Can Cardano Solve Ethereum’s Problems?

Can Cardano Solve Ethereum’s Problems?

Ethereum has enjoyed a lot of success over recent years, but as it’s grown its infrastructure has led to volatile transaction fees, congestion on the network and expensive node operating costs. Cardano, on the other hand, had the benefit of arriving later to market and its protocol was designed to address the main issues of Ethereum:

Scalability: This is one of the larger issues with PoW blockchains, including Bitcoin and Ethereum. Even though the initial version of Ethereum addresses some of the scalability issues of Bitcoin, it is still not capable of handling millions of new users. With the launch of Ethereum 2.0, the network could eventually handle up to 100,000 transactions per second (tps). But Cardano is working to reach millions of tps thanks to Hydra, a second-layer solution built on top of Ouroboros – you can think of it as an extension meant to improve the network, like adding an external memory or card reader to your laptop. Second-layer solutions are additional protocols built on top of a blockchain that perform certain tasks to reduce the workload for the main chain.

Interoperability: Another problem Cardano wants to solve is the lack of proper interoperability among blockchains. Most blockchain networks are independent and cannot communicate with each other because they use different architectures and coding languages. Ethereum achieves interoperability within its own ecosystem of tokens created to adhere to a specific standard, usually ERC-20. Cardano plans to build true interoperability so any user could move bitcoin to Ethereum without intermediaries and friction. This can theoretically be achieved through sidechains, which are parallel chains attached to the main chain, be it Bitcoin, Litecoin or Ethereum itself.

Sustainability: Every blockchain needs ongoing improvements, but who can fund developers willing to work on new upgrades if the network is fully decentralized? Cardano aims to solve this issue with a treasury. Whenever a block is mined, part of the ADA rewards will eventually go to the separate wallet, and when someone wants to propose changes to the network, they can submit a ballot and ask for grants. Eventually, ADA holders (stakeholders) vote and decide if the proposal should be granted or not. Conversely, the Ethereum Foundation, which has a major influence on how Ethereum works and where the network is heading to, is a centralized organization.

Governance: Cardano intends to host a stakeholder voting system in the form of a decentralized autonomous organization (DAO) once the final stage of its development, named “Voltaire,” is fully deployed. With Voltaire, the Cardano community will make meaningful decisions related to technical improvements, software updates and funding decisions. All ADA holders will be able to vote or delegate others to represent them as part of a liquid democratic system.

Philosophy: Last but not least, Cardano has a unique philosophy. It’s not just another blockchain. Cardano aims to become a global cryptocurrency ecosystem that would reach the unbanked people, support decentralized financial services, and make the world work better for all. For example, IOG has partnered with several governments of African countries to promote the blockchain for various use cases.

Cardano still has a lot to prove

It’s worth pointing out that at this stage only 62 dapps have been built on Cardano’s blockchain compared to more than 2,997 built on Ethereum. Not to mention, Ethereum’s market capitalization stands at $442 billion versus Cardano’s $45 billion market capitalization.

There is also 9 million ether currently locked away in DeFi protocols (worth $33,811,920,000 at press time) while it’s unknown exactly how many ADA tokens have been deposited in DeFi protocol smart contracts.

The road ahead is long for Cardano but thanks to its advanced technologies, rigorous approach and gift of hindsight, it appears to be in a strong position to challenge Ethereum’s dominance and address some of the most common blockchain problems earlier generation blockchains face, namely scalability, sustainability, interoperability and governance.

Share to Social Media

Share on facebook
Share on telegram
Share on twitter
Share on linkedin
Share on pinterest
Share on reddit
Share on whatsapp

Recent News

Hot stories

Promotion

Join Our Newsletter