – which is also among the 10 most popular cryptos – has a market capitalization of $70B, according to CoinMarketCap. This is a position that it has held steadily for months.
The maximum supply of ADA is 45 billion coins, which is one of the factors that keep the price of this crypto asset below the price of SOL.
The ADA inflation rate will continue declining for several years to the point where new supply is so low that it becomes deflationary, which could lead to a significant price increase.
Solana vs Cardano – What are the future projections?
The difference in price and supply of both SOL and ADA is one of the main factors – if not the most important – to think about when deciding on one cryptocurrency or another, considering that both projects belong to third-generation blockchain technology.
In this case, for investors, the best option might be to adopt both cryptocurrencies but with a different approach based on time.
To begin with, both cryptocurrencies have remained with constant rises and falls in price, mainly due to the influence of their different stages of development.
Many analysts agree that the upcoming Ethereum updates will positively influence the price of both assets when a third-generation blockchain war breaks out.
Now, considering that SOL has a lower market capitalization than ADA, this could bring a much higher return on investment in the medium and long term if Solana manages to place itself in a better position than it currently has – but also the risk for the investor will be higher.
Based on this, the best strategy could be to acquire ADA to keep it as a long-term investment, while SOL could be used to carry out swing-trading operations, playing with the constant variations in price. This is a very common strategy when making investments in the crypto world.
It’s too early to say at this point which of these two blockchain projects is superior to the other. Both Solana and Cardano are third-generation blockchains that promise great improvements to the crypto ecosystem.
Without going into too much detail, the fact is that the market sees these two projects as having a lot of potential, but neither of them is yet fully functional.
Although both projects have been nicknamed as “Ethereum killers,” Buterin’s blockchain continues advancing in developing solutions to its current flaws, so I see it unlikely that any project will wipe it off the map yet – improbable, but not impossible.
Meanwhile, the safest option for crypto investors is to have a varied portfolio that allows them to operate and make decisions with ease and without going to any extremes. As always, this should not be taken as financial advice, but rather, crypto education. Always make sure to do your own thorough research before investing.
And in the end, Allah knows best.
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