Analyst Thinks Cardano is Better than Ethereum! Looking at the Data from ETH VS ADA

Cardano (ADA) and Ethereum (ETH) have long been among the top contenders in the blockchain space, with both networks powering decentralized applications (dApps), smart contracts, and staking. 

However, an increasing number of analysts and industry experts argue that Cardano has several advantages over Ethereum, especially in terms of scalability, energy efficiency, and governance. 

Let’s delve into the key differences between ADA and ETH to understand why some analysts believe Cardano is ahead of Ethereum.

1. Early Adoption of Proof-of-Stake (PoS)

Cardano was built from the ground up with a Proof-of-Stake (PoS) consensus mechanism, unlike Ethereum, which initially used Proof-of-Work (PoW) and only transitioned to PoS in 2022 through the highly anticipated Ethereum 2.0 upgrade.

Cardano’s early implementation of PoS allowed it to focus on energy efficiency and decentralization right from its launch. PoS is inherently more energy-efficient than PoW because it doesn’t require the extensive computational power that PoW needs for mining. This gives Cardano a head start in the quest for sustainable blockchain solutions.

In contrast, Ethereum’s shift to PoS was a gradual process that involved significant updates across its entire ecosystem. This transition took years and required coordination with various decentralized applications (dApps) and validators. 

By launching with PoS, Cardano saved time and resources, refining its staking process with features like delegated staking—where users delegate their tokens to staking pools to help secure the network and earn rewards. This has contributed to Cardano's ability to scale in a decentralized way.

Also read Is ADA Turning Bullish? Technical Analysis Points to Potential Profit Opportunity

2. Superior Transaction Model and Scalability

Cardano uses an innovative extended unspent transaction output (eUTXO) model, a feature that sets it apart from Ethereum's account-based model. The eUTXO model helps Cardano avoid transaction conflicts, making it easier to process multiple transactions simultaneously. This design ensures that the state of the blockchain is more predictable and consistent, even as user interactions increase.

On the other hand, Ethereum’s account-based model allows for flexibility but can lead to more complex interactions. In Ethereum’s system, each account holds balances and can execute transactions, but this can create challenges when multiple users interact with the blockchain at the same time. 

Ethereum Rollups

To address these limitations, Ethereum has been exploring solutions like rollups, which are Layer 2 solutions that help improve scalability by processing transactions off-chain before settling them on the main chain. However, Ethereum's reliance on custom smart contracts for tokens like ERC-20 and ERC-721 still introduces complexity and additional costs.

Cardano Native Tokens

Cardano, in contrast, allows users to create and transfer native tokens without the need for writing custom code, simplifying the token creation process and reducing the risk of vulnerabilities. This makes it easier for developers to launch new tokens without incurring the costs associated with smart contracts on Ethereum.

Also read Is Cardano A Strong Blockchain Platform? Its Creator Thinks So Compared to New Projects

3. Governance and Community Involvement

Another major area where Cardano outshines Ethereum is in on-chain governance. Cardano is actively building a decentralized governance model where token holders can vote on protocol upgrades and changes directly on the blockchain. This approach aims to give the community more control and involvement in the development of the network, ensuring that updates reflect the collective decision-making of the Cardano ecosystem.

Ethereum, by contrast, relies on social consensus and off-chain discussions for decision-making. While this system has worked well for Ethereum in the past, it doesn’t allow for direct community participation in protocol governance. Decisions about upgrades or changes are made by a small group of developers and stakeholders, which can create a sense of centralization.

Cardano’s emphasis on decentralized governance with a transparent and participatory voting system represents its commitment to long-term growth and community involvement.

Also read Ethereum White Paper – Is There Something New?

4. Scalability: Cardano’s Hydra vs Ethereum’s Rollups

Cardano’s Hydra scaling solution is one of the most innovative aspects of the network. Hydra is designed to significantly increase the throughput of the Cardano blockchain by enabling the processing of up to 1 million transactions per second (TPS). 

This breakthrough was demonstrated in tests conducted in late 2024, where Hydra successfully processed a massive number of transactions without altering the core structure of Cardano’s blockchain.

Ethereum, while also pursuing scalability solutions, primarily relies on rollups. Rollups are Layer 2 solutions that bundle multiple transactions together, reducing the load on the Ethereum mainnet. 

While rollups have proven effective in improving Ethereum's scalability, they are still a work in progress and depend on Layer 1 for final settlement. Cardano’s Hydra, on the other hand, is fully integrated into its mainnet, providing a more seamless solution for high-volume transactions.

Also read Will ADA Go Up After Its Surprise Airdrop? Looking at the Current Data

5. Market Capitalization and Token Supply

As of the latest data, Cardano (ADA) has a circulating supply of about 36 billion ADA, with a hard cap of 45 billion ADA. This capped supply is an important feature as it ensures that the total number of tokens will not exceed a set limit, which can help mitigate inflation and maintain value over the long term.

Ethereum (ETH), on the other hand, has no fixed supply cap. As of now, there are about 120.6 million ETH in circulation, and the total supply continues to increase over time due to the lack of a hard cap. This means that Ethereum’s inflationary nature could potentially have an impact on its price stability in the long run.

Despite Cardano's smaller market cap of about $23.3 billion compared to Ethereum's $198.1 billion, ADA offers a more competitive entry point for investors, with relatively lower risks and more room for potential growth. 

With its capped supply, Cardano offers a more predictable and sustainable growth model compared to Ethereum's inflationary structure.

Source: X

Conclusion: ADA vs ETH Which is the Better Investment?

While Ethereum (ETH) has the largest user base and developer community in the blockchain space, Cardano (ADA) offers several advantages that could make it a more attractive long-term investment. Cardano’s early adoption of PoS, its superior transaction model, on-chain governance, and innovative scalability solutions all position it well to outperform Ethereum, especially as the demand for more sustainable, decentralized blockchain solutions grows.

Ultimately, the debate between ADA and ETH comes down to personal investment preferences. Ethereum’s larger ecosystem and market presence provide solid backing, but Cardano’s features and long-term potential could make it a more favorable choice for those seeking scalability, sustainability, and decentralization.

FAQ

What makes Cardano’s Proof-of-Stake system better than Ethereum’s?

Cardano’s PoS system was implemented from the beginning, making it more energy-efficient and secure. Ethereum transitioned to PoS later, which required extensive upgrades and coordination.

How does Cardano’s Hydra scaling solution differ from Ethereum’s rollups?

Hydra allows Cardano to process up to 1 million transactions per second, while Ethereum relies on rollups for scalability, which are still in development and dependent on the mainnet for final settlement.

What is the significance of Cardano’s capped supply of ADA?

Cardano’s hard cap of 45 billion ADA ensures limited token supply, which helps control inflation and can potentially maintain long-term value, unlike Ethereum’s inflationary model.

How does Cardano’s on-chain governance work?

Cardano allows token holders to vote on protocol upgrades and decisions directly on the blockchain, offering a more decentralized and community-driven governance model compared to Ethereum’s off-chain decision-making process.