Cardano vs Ethereum: Comparing Use Cases, Who Wins DeFi Race?

Cardano’s peer-review and research-driven approach to blockchain is a strong competition to Ethereum’s market dominance and first-mover advantages. However, Ethereum clearly leads in the smart contracts distribution and DeFi adoption race, with over 200 projects currently built on its network, while Cardano trails with about 100 to its name.

Nonetheless, enthusiasts and experts dub Cardano the “Ethereum killer” due to the improvements the Cardano ecosystem offers to existing Ethereum challenges. It’s fair to say two major differences between the two rivals are philosophy and strategy.

But way beyond them, we could highlight a few more ways that the blockchains are different from each other, their use cases, and their potentials for offering a truly decentralized ecosystem.

One question you may want to answer yourself after reading this piece yourself is whether Cardano is really the “Ethereum killer.” But first, let’s explore the core differences between the two Web3 giants.

Operational Philosophies

Cardano adopts a detailed and organized approach in its philosophy, while Ethereum follows the launch first-then-upgrade philosophy to its protocol. One may assume it to be as a result of their founders’/CEOs’ ideologies on blockchain technology.

Charles Hoskinson was a co-founder and contributor to the Ethereum network before founding Cardano in 2015, adopting stringent and academic-backed plans and protocol to the network, irrespective of how long it took to actualize.

While speaking on the scientific correctness behind Cardano’s Ouroborus, Hoskinson noted the rigorous steps taken to ensure that the paperwork behind it is academically correct and worthy to be a guide for several other projects.

“So if you Google Ouroborus, for example, you’ll see the first result on google’s paper, and then you’ll see citations,”’ Hoskinson said. “Those are all other papers that have referenced our work and built on top of our works if you click that. I think there are over 900 of them.”

Charles further emphasized business philosophy and what separated the network from Ethereum, based on concrete, detailed and well-researched protocol instead of just putting out a crappy network and hoping to scale and enhance it in the long run.

This statement clearly shows how much of a better protocol Cardano’s network is than Ethereum, which a young entrepreneur, Vitalik Buterin, chairs. Vitalik and Charles have always gone head to head in explaining which network offered better services, and this has appeared in the media as the “crypto war.”

While this has appeared to pundits as a trend, the real crypto community views it as an innovative approach to scale the blockchain and crypto ecosystem to encourage a strong rivalry to boost blockchain networks and their protocols.

Vitalik Buterin launched Ethereum as a young crypto enthusiast, capitalizing on the weakness of  Bitcoin at the time. On the other hand, Charles had been a huge contributor to Ethereum, capitalizing on Ethereum’s trilemma in scaling, decentralization, and security issues to create a near-flawless Cardano network.

Strategy

Comparing the two networks in terms of strategy, Cardano focuses on regions with lesser blockchain and DeFi adoption, beginning with Africa and South Asia. While Ethereum, a renowned brand name in DeFi adoption, follows a global finance trend.

Speaking on his focus on developing countries, Hoskinson noted the existing challenges that people face in Cardano’s target regions.

“I started my company in February of 2015 with a dream of delivering economic identity to those who don’t have it,” Hoskinson stated. “In the developed world, it’s easy for us to have an identity, passports, and driver’s licenses. It’s easy for us to travel, prove our creditworthiness and get credentials.

“But when you live in the developing world, it’s a very different prospect. It isn’t easy to globalize. It’s difficult to prove claims whether you’re producing something with fair trade or in a sustainable way.”

Cardano’s mission is clear: establish itself as a name in regions with less DeFi adoption and scale its ecosystem organically. Ethereum, a big name with a strategy already in place, looks to advance further in that respect and scale its ecosystem.

Cardano’s mission also proves why it may be a bigger prospect for investors than Ethereum. But how important would its offering be with the introduction of Ethereum 2.0, a direct competitor to Cardano’s protocols considering its influence in the DeFi sphere?

Transaction Capacity (Fees, TPS, and Confirmation Time)

In terms of transaction capacity, Cardano dominates its rival, Ethereum. Cardano could process about 250 transactions per second (TPS) compared to Ethereum’s 100 TPS.

With Ouroborus Hydra in view, Cardano could process up to 2.5 million transactions per second. One may say it’s overly assertive, considering that such an amount could not be applicable at a go in reality.

But, to be fair, the world’s financial system is constantly evolving to cover a broader amount of transactions, and by the time “the crypto dream” of adoption by the government comes to be, Cardano may have the last laugh.

In the same vein, Ethereum 2.0, which is still in the pipeline, is targeting only 100,000 TPS, putting it leagues behind Cardano’s speed offering.

Transaction fees and confirmation time are also slightly different for the two, with Cardano offering a lesser transaction fee and slightly slower confirmation time ($0.21 and 69 secs respectively), and Ethereum, a higher average transaction fee and faster confirmation time ($20 and 39 secs).

Energy Consumption

Cardano already adopts the PoS consensus, which consumes less energy than Ethereum’s PoW protocol which it looks to stop in its ETH2.0 module.

Cardano energy consumption in validating crypto on its blockchain stands at 0.00052 terawatts compared to Ethereum’s 14.81 terawatts. This situation has sparked concerns from stakeholders and the government about the Ethereum network, a huge plus for Cardano.

Cryptocurrencies

At the time of this writing, Ethereum dominates in both market capitalization and crypto value. In November 2021, Ethereum reached an all-time high of $4,700 in value, while Cardano’s all-time high was barely $2.64 around August of 2021.

Ether is worth over $560B in market capitalization while Cardano trails by over $70B, almost four times Ethereum’s worth in the market. However, a talking point should be the yielding potential in the two tokens.

While Cardano may look small in value, it has a higher potential than Ether. According to Walletinvestor, if an investor buys Cardano (ADA) worth $100 now, his investment stands to yield around +488.6% in 5 years, compared to Ether’s +287.68% at the price and time.

Use Cases

DeFi projects on Ethereum revolve around finance, while Cardano looks to combine real-world use cases and finance. However, we look forward to seeing more real-world solutions in the coming ETH 2.0.

While there are over 100 DeFi services on Cardano, here are some disruptive projects on the network:

• Atala Prism: a decentralized digital identity management solution on the Cardano network that enables users to own and manage their data and personal information. It finds its application in systems easily marred with fraud and where identity verification is an issue.

Atala Prism is gradually becoming the most sought-after identity solution for several projects in Africa, in keeping with Hoskinson’s vision of providing economic identity to developing nations.

• Blockademia: a disruptive solution on Cardano that provides a decentralized information management system for issuing and checking the authenticity of issued diplomas, certificates, contracts, documents, source code, videos, etc.

Once more, Blockademia is another reflection of Hoskinson’s philosophy of building a platform that offers scientifically-proven approaches to real case problems. Running a Proof-of-Truth consensus, this solution solves the growing challenges of copyright infringements, plagiarism, and academic fraud, and certificate forgery.

Having the upper hand, Ethereum boasts over 200 projects on its blockchain. But here are some disruptive projects on the network:

• uPort: a digital solution that provides decentralized identities for users through its dApp powered by Ethereum. It can be tagged as a competitor to Atala Prism, except that both projects run on different ecosystems.

That means existing and upcoming solutions on Cardano can use Atala Prism, while solutions on Ethereum can use uPort or its alternative. However, when it comes to their intrinsic features, both digital identity projects are quite different.

• TenX: a decentralized payment solution powered by Ethereum’s network that issues debit and credit cards while confirming transactions on the blockchain. Although it’s built on Ethereum, its card supports other top cryptos like BTC, DASH, and LTC.

TenX claims it will share its profit with the holders of its native token, PAY, and users of its debit/credit cards.

Our CEO @marin1602, who is the #Cardano ambassador for Croatia with @IOHK_Charles on #CardanoMeetUp in Plovdiv#blockademia #cardano #blockademiaACI #cardanocommunity #blockchain #blockchaintechnology pic.twitter.com/hPkOHjEED2

— Blockademia – ACI (@blockademia_aci) October 11, 2021

Conclusion

Cardano and Ethereum are strongly evolving ecosystems, and the best way to look at them is through the eyes of their objectives, strategies, and philosophies.

While Ethereum focuses more on a global finance scale, Cardano looks to scale and bring blockchain and decentralized services to regions with lesser adoption through strategic partnering and community building.

In a bid to allow users and dApps to get the most of the two blockchains, a few emerging projects are building bridges between both ecosystems. The goal is to foster integration between both platforms.

However, it doesn’t stop you from having a valid comparison of both. So that said, what do you think – is Cardano the Ethereum killer?

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