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.

1. Scalability

Solana

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.

Cardano

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.

2. Interoperability

Solana

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.

Cardano

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

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.

Cardano

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.

4. Tokenomics

Solana

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.

Cardano

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.

Final thoughts

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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Even with all the global problems related to technology — component shortages, bans, hacks, and more — the crypto market continues its unstoppable advance, providing new opportunities for those who are able to see them.

While nothing seems to move Satoshi Nakamoto’s first-born daughter from its top spot in the cryptocurrency rankings, it seems like a whole army of new projects is trying to topple Ethereum from its well-earned second place.

Currently, Solana is one of the most solid projects that are seeking to replace Vitalik Buterin’s blockchain, not in vain, it has earned the nickname of “Ethereum killer.”

But is Solana better than Ethereum as many experts claim?

Let’s analyze the panorama…

Solana vs Ethereum – The Current situation

Solana is an open-source blockchain project that aims to provide a robust, fast, and scalable platform for the development and execution of next-generation DApps that surpasses anything seen so far.

Solana has been developed from scratch using a new consensus algorithm called Proof of History (PoH) that promises to increase the speed and scalability of the network to new levels, potentially being able to process tens of thousands of transactions per second (tps).

In addition, Solana has its own cryptocurrency called SOL, which in 2020 was still valued for less than $10, but in recent months it has seen its price skyrocket, staying close to $200 at the time of this blog posting, with a market capitalization of $406B, according to CoinMarketCap.

Solana has managed to build in a very short time — remember that it was founded in 2017 — a robust ecosystem with a good number of developers giving their support to the project with their DApps, but especially in the NFTs segment.

And what about Ethereum?

Ethereum, the super-popular decentralized open-source platform for programming smart contracts and DApps, has held its position, gaining and gaining value even with the technical problems it faces today.

Still, thousands of developers around the world continue creating smart contracts and DApps on Ethereum and invent new types of solutions, many of which are used by large companies and organizations around the world.

Meanwhile, its cryptocurrency Ether, the “fuel” for operations within the network, hasn’t stopped increasing its value, slowly but firmly, although still staying a long way from the almighty Bitcoin.

With that said, it’s now the time to see in more detail, the position of each project based on several factors that I consider critical for a modern blockchain.

How Solana compares to Ethereum

1. Scalability

Solana

Solana is a blockchain that makes use of the Proof of Stake (PoS) consensus algorithm to improve efficiency when processing transactions on the network. This already means a significant saving of resources, both in hardware, as well as in time and energy. But in addition, Solana adds a support algorithm developed specifically for this network and which has been called Proof of History (PoH).

In simple words, what this algorithm does is allow network validators to process transactions as they’re generated, without having to wait for a block to complete.

This simple mechanism allows a greater number of transactions per second to be processed simultaneously, being able in theory to process up to 50,000 tps or more under certain conditions, at the same time that it manages to maintain very low fees with an average price of $0.00025.

Ethereum

For its part, Ethereum currently uses the Proof of Work (PoW) algorithm, the same one used by Bitcoin and which requires a large amount of energy and resources to function.

This system only allows the Ethereum network to process a maximum of 30 tps, which, added to the huge user base of the network and the large number of transactions that take place every day, results in the network becoming frequently congested, also increasing the price of the fees, which in many cases reach hundreds of dollars for a single transaction.

However, the next major Ethereum update, 2.0, will focus on migrating the network from PoW to PoS, which will theoretically increase the number of transactions from 30 tps, up to 100,000 tps.

2. Interoperability

Solana

The development team behind Solana is already working on implementing the Wormhole protocol in its network in collaboration with the company Certus One. Wormhole will act as a communication bridge so that Solana can interact with other networks, but in some first tests, it’ll allow communication with the Ethereum network.

Subsequently, new bridges will be added to the Solana network to enable communication with other blockchains and to be able to carry out asset movements seamlessly and in a fast and efficient way.

Ethereum

Currently, Ethereum doesn’t have its own project to achieve interoperability with other networks, but there are already several third-party projects that are offering to add this functionality to the network, something key for its future growth.

Some of these projects include:

• Chainlink – An interoperability solution especially useful for projects that need to access data from other networks without directly interacting with them.

• Wanchain – A project that will make communication between both public and private blockchains possible through a secure and private system for the exchange of value and data called T-Bridge.

• Aion – A communication system between blockchain networks that will make use of Artificial Intelligence.

• Block Collider – A project that seeks to achieve interoperability between networks using a consensus algorithm called Proof of Distance (PoD) and that doesn’t require validators.

Just to name a few.

3. Smart contracts and DApps

Solana

Solana has a protocol called Sealevel that gives it the ability to create and execute multitasking smart contracts in parallel with the rest of the transactions on the network. This is one of the key features that will allow it to achieve greater scalability.

In addition to this, the Solana network has managed to build, since its foundation in 2017, a robust DApps ecosystem that currently already has nearly 500 projects in its network.

Ethereum

In this regard, there is no doubt that Ethereum is the world’s leading network for blockchain-based solutions. In this sense, the Ethereum network already has more than 3,000 fully functional DApps in all kinds of categories, especially in DeFi and more recently, in the NFT segment.

All this is possible thanks to the use of its standard ERC-20 and ERC 721 tokens, which allow interoperability between different DApps within its network.

4. Tokenomics

Solana

Despite being founded in 2017, Solana already has a market capitalization close to $50B, thus placing its SOL token among the most important cryptocurrencies in the world.

SOL has a maximum supply of 489 million coins, and its market value is close to $200, a significant increase considering that in 2020 it was valued at just $2.

However, it’s important to note that due to certain inflationary elements established by the developers, the price of the cryptocurrency will tend to be somewhat more volatile than other similar assets, with a downward trend in the future.

Ethereum

The problems that Ethereum faces at the moment are scalability and transaction costs, This is one of the factors that have kept its price at bay.

Even so, in the last 12 months, the price of Ether has increased significantly, mainly due to progress in the development of its future updates, already hovering around $3,500 at the time of publishing this blog, with a market capitalization of +$400B.

It is precisely this last factor that is helping to create pressure on the price of Ethereum, both in supply and demand, which added to the great support it has, is attracting more investors to the platform.

Which is better, Solana or Ethereum?

Although Ethereum currently has significant limitations in terms of scalability and transaction costs, this has not prevented the network from continuing to grow at a sustained rate. The platform already has 7,000 nodes and 90,000 validators.

However, this is also due to the use of the PoW consensus algorithm, something that will change shortly when PoS is implemented.

When that time comes, Ethereum is supposed to be capable of processing around 100,000 tps, which is pretty good compared to Solana’s current capacity, which is around 50,000 tps – but could theoretically go up to 500,000 tps.

For its part, although Solana only has about 600 nodes and about 1,000 validators, interest in the network hasn’t stopped growing, especially if we consider that it’s still under development.

The same must be said when thinking about DApps. Solana owns just close to 500, while Ethereum owns 3,000. Still, Solana’s growth has been remarkable in this regard.

While Solana is technically superior, Ethereum has the advantage of being on the market first, so it has a strongly established community and ecosystem that help revalue the network.

Solana is unlikely to replace Ethereum, especially since the development team of Ethereum is not going to be left behind when it comes to implementing improvements that will help it better face its competitors.

Of course, it’s a fact that when Solana is 100% functional, many people will migrate from one network to another, but probably not at a rate that will remove Ethereum from its second place in the cryptocurrency rankings.

I believe that in the future, there will be a fierce war between these two blockchains, especially in the DApps and NFTs sector, but I also believe that there is enough space for both projects to coexist. In other words, both Solana and Ethereum will have their own niche.

And in the end, Allah knows best.

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