Cardano vs. Ethereum

Cardano and Ethereum are both open-source decentralized platforms that allow for Smart Contracts to be programmed and Decentralized Applications to be developed and deployed.

Since the Ethereum Merge in 2022, the two blockchain networks both use a Proof of Stake (PoS) consensus mechanism to validate transactions and add new blocks.  

They each have roadmaps, loyal followers, teams of developers, and are led by two of the most influential founders in crypto.

Cardano was originally designed to be faster, more secure, and more efficient than Ethereum but how likely is it to ever become an “Ethereum killer” especially after the move to Proof-of-Stake?

In this article, we’ll compare Cardano and Ethereum in detail.

Key takeaways
  • Cardano and Ethereum are open source decentralized blockchains with Smart Contract functionality
  • Cardano’s token is ADA
  • Ethereum is ETH
  • Both ADA and ETH in the top ten best performing cryptocurrencies
    (#8 and #2 at the time of this writing)
  • Both use Proof-of-Stake mining
  • Ethereum was proposed by Vitalik Buterin in 2013 — it launched in 2015
  • Cardano was founded by Charles Hoskinson — one of the co-founders of Ethereum — in 2017

Similarities between Cardano and Ethereum 

These two cryptocurrencies offer a lot of the same features to their developers and users.

Native Tokens
Cardano and Ethereum are the blockchains or platforms, while native tokens are the cryptocurrencies that can be used on each platform. ADA fuels the Cardano blockchain and ETH fuels Ethereum.

Both tokens are among the top ten cryptocurrencies by market cap. In terms of USD equivalent ETH is much more valuable and much more popular. Ethereum hit an all time high of $4,878.26/ETH in November 2021. ADA reached $3.09/ADA in September of 2021. Both tokens retracted significantly (along with the rest of the crypto market) in 2022.  

DeFi
Both blockchains feature Defi ecosystems but Ethereum continues to lead the way with the number of Defi dApps running on it (3,000+ dApps).

NFTs
While both Cardano and Ethereum allow NFTs to be created on their networks, once again Ethereum was the first to support this with its ERC-721 standard. It continues to be the most widely used.

The oldest, most popular and most valuable NFT projects are all on Ethereum.

A few of them include:

 

CryptoPunks (2017)

Current floor price (lowest priced CryptoPunk available)
65.5 ETH ($85,000 USD)

Record sale:
#5822 sold for 8K ETH ($23.7 Million USD)

#475
#5822

 

CryptoKitties (2017)

 

Bored Ape Yacht Club (BAYC) (2021)

 

 

NFT projects launched via Cardano are not nearly as popular or expensive.

Popular NFT collections on Cardano include:

 

The Ape Society

Floor price: 8,350 ADA

 

SpaceBudz (2021)

 

and Clay Nation (2021)

#2927

 

What are the Main Differences between Cardano and Ethereum?

A few things:

Programming Language
Ethereum’s Smart Contract programming language is Solidity while Cardano’s Plutus is based on Haskell.

Solidity is more popular among developers and it’s easier to learn than Haskell. There are over 200,000 Solidity developers in the world.

Blockchain Architecture
Ethereum has one layer while Cardano operates on two layers, the Settlement Layer and the Computational Layer. As a layer 1 blockchain, Ethereum struggles with scalability issues as it solely handles all services. Cardano distributes its services across its two layers, for faster and better service delivery.

Governance Structure
Ethereum is overseen by a single organization,
the Ethereum Foundation. Cardano is overseen by three independent organizations, IOHK, The Cardano Foundation, and Emurgo.

Transaction Speeds
Cardano can handle 250 transactions per second.
Ethereum is expected to eventually handle up to 100,000 transactions per second but that will take some time. At the time of this writing it’s closer to 20 TPS.

Charles Hoskinson

Charles Hoskinson, the founder of Cardano is also one of the co-founders of Ethereum. He’s one of the reasons the two blockchains are similar.

It’s well known that Hoskinson originally created Cardano to tackle many of Ethereum’s early challenges.

 

Charles Hoskinson
Charles Hoskinson: Wiki

 

History and Milestones 

A Brief History of Ethereum

  • November 2013, Vitalik Buterin, published the Ethereum whitepaper. 
  • Ether went on sale via an ICO (Initial Coin Offering) in 2014
  • The Ethereum blockchain went live in 2015.
  • In 2016, the Homestead and Dao fork took place.
    The Homestead fork included several protocol changes and a networking change that enabled Ethereum to do further network upgrades.
    The Dao fork was a response to the infamous Dao hack that saw $60 million (at the time) worth of Ether stolen.
  • The Dao fork, which was voted on by 85% of the Ethereum community, moved all Ether from the faulty Smart Contract to a new secure contract. Those who objected to the hard fork went on to form the Ethereum Classic.
  • In 2017 the Byzantium hard fork happened. The hard fork reduced block mining rewards from 5 to 3 ETH among other changes.
  • In 2019, the Constantinople network upgrade took place. Some of the network changes included optimizing the Gas cost of certain actions in the Ethereum Virtual Machine (EVM) and ensuring the blockchain didn’t freeze before the Proof of Stake could be implemented.
  • In 2020 the Beacon Chain was launched. The blockchain is a Proof of Stake blockchain for the Ethereum network. It is a consensus layer for the network. It is Ethereum’s upgrade to a proof-of-stake blockchain.
  • In 2022 the Merge took place. Ethereum and the Beacon Chain merged, transitioning Ethereum to a Proof of Stake blockchain. The blockchain no longer uses miners but validators to validate transactions and add new blocks.

 

A Brief History of Cardano

Cardano’s history begins in 2015 when Charles Hoskinson and Jeremy Wood founded IOHK, a blockchain research and development company, and started its development. However it wasn’t until 2017 that Cardano was launched.

Cardano will roll out in five phases according to its roadmap: 

  1. Byron
  2. Shelley
  3. Goguen
  4. Basho 
  5. Voltaire

The Byron era began in 2017.
Cardano was introduced to the world. Not much could be done on the platform as users only buy, send, and sell their ADA cryptocurrencies, the blockchain’s native coin. 

The Daedalus wallet also came alive, providing a place where ADA holders could securely store their coins.

On July 29th, 2020, Cardano transitioned from the Byron era to the Shelley era. The network upgrade saw Cardano introduce staking and transition from a centralized federate system to a fully delegated Proof of Stake.

The Goguen era began in 2021 with the Alonzo hard fork that saw Smart Contract functionality introduced to Cardano. Users would be able to use Smart Contracts to create decentralized applications on Cardano through the Plutus development language.

The Goguen era began with the Mary hard fork that saw Cardano begin to support the creation of NFTs, the creation of new cryptocurrencies on Cardano as well as the tokenization of digital and physical assets.

As of 2022, Cardano is in its third phase, the Basho era, which is all about scalability. Since the beginning of the year, the network has had several updates to help with its scalability goal.

On 1st Feb 2022, Input Output Global, the development studio behind Cardano, through its Twitter page announced a network update that would see Cardano’s block size increase from 72KB to 80KB. Another network update was the increase of Plutus script memory units per transaction from 12.5M to 14M.

Pipelining is another key scaling improvement announced to be deployed in 2022. It is a scaling solution to Cardano’s consensus layer. It is designed to significantly increase the speed of transaction execution and the net transaction throughput of the Cardano network.

On 22nd September 2022, Cardano launched its most anticipated network upgrade, the Vasil hard fork. 

Named after the Bulgarian Mathematician and prominent Cardano community member who died in 2021, the Vasil hard fork will bring numerous upgrades to the Cardano network. It is meant to improve network capacity and lower transaction costs. It is also meant to improve Plutus, Cardano’s Smart Contract programming language used for dApp development.

The Case for Ethereum

On September 15th 2022 the Merge was executed. The network upgrade saw Ethereum transition from a Proof of Work (PoW) to a Proof of Stake (PoS) network.

As a PoS network, users expect to benefit from faster transaction speeds, low gas fees, and staking rewards but all this will still take some time.

According to Vitalik Buterin, the Ethereum network should be able to handle 100,000 transactions per second and gas fees could be reduced to $0.02. Most importantly, the network’s energy consumption rate is expected to reduce by 99.95%.

So far, the Merge is yet to cause any significant change to the network. The Ethereum network is still congested and users continue to struggle with high transaction costs. The expected benefits are on the way. But it will take some time before users start experiencing them.

There were high expectations for ETH holders in anticipation  of the Merge but that was not the case. ETH slumped by as much as 7% in the weeks following the Mergeafter a bit of a rally leading up to it. Another case of “sell the rumour, buy the news”.

Performance Against the US Dollar

ADA/USD

This chart from CoinGecko shows the performance of ADA against USD between Oct 2021 – Oct 2022.

As we can see from the chart, Cardano is in a downward trend. Cardano was trading at $0.47 against the US dollar, which is a big decline from its all-time high of $3.10.

ADA reached its all-time high in August 2021 and has been falling ever since. Despite this massive drop in price, Cardano is still one of the top cryptocurrencies by market capitalization.

The recent drop in price can be attributed to the bearish sentiment in the cryptocurrency market as a whole and affects ETH as well.

 

ETH/USD

This chart shows the performance of ETH against USD between October 2021 – October 2022.

Here the ETH/USD pair was trading at the $1,588 level and continues to show signs of bullish momentum. The pair was on an uptrend since July but really hasn’t moved upwards despite the success of the Merge in late September.

 ADA vs. ETH 

This chart here shows the performance of ADA vs. ETH since inception. 

As we can see, ETH has been outperforming ADA by a fairly wide margin. This is likely due to a combination of factors, including strong fundamentals, community support, and market momentum.

Ethereum seems to have weathered the early 2021 storm better than most altcoins and looks poised to continue its upward trend in the near-term. ADA is lagging behind ETH, and looks to be consolidating after the Proof-of-Stake upgrade

Conclusion

Each of these two cryptos brings a lot of value to the crypto space and both are likely to be around for a long time.

As an investor I’d be happy to hold both of them for the longer term, but I suspect that ETH will remain on top for the foreseeable future. It has the first mover advantage and many more projects are being developed on Ethereum. Plus, now that it has moved on to Proof of Stake successfully the future seems even brighter.

It’s up to you to decide if, when or how much you can afford to invest in these two cryptos or any other digital assets.

Only your financial advisor can offer financial advice — not us.