Ethereum, the leading blockchain of decentralized finance (DeFi) went live in 2015. It is a decentralized open-source blockchain project and allowed the execution of smart contracts.
While smart contract development is a brilliant innovation in the blockchain space, DeFi development opened gates to new financial solutions on blockchain. The users can now borrow, lend cryptocurrencies without any intermediary and earn interest.
DeFi is undergoing meteoric growth. But unfortunately, the Ethereum network’s inability to meet the growing demand without incurring high transaction fees has been hindering the growth. This is where blockchains like Cardano and Solana come in.
Capable of delivering higher throughput at lower fees, both Cardano and Solana could accelerate the adoption of DeFi development services. But which one is of them is more DeFi ready? Let’s find out.
What is Cardano?
Cardano is a third-generation blockchain platform that uses DPoS (decentralized proof-of-stake) consensus mechanism. This consensus mechanism is known to be more energy-efficient than proof-of-work used by the Ethereum network.
The Ouroboros consensus protocol powers the Cardano platform. As a highly secure PoS protocol, the Cardano blockchain’s roadmap has five eras (phases). Currently, it is at the end of the 3rd era. After the recent Alonzo Hardfork, the developers can now deploy smart contracts on the blockchain. This has made Cardano DeFi ready as developers can now creating decentralized applications (DApps) to provide decentralized finance (DeFi) services to Cardano users.
Developers have given a thumbs-up to the Cardano smart contracts. With 4 days of the Alonzo hard fork, 40,000 smart contracts have been deployed on Cardano. The upcoming eras of development are scalability and governance.
What is Solana?
Solana is a high-performance blockchain that is designed to support the development of smart contracts and decentralized applications. By using the proof-of-stake and proof-of-history consensus mechanism, Solana has proven to be one of the most performant blockchains.
By using the Proof of History (PoH) consensus mechanism, Solana blockchain users can create historical records with an attached proof of time. This helps the Solana network to deliver higher efficiency and a higher throughput rate.
As Solana had started supporting smart contract development a long time back, its DeFi ecosystem is roaring with success and that has led to the massive rally of SOL, the native Solana token which is up almost 7,300% year to date.
Differences between Cardano and Solana
Take a look at Solana’s total value-locked DeFi chart.
In the last 3 months, the TVL surged from $900 million to $8.87billion. This milestone shows Solana holds promise to compete against Ethereum. On the other hand, Cardano DeFi development is still in its infancy as it recently started supporting smart contract development. Here is how Cardano and Solana differ from each other technically:
Transaction per Second
Solana claims to be capable of delivering a throughput of 50,000 transactions per second (TPS). This is much higher when compared to the Ethereum network that still processes only 15 transactions per second. However, recently Solana blockchain’s mainnet-beta experienced intermittent instability due to a massive increase in transaction load which peaked at 400,000 TPS.
Cardano on the other hand is delivering a transaction throughput of 270 TPS without any instability. But this is expected to scale up to 1 million TPS after Cardano releases its layer-2 solution Hydra which is currently under development.
The Average Fee per Transaction
Solana DeFi users are enjoying low-cost transactions on the Solana blockchain. At present, one transaction on the Solana network costs only $0.00025 this is far less than Ethereum Network. On the other hand, each transaction on the Cardano network costs close to $0.25 which makes it almost 1000 times costlier than Solana. However, as the adoption of the Cardano blockchain increases and the number of transactions increases, the per-transaction cost will per reduce.
For blockchain networks transaction latency is the time that the network takes to confirm the acceptance of a transaction. In simple words, it is the time gap between the time of submission of a transaction and the time of acceptance by the network.
For Solana, the network latency is 0.4 seconds while for the Cardano network the latency is 20 seconds. But with the release of Hydra, the network might be able to achieve latency as low as 1 second.
Number of Validators
Cardano explorer reveals that the network is supported by almost 852,181 delegators. On the other hand, the Solana network has 978 validator nodes. This means Cardano blockchain is more decentralized than Solana blockchain.
Total Transactions to Date
With the growing popularity of the Solana network, the number of total transactions to date has been growing immensely. Solana Explorer shows that close to 29 billion transactions have been processed to date.
However, on Cardano, only 13 million transactions have been processed to date. This is clearly because Cardano recently become capable of smart contract development.
Both Cardano and Solana support staking. Currently, almost 384 million SOL tokens are staked in different stake pools. On the other hand, 23 billion ADA tokens are staked right now. This is primarily because of Cardano’s Initial Stake Pool Offering or ISPOs.
Wrapping it up
Solana is leading as an Ethereum competitor. That’s because it had delivered smart contract development support way before Cardano. Now that Cardano ecosystem developers can also deploy smart contracts, we will see more NFT and DeFi development on the Cardano blockchain also. If Hydra, the Cardano scaling solution is delivered in time, we might see a huge migration of developers from Ethereum and Solana to Cardano. Meanwhile, right now Solana seems to be way ahead of Cardano.