Is Cardano the Ethereum’s Successor? – Read Here Why!

Cardano is an open source decentralized blockchain network launched in mid-September 2017. Like Ethereum, Cardano supports smart contract functionality (self-executing computer programs). Nevertheless, it aims to take them to the next level by ensuring better speeds and interoperability.

Some think this will help make Ethereum smart contracts more functional so that anyone besides developers will be able to build their own decentralized applications. Cardano was founded by former Ethereum co-founder Charles Hoskinson and former Ethereum executive assistant Jeremy Wood, and is also overseen by three independent entities. These are: The Cardano Foundation, IOG (formerly called IOHK), and EMURGO.




Of course, the project is still developing. Nonetheless, Cardano has been widely promoted as an «Ethereum killer»: it aims to improve the current infrastructure of what is today the second largest cryptocurrency. Improvements include:

  • Significantly more affordable fees
  • Better scalability
  • Better performance and transaction speeds (compared to what is currently offered with the Ethereum 1.0 blockchain).

The competition in the field of decentralized applications is getting strong and Cardano aims to become a strong competitor.

Conversely, Ethereum is a public and decentralized blockchain network that is also an open source. It was the one that first introduced smart contract functionality to the world of cryptocurrencies. It enables peer-to-peer transactions with its own internal cryptocurrency, ether. Additionally, it supports the creation of fungible tokens, non-fungible tokens (NFTs), semi-fungible tokens, and decentralized applications.

 

What Cardano Learned from Ethereum

  • Architecture:

The Cardano blockchain network is divided into a couple of layers: the settlement layer (CSL) and the computation layer (CCL). The former is used for ADA transfers, while CCL provides smart contract functionality that enables developers to create programs (decentralized applications or d-apps). It is like having a couple of individual rooms for different activities, allowing operations at both layers to run more efficiently.

One of its great advantages is that you can update one of the rooms while the other is left intact. Or you can also make two updates on the sidelines with their independent attributes. In contrast, Ethereum handles ETH transactions and smart contracts in a single layer, which often leads to congestion and higher fees.

  • Consensus Mechanism:

One of the things that sets Cardano apart is its unique consensus algorithm Proof-of-Stake (PoS). This is a mechanism that defines how new transactions are made and added to the blockchain. Known as Ouroboros, the Cardano’s PoS system is more scalable and energy-efficient than Bitcoin’s Proof-of-Work (PoW). In this way, it is claimed to be the first verifiably secure system of its kind. In PoS networks, users do not need to mine tokens. Instead, they are part of a block validation process by staking the native token. This involves locking the tokens (adding them to a smart contract) so that they are more likely to be chosen to assign new blocks to the chain.

Likewise, the betting systems are weighted. This means that, the more coins are blocked, the greater the probability of being chosen to assign new transaction data to the next block. Similar to the PoW mechanism, the gamblers who are selected to allocate new blocks are rewarded with newly created coins. Ethereum uses a PoW protocol, a slower and less energy-efficient consensus mechanism. Since it launched, it has been slowly moving to a PoS algorithm as part of one of its updates to Ethereum 2.0. This one is a substantial constant update of the Ethereum blockchain to make it more scalable, with better energy and a productive efficiency.

  • Approaching:

Unlike other blockchain systems, Cardano makes use of a peer-reviewed scientific procedure before launching a new product, service, or upgrade. This has a greater reliability and security than most other cryptocurrency projects offer.

Firstly, academic articles are made in, which new ideas and their implicit technologies are explained. These articles are free for independent review by computer scientists and other interested academics. Comments can be made public or sent privately when reviewing the documents. As of today, Cardano has made more than 128 articles public. Ouroboros is a good example of an idea making it through this strict formal review process that continues to this day.

Which Ethereum Problems is Cardano Aiming to Solve?

  • Scalability:

This is one of the biggest issues with PoW blockchains, including Bitcoin and Ethereum. Although, in its first version, Ethereum addressed several of Bitcoin’s scalability problems, it is not yet capable of handling millions of new users. With the launch of Ethereum 2.0, the network should eventually be able to handle up to 100,000 transactions per second (tps).

However, Cardano is aiming to reach millions of tps thanks to Hydra, a second layer resolution that was built on Ouroboros. You could think of it as an extension intended to enhance the network, such as adding external memory or a card reader to your laptop. These second layer solutions are a kind of additional protocols that are built on top of a blockchain. They do some work with the aim of reducing the task overload of the main chain.

  • Interoperability between blockchains:

Many of the blockchain networks are independent and are not able to communicate with each other due to the fact that they use different architectures and programming languages.

Ethereum achieves interoperability through an ecosystem of proprietary tokens made to adhere to a specific standard, mostly ERC-20. Cardano has among its plans to create real interoperability so that all users can move bitcoin to Ethereum without intermediaries or friction. In theory, it is possible to achieve this using side chains, which are parallel chains attached to the main chain. It could be Bitcoin, Litecoin or Ethereum.

  • Sustainability:

Every blockchain needs to continually improve, but who could fund developers who are willing to work on future upgrades if the network is fully decentralized?

In this way, Cardano intends to solve this problem through a treasury. Every time a block is mined, some of the ADA rewards will slowly travel to the separate wallet. Then, when someone wants to propose changes to the network, they can submit a ticket and apply for grants. Eventually, the ADA holders (stakeholders) will vote and decide whether or not such proposal should be granted. Contrary to this, the Ethereum Foundation, which has great influence on how Ethereum works and where the network is headed, is a centralized organization.




  • Governance and Philosophy:

Cardano envisions having a voting system for stakeholders. It would take the form of a Decentralized Autonomous Organization (DAO) when the final stage of development, named «Voltaire», is implemented in its whole. With Voltaire, the Cardano community will be able to make important decisions regarding technical improvements, software updates, and funding decisions. Any ADA holder may vote or delegate others to represent them as part of a liquid democratic system. Cardano also has a unique philosophy. It is not just another blockchain.

Cardano intends to transform itself into a global cryptocurrency ecosystem that would reach out to non-bank individuals. With this in mind, it may support decentralized financial services and other projects towards a world that works better for the many.

Cardano Still Has a Long Way to Go

It is important to add that, at this stage, only 62 d-apps have been built on the Cardano blockchain compared to more than 2,997 that were built on Ethereum. Not to mention that Ethereum’s market capitalization is $442 billion, compared to Cardano’s $45 billion.

Cardano has a long road to travel, but with the help of its innovative technologies, strict approach, and hindsight… Well, it is holding a good place in tackling Ethereum’s dominance and trying to solve several of the most common issues faced by chains.