Cardano vs Ethereum—Which Blockchain Is Better?

Two of the most popular blockchains for smart contracts, decentralized applications and services are Cardano and Ethereum. These blockchains are maintained by a decentralized network of node operators, and don’t rely on any centralized entities such as any institution, business, company, or server.

Ethereum introduced the concept of smart contracts to blockchains, while projects like Cardano followed with an attempt to improve upon the vision laid out by Ethereum. While Ethereum has the most users, dApps, transaction volume and TVL by far, Cardano could become a serious competitor in the future.

Cardano vs Ethereum Quick Comparison

Before we take a closer look at each respective blockchain, let’s go through a quick comparison showcasing some of the most important aspects of Cardano vs Ethereum. We’ll be looking at transaction throughput, average transaction fees, and more.

  Cardano Ethereum
Launched in 2017 2014
Native asset ADA ETH
Consensus Proof-of-Stake Proof-of-Stake
Smart contracts language Marlowe, Plutus (Haskell-based) Solidity
Max transactions per second ~250 ~15
Block time ~20 seconds ~12 seconds
Average transaction fee $0.10 $2
Market cap $10.5 billion $150.2 billion

*Data as of December 7, 2022

The origins of Ethereum

Ethereum’s whitepaper dates all the way back to 2013, and the Ethereum blockchain was officially launched in July 2015. The person who wrote the whitepaper and played a major role in the development of Ethereum is Vitalik Buterin. However, Ethereum was founded in partnership with 7 people, including Cardano founder Charles Hoskinson and Polkadot founder Gavin Wood. In the Ethereum ICO organized in 2014, ETH could be purchased with BTC.

The origins of Cardano

Charles Hoskinson founded Input Output Hong Kong (IOHK) after leaving Ethereum. This company still leads the technical development of the Cardano project. The other two key entities in the Cardano ecosystem are Cardano Foundation and Emurgo. The Cardano blockchain was launched in September 2017. Cardano raised funds for development through an ICO, which concluded in December 2016.

What is Ethereum?

Ethereum is a public, open source and decentralized blockchain network that introduced smart contract functionality to the blockchain world. The network enables the creation of custom tokens, NFTs, and various decentralized applications such as decentralized crypto exchanges and DeFi protocols. ETH has consistently been the second-highest cryptocurrency by market cap since March 2016, although it was briefly surpassed by XRP on a few occasions. When comparing Ethereum vs Cardano, we must take into account that Ethereum has a market capitalization of about 14 times higher than Cardano.

Ethereum is the highest adoption project within the entire blockchain industry. This platform, which already has a very large user base, often processes over 1 million transactions every day. DeFi platforms, GameFi games (Play-to-Earn & Metaverse), NFT collections and many other categories of dApps are commonly built on the Ethereum blockchain.

Ethereum 2.0

The Proof-of-Work consensus algorithm that was used by Ethereum between its launch in 2015 and September 2022 was very energy intensive, and posed serious limits to the scalability of the Ethereum platform. 

The Ethereum project had included a transition to Proof-of-Stake in its roadmap for quite some time. The first big step towards this happened in late 2020, when the Beacon Chain officially launched. Then in September 2022, the Beacon Chain was combined with the Ethereum mainnet in a process called “The Merge”. This completed Ethereum’s transition to a Proof-of-Stake consensus algorithm and immediately made the network much more environmentally friendly.

During periods of high demand for the Ethereum network, transactions can get very expensive ($20 and above for a single transaction). Therefore, it’s crucial for the Ethereum project to improve the scalability of the blockchain. While the transition to Proof-of-Stake hasn’t had a significant impact on transaction costs and speeds by itself, it lays the foundation for future upgrades such as sharding, which will actually make Ethereum much cheaper and faster to use.

During the bear market, Ethereum transaction fees have dropped significantly compared to the bull market, averaging $0.27 for token transfers and between $0.70 to $2.40 for complex smart contract transactions.

  • High adoption
  • Strong decentralization
  • Over 1 million daily transactions
  • The most comprehensive dApp ecosystem
  • A leader in sectors such as DeFi and NFT
  • Token burning mechanism
  • $24.46b TVL
  • Low throughput
  • Relatively high transaction costs
  • No upper cap on ETH supply

What is Cardano?

Cardano is a blockchain that uses a Proof-of-Stake consensus algorithm and supports smart contracts functionality. The Cardano project prides itself on applying strict academic standards in their coding and development in order to release secure and robust protocols. 

However, the ecosystem of decentralized applications on the Cardano network is still relatively underdeveloped. Cardano’s smart contracts functionality is still not quite as flexible and powerful as Ethereum’s Solidity, which makes it challenging to create complex decentralized applications. As new updates are released, however, we will likely see Cardano’s smart contracts be much more competitive.

Cardano’s smart contracts platform is called Plutus. It is based on the Haskell programming language, which is a functional programming language that allows for a high degree of security and predictability. However, Haskell is not a widely adopted programming language, which might make some developers hesitant to build their smart contracts on Cardano.

Ouroboros Consensus Mechanism

Ouroboros, a unique consensus mechanism developed by Cardano, is an energy-efficient PoS algorithm. Proven to be secure against delayed adaptive corruption, this protocol can handle approximately 1,000 transactions per second with the Hydra scalability solution algorithm. Currently, the Cardano network has an average daily trading volume of more than 100,000 transactions.

  • Good scalability
  • High security
  • Limited supply of 45 billion
  • Does not have a very large user base
  • Smart contracts are written in Haskell, a programming language that is not widely adopted
  • Low TVL (total value locked) compared to other blockchains

Is Cardano (ADA) a Good Investment?

At the time of writing, Cardano’s native asset ADA is down about 90% from ATH price, which was reached in September 2021. Cardano was one of the many cryptocurrencies that were badly affected by the harsh crypto winter in 2022, but the team continued development and progressing along its roadmap.

The ADA coin, which was priced at $0.316 when entering December 2022, may reach or even exceed the $0.50 level again next year, according to Coincodex’s ADA price prediction algorithm.

Is Ethereum (ETH) a Good Investment?

Ethereum, on the other hand, has suffered slightly less in the crypto winter compared to Cardano. At the time of writing, ETH is down around 74% from its ATH price. Ethereum’s roadmap includes upgrades such as sharding, which will be required for the project to maintain its industry-leading status. 

Coinsprediction.net’s ETH price prediction algorithm shows that ETH price could exceed $2,300 in 2023 and Ethereum could be one of the cryptocurrencies to start the new bullrun. If the macroeconomic conditions improve, both cryptocurrencies may test their ATH levels again in the next 2 years.

Is Cardano better than Ethereum?

Cardano and Ethereum both tackle a similar problem—creating a blockchain that supports smart contracts while being secure and scalable enough for widespread use. Currently, it’s fair to say that Ethereum is further along in its path, but it has also had a head start of almost four years.

Can Cardano replace Ethereum?

At the moment, it doesn’t look very likely that Cardano can replace Ethereum. The Ethereum ecosystem is much more active in terms of user count and trading volume, and there’s also greater variety of decentralized applications to choose from. Meanwhile, Cardano investors are banking on the project’s slow and steady approach to deliver a superior smart contracts platform in the future.

ADA vs ETH—The bottom line

Ethereum and Cardano are both solid platforms for smart contracts and decentralized applications. Currently, Ethereum is much further along its development roadmap and has a much larger community of users, as well as a more diverse ecosystem of DApps. Cardano could definitely gain some market share in the future once its smart contracts functionality is fleshed out further, which would attract more developers to the ecosystem. At the moment, however, it’s difficult to image Cardano overtaking Ethereum as the number one smart contracts blockchain.

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