Solano and Cardano both the Ethereum Killers come under the Top 10 cryptos by Market Value. Solana at No. 5 with a market cap of $71.1 Billion and Cardano at No. 6 with $66 Billion. For long Cardano had a much higher valuation than Solana, but in the past one month itself, Solana has surged more than 60%. So currently the valuation gap between Cardano and Solana is a little more than $5 Billion, with Solana at the top.
Ethereum on the other hand is in a separate league with a market valuation of $532 Billion. Ethereum is valued 7x the valuation of Solana and Cardano. The gap was even higher some time back, but both Solana and Cardano have shown tremendous growth. Ethereum’s valuation has shot up a lot since its Altair Upgrade, of its Ethereum 2.0 Project. Bitcoin and Etheruem hold more than 63% value of the overall crypto markets. The valuation gap between the top 3 cryptos is huge and currently, there are no close competitors for any of those.
Why are Solana and Cardano called the Ethereum Killers?
Ethereum has attained such popularity and high valuations because of its DeFi and NFTs. Other than those things, Ethereum was the first major Blockchain to launch Smart Contracts on its platform. These factors have led Ethereum where it is today. One other thing that gives Ethereum the edge in the crypto markets is its commitment to shift to the Proof-Of-Stake method from the Proof-Of-Work mechanism.
Understanding PoW and PoS
The proof-Of-Work mechanism requires the miners to verify every transaction on the Blockchain by solving complex algorithms. If successful the miner is rewarded with crypto, for their effort.
But solving such complex algorithms first among the competition is crucial for earning the reward. And to do that miners use costly hardware and computers which require a lot of energy to run. Therefore this PoW mechanism is not environmentally sound and beneficial for the long-term use of Cryptos. On the other hand, the Proof-Of-Stake mechanism requires the miners to put their own cryptos at stake to earn the transaction. So the miner with the highest stake wins the transaction and is rewarded in crypto. This method reduces a large amount of work and energy that is involved in the PoW mechanism. And therefore PoS mechanism is preferred over the PoW mechanism.
The Edge
Solana and Cardano, both the Ethereum Killers, do not use the Proof-Of-Work mechanism. While Ethereum is committed to shifting from PoW to PoS mechanism by 2022. This is why they have an edge over the world’s biggest crypto Bitcoin. But how does that give the edge to Solana and Cardano over Ethereum? How are they the “Ethereum Killers”?
Firstly Ethereum does not yet work on the PoS mechanism, while both Solana and Cardano are already working on the PoS mechanism. Secondly, one of the drawbacks of Ethereum is the scalability of its blockchain network. Most of the times the Ethereum network is extremely busy. Which gives a rise to the transaction and gas fees for the users transacting on its blockchain. The cost could go as high as $150 making it an inconvenient option for its users. The same problem persists with Cardano as well. While Solana has found a solution to the scalability issues of these chains. It has a system of cryptographic time-stapping that can hold 65,000 transactions per second. No other payment mechanism has even come close to this number, including Visa or Mastercard.
So, understanding all of the points mentioned above Solana may seem like the best choice for any crypto investor. But the problem with both Solana and Cardano is that they lack the much-required market value of their platforms. Because of which they lack liquidity, which means they are still excessively volatile. So, Solana or Cardano may seem like the right option to some users or investors, but as mentioned above, the valuation gap between Solana-Cardano and Ethereum is 7 times. And maybe, by the time Solana and Cardano cover that huge gap, Ethereum may improve all of those drawbacks mentioned above.
How can Solana and Cardano takedown Ethereum?
For taking down Ethereum, Solana and Cardano will have to develop their platforms consistently and effectively. But even that may not be enough if Ethereum also keeps on developing at the pace it is developing right now. Ethereum is the only one that is expected to take down Bitcoin one day with its cutting-edge technology and features. Although Solana has shown tremendous growth, much higher than Ethereum or Cardano in the past 10 days. But it will require consistent growth to level with Ethereum before it stretches its valuations even higher.
So, as of the current scenario is extremely difficult for both Solana and Cardano to takedown Ethereum. But in the long run, they may be able to become peers with Ethereum.