A good way to decide which cryptocurrency to invest in is to compare two of them. Knowing their similarities and differences is perhaps the best alternative to knowing exactly which cryptocurrency is best suited to each investor. Two of the cryptocurrencies that have been compared the most for their potential are Cardano vs Ethereum.
Both digital assets are altcoin heavyweights that are among the top 10 cryptocurrencies and offer users a massive investment opportunity. Although they provide similar functionality in relation to smart contracts and decentralized applications (dApps), there are some important differences that separate ADA and ETH.
Lately, the war between the two formidable opponents has intensified due to the significant increase in decentralized finance (DeFi) projects. Furthermore, the comparison between the two has aroused interest, in part because Cardano founder Charles Hoskinson was also one of the original developers of Ethereum. The Ethereum network seems to be in a dominant position compared to the Cardano network due to its enormous size.. It is the second most popular cryptocurrency behind Bitcoin (BTC).
Ethereum is also the most popular network for non-fungible token (NFT) markets., DeFi applications and numerous metaverse projects. Although Cardano also hosts these types of applications, Ethereum is the clear leader in this space.
However, since its release Cardano has taken a more cautious path, with an approach based on peer-reviewed research, aiming to bring academic rigor and mathematics to blockchain technology.. Their main goal has been to create a cheaper and more efficient system than Ethereum.
Although there are many similarities between Cardano and Ethereum, they have their differences depending on the perspective of each investor or user. In this article, Let’s understand in detail the main differences between Ethereum (ETH) and Cardano (ADA).
MAIN DIFFERENCES BETWEEN ETHEREUM (ETH) AND CARDANO (ADA)
Ethereum and Cardano seem similar on the surface, but have significant operational and application differences. The key differences have been segregated into 4 main categories, namely
Transaction volume
Ethereum enjoys a larger fan base and processes approximately 1 million transactions daily. On the other hand, Cardano processes less than 100,000 transactions a day. However, when it comes to the speed of transactions, Cardano has eclipsed Ethereum in transactions per second (TPS). At layer 1, Ethereum can process up to 30 TPS. This is in contrast to the speed of the Cardano network, which can process approximately 250 TPS.
scalability
Both Cardano and Ethereum 2.0 are “Layer 1” blockchains, but their designs are different. Ethereum 2.0 uses a single layer to manage smart contracts and on-chain applications, but Cardano has a dual-layer design that allows for more functionality and scalability.. This means that Cardano is more scalable than Ethereum and can handle more transactions. It seems that Cardano is taking advantage of things that Ethereum is not, and vice versa.
transaction fees
Ethereum is infamous for its notoriously high gas rates compared to Cardano. ETH transaction fees are very high with users having to pay $2 to $6 for just 1 transaction. By comparison, Cardano gas fees are consistently lower, averaging 0.16 ADA per transaction.
DeFi ecosystem
The current boom in DeFi projects has had a huge impact on both Ethereum (ETH) and Cardano (ADA). The size of the global decentralized finance market was valued at $13.61 billion in 2022 and is expected to expand at a compound annual growth rate (CAGR) of a staggering 46.0% from 2023 to 2030. This exponential growth has put both Ethereum and Cardano at the forefront with a series of upcoming updates on both blockchains..
Since Ethereum was the first chain with smart contracts, it dwarfs the Cardano smart chain ecosystem. To put things in perspective, Ethereum has over 3,000 dApps running on it, while Cardano has just over 1,000.. If we look at Total Value Locked (TVL), the Ethereum DeFi ecosystem dwarfs Cardano by far. Subsequently, Cardano understands only a small fraction of Ethereum, based on the TVL being less than $100 million. In short, Ethereum has taken the winning trophy in this category.
Meanwhile, even on the NFT front Ethereum (ETH) manages to post a landslide victory with some of the most popular and lucrative NFT projects including CryptoPunks and Bored Ape Yacht Club (BAYC). On the other hand, the Cardano NFT ecosystem is also heating up with the three most popular Cardano NFT collections: Skyweaver, Etheremon, and Spells of Genesis.
Cardano’s NFT project Clay Nation has also revealed an integration with The Sandbox Game, a virtual world where players can build, own, and monetize their gaming experiences. So these advances seem to be giving Cardano a lot of credibility.
Enter The Sandbox 🪨
Clay Nation will become the first @Cardano project to be integrated in @TheSandboxGame – pushing interoperability even further in #Web3
The experience will be created in collaboration with @smoblerstudios.
Stay tuned for more. pic.twitter.com/kzdSsUyKpW
— Clay Nation (@claymates) February 25, 2023
HOW ARE CARDANO AND ETHEREUM SIMILAR?
As mentioned earlier, Ethereum (ETH) and Cardano (ADA) have several similarities due to the fact that they share a common heritage with Cardano founder Charles Hoskinson being one of the original developers of Ethereum. Other similarities can be briefly categorized in that both digital assets are used for peer-to-peer transactions and as a mode of payment for services and processing power on their underlying blockchain networks.
Furthermore, both are commonly used as investment products, as users buy them on the Exchange and then hold or trade them in the hope of making a profit. The main similarities also include features such as the smart contract functionality, dApp development, sending financial transactions through the network’s native token and the same Proof-of-Stake (PoS) consensus mechanisms for your blockchains.
Ethereum started working with the Proof-of-Work (PoW) consensus, the original mechanism inherited from Bitcoin (BTC). But it switched to a PoS model in September 2022, which is a more environmentally friendly consensus mechanism than PoW. Meanwhile, Cardano launched with a purpose-built proof-of-stake (PoS) blockchain protocol for consensus called “Ouroboros.”
As for smart contracts, both blockchain networks continue to incorporate them into their operations. It is likely that, although both projects are still actively developing, Ethereum is a bit further along in its deployment than Cardano.
STAKING: ETHEREUM VS CARDANO. WHICH IS MORE PROFITABLE?
Staking refers to a popular way to earn rewards, for helping to support the network validation of blockchain transactions. The process helps the network remain decentralized by extending consensus to thousands of validators that secure transactions.
Ethereum (ETH) takes the trophy for the most staked cryptocurrency following the successful merger of the Beacon Chain consensus layer with the Ethereum execution layer in 2022. ETH staking returns on the chain currently sit around 4% APY. To stake Ethereum currently, users have to agree to lock up a minimum of 32 ETH until after the network upgrades to Shanghai Hardfork.
Alternatively, Cardano has no lockup period, ADA holders can stake at will, while maintaining the freedom to use their tokens to make payments and transfers and even enter Cardano’s DeFi ecosystem. Currently, ADA staking returns a return of around 3.5 to 5% APY.
Summary: ETHEREUM VS CARDANO COMPARISON TABLE
| Ethereum (ETH) | Cardano (ADA) | |
| Release date | July 30, 2015 | September 27, 2017 |
| Maximum Token Supply | endless | 45 billion |
| consensus mechanism | Proof-of-Stake (PoS) | Proof-of-Stake (PoS) / Ouroboros |
| Transaction fees | $2-$6 (depending on network traffic) | 0.16 ADA per transaction. |
| Transactions per Second | 30 transactions | 250-270 transactions |
| Programming language | solidity | Haskell |
| Web | https://ethereum.org/en/ | https://cardano.org/ |
CONCLUSION
Although all cryptocurrencies have their pros and cons, Ethereum is generally considered the safer bet compared to Cardano. It is significantly larger and more widely used than Cardano, which gives it an edge. In fact, Ethereum is also more established and more likely to survive in the long term. due to its larger developer community and ecosystem. Meanwhile, Cardano is relatively new and still developing its fundamentals.
However, given his methodical approach Cardano could witness sustainable growth over time, especially since it has a treasury that is run as a separate entity from the rest of the organizations. On the contrary, when it comes to the organizational structure, Ethereum is overseen by a single organization, the Ethereum Foundation.
In conclusion, it can be said that both networks have great growth potential in the future and that, for the moment, there is no clear winner. There is also the possibility that both Ethereum (ETH) and Cardano (ADA) will come out on top in the future.
Crypto Economy reviews and comparisons are for informational purposes only and should not be taken as investment advice. If you want to invest in cryptocurrency, do so at your own risk and do your own research beforehand.
