Does Cardano have a sustainable competitive advantage[s]?
In this article we’ll attempt to show Cardano's competitive advantage[s] [if there are any] compared to ETH, SOL and other layer 1 blockchain companies. In the spirit of full disclosure, I own ADA, but I also hold ETH and have owned SOL. We’ll particulalry review issues of scalability, security, decentralisation, governance, and real-world use.
1. First up - SCALABILITY.
Comparatively, Ethereum is known for experiencing high gas fees and network congestion. Additionally, Solana made waves with its blazing-fast speeds but at the cost of security. Cardano strikes a balance with its specific proof of stake algorithm.
Due to Cardano’s proof of stake algorithm, Cardano can securely scale to handle 250 transactions per second. But the developers have even bigger plans. Through innovations like Hydra, Cardano aims to scale up to an astonishing 1 million TPS! Even Visa processes only 24,000 TPS. This would make Cardano by far the most scalable layer 1 blockchain on the market. This is a substantial, sustainable competitive advantage aiding real-life use cases.
2. But scalability means nothing without SECURITY.
Comparatively, Ethereum and Solana have both suffered significant exploits and network outages. Cardano, on the other hand, has never been hacked. That's because the protocol is built using peer-reviewed academic research.
Leading academics check each other's work, drastically reducing bugs. This rigorous approach makes Cardano one of the most secure blockchains ever developed.
3. Security and scalability are nice - but Cardano balances them with DECENTRALISATION.
Unlike Solana, which relies on fewer than 200 validators, Cardano has over 2,000 diverse stake pools operating around the world. This makes its network much harder to compromise. However, Ethereum has over 400,000 validators. Ethereum uses a slightly different system than ADA; however, ETH is undeniably the largest altcoin layer 1 blockchain.
Cardano uses randomised slot leader selection and delegation to ensure no single entity controls over a 50% stake. This may be the most decentralised POS blockchain in existence.
4. Cardano also stands out for its GOVERNANCE.
To avoid disruptive hard forks, Cardano has a voting system that lets ADA holders have a say in upgrades. This formal on-chain process brings the community together and provides stability.
Meanwhile, Ethereum's contentious hard forks have divided the community into rival camps like Ethereum and Ethereum Classic. Cardano's governance is a competitive advantage. With that said, Ethereum has existed for longer; therefore, who knows whether there may be hard forks in the future.
5. Finally, there's REAL-WORLD ADOPTION.
Most layer 1s today are only used for speculation. However, Cardano is focused on regulated use cases. In Ethiopia, a Cardano-based ID system tracks student performance across 3,500 schools. More DeFi and supply chain applications are launching every year.
While early, Cardano is gaining traction in the developing world thanks to its low fees and security.
So, does Cardano have a sustainable competitive advantage against its competitors? Personally, I would suggest that Cardano’s unique algorithm, governance and real-world use case differentiate it from another layer 1 blockchain. After all, actual utility brings value.
However, that is not to say competitors such as Ethereum and Solano don’t have their own unique qualities and use cases because they do so perhaps one of the most important future characteristics will be the strength of the community in each blockchain. Marketing, partnership and adoption are key for each of these companies to continue to grow.