Cardano is a particularly interesting cryptocurrency that finally implemented smart contracts in its blockchain last year. This caused the price of Cardano’s ADA token to increase massively. Many saw and still see Cardano as the “Ethereum killer”. But can Cardano’s smart contracts lead to Ethereum being replaced in the future? In this article, we discuss whether the smart contracts at Cardano can lead to Cardano replacing Ethereum in the future.
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What is Cardano?
Cardano is a blockchain network that is characterized by the fact that it is technically excellent, secure, and scalable. Cardano was founded in 2017 by Ethereum co-founder Charles Hoskinson. The blockchain uses the modern Proof-of-Stake consensus mechanism. Cardano’s network token is the ADA. What is special about Cardano is the evidence-based approach with which the blockchain is further developed. Scientists are working on the blockchain and analyzing the weaknesses of other blockchains to fix them with the Cardano blockchain. Cardano is still a blockchain that bypasses the blockchain trilemma. It has high scalability, security, and decentralization.
What are smart contracts?
Smart contracts are specific programs that run on a blockchain. Unlike most other programs, although, smart contracts run on virtual machines. They are platform-independent. The variables of the programs are written on the blockchain. Smart contracts on the blockchain enable decentralized applications to be built on that blockchain. Blockchains that have smart contract functions can be the basis of these decentralized applications. The first major blockchain to use smart contracts is Ethereum. In recent years, more and more blockchains have been added.
When did Cardano introduce smart contracts?
Cardano is a blockchain network that is being developed over the long term and in clearly defined steps.
The smart contracts were implemented relatively late on the Cardano blockchain compared to other blockchains. The Goguen development phase was responsible for this.
The final implementation and thus the completion of the Goguen development phase did not come until the third quarter of 2021. However, the introduction of smart contracts ensured that Cardano’s ADA token saw a massive increase in September 2021 and rose to an all-time high of over $3.
How are smart contracts developing on Cardano?
If we look at the development of smart contracts on the Cardano blockchain, then we see great success in the last few months. We can see this with the increasing number of Plutus scripts on the Cardano blockchain. These once again reached a new all-time high in May.
The rise in smart contacts as opposed to the loss in value of the ADA token. The value of the ADA token has fallen particularly sharply over the past 6 months as part of the losses on the crypto market. The ADA is now just under $0.50. However, developments in smart contracts show that the project is moving in the right direction.
How do the numbers compare to Ethereum?
Compared to Ethereum, the numbers at Cardano are still much lower. At Ethereum, six-figure new smart contracts are used every month. In June 2021 alone there were 2.5 million smart contracts.
With its smart contracts, Cardano mainly focuses on the area of decentralized financial services (DeFi). In the DeFi area, the so-called Total Locked Value (TLV), one of the best parameters for the significance of a blockchain in the DeFi area, is currently 116 million US dollars.
This value is much higher for Ethereum. Ethereum’s TLV is currently above $54 billion. This shows the massive differences between the two blockchains at the moment.
Why do many analysts think Cardano Ethereum could become dangerous?
Cardano is a project that has a large fan base despite the weak price development of the ADA token. What makes Cardano so popular?
The fascination with Cardano comes from the long-term and evidence-based approach. The fact that Cardano analyses the weaknesses of other blockchains and fixes these errors in its blockchain ensures that Cardano is technically excellent.
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The implementation of smart contracts came too late for many crypto enthusiasts. At this point, new, extremely scalable blockchains such as Solana and Avalanche were already emerging, which were quickly approaching Cardano in terms of market capitalization and, in the case of Solana, even overtaking it at the time. But Cardano relies on continuity. The goal of the Cardano Foundation is to develop the technically best blockchains on the market.
Cardano is already topping the Ethereum blockchain in areas such as scalability and security. The advantage of Ethereum in smart contracts is an expression of the fact that the Ethereum blockchain has been offering smart contracts for years and is a pioneer in this area.
Can Cardano replace Ethereum in smart contracts?
There is still a long way to go for Cardano to replace Ethereum at the top of Smart Contracts and, for example, in the DeFi area. However, rapid development does not always have to be good. Terra has been taking a large chunk of all TLVs in the DeFi space for the past few months. The blockchain took significant market shares from Ethereum. But in the last few weeks, terra or its native cryptocurrency LUNA has imploded.
Cardano has constructed a reputation for reliability that “exciting” projects cannot match. At the moment, Cardano is working on massively increasing scalability after implementing smart contracts. This is to be done in the basho development phase. Cardano could ultimately achieve transaction speeds of up to 100,000 transactions per second.
Such an increase in scalability would give Cardano a huge competitive advantage over Ethereum in the future. Ethereum is currently still in the process of completing the transition to Ethereum 2.0, which is being delayed. But even Ethereum 2.0 could hardly offer such speeds.
If Cardano continues to develop positively, Ethereum could also become dangerous in the area of