Chasing Ethereum: Cardano and Solana Make Bold Moves in the Smart Contract Market
Are smart contracts the game changer for blockchains? The Cardano and Solana teams think so. The two alt coins are attracting attention from retail traders and institutional investors as they promote their smart contract capabilities. (Smart contracts are computer protocols that automatically execute and control legal contracts on a blockchain).
Cardano’s “Alonzo” upgrade, which was completed over the weekend, was welcomed by followers who believe this ability to execute smart contracts offers an attractive alternative for developers frustrated by Ethereum’s high fees, slow network and energy use. Cardano (ADA), which was founded by Ethereum’s co-founder Charles Hoskin, uses the proof-of-stake or PoS protocol that is more energy efficient than the proof-of-work model currently in use by Ethereum. (Note: Ethereum plans to move to PoS later this year).
The Alonzo upgrade “will mark the beginning of fresh period of rapid growth,” parent company IONK’s blog reports. “By allowing Plutus (smart contract) scripts to be written and executed on-chain, we’ll have the backbone for a new decentralized application platform, enabling numerous decentralized applications (DApp) and decentralized finance (DeFi) use cases – from simple swap type apps to decentralized exchanges (DEXs), and more complex computational programs such as Oracles and crypto-backed algorithmic stablecoins.”
Shortly after the upgrade was completed, a Cardano enthusiast reported on Twitter that smart contracts were already being created on the blockchain.
“With this update Cardano is now a new challenger in a crowded defi ecosystem, that is dominated by other more established chains in the space like Ethereum and Solana,” Bitcoin.com said.
“This upgrade will allow the implementation of smart contracts on the blockchain, enabling a new sweep of decentralized finance (DeFi) applications and programmability,” MarketWatch reports. “Cardano will now be able to compete with the likes of Ethereum, a much larger network, earning itself the nickname of potential "Ethereum killer."
Amid all the excitement over the upgrade, Cardano’s team advised patience.
“There are high expectations resting on this upgrade,” the company said. “Some unreasonably so. Cardano watchers may be expecting a sophisticated ecosystem of consumer-ready DApps available immediately after the upgrade. Expectations need to be managed here.”
Solana, a one-and-a-half-year-old blockchain and the sixth to seventh-largest crypto in terms of market cap, also has high hopes that its smart contract capability will lure Ethereum developers.
Solana (SOL), which calls itself the “fastest blockchain in the world and the fastest growing eco system in crypto” is making great gains in September fueled in part by its NFTs or Non-Fungible Token marketplace.
“Recently, Moonrock Capital, a Blockchain advisory and investment partnership firm acquired an NFT from the Degenerate Ape Academy NFT collection for a whopping $1.1 million,” FXstreet reports. “This is Solana network’s first million-dollar NFT sale. The blockchain protocol continues attracting trending NFT projects.”
The coin is up 300% in the last 30 days and more than 10,000 % YTD. The networks speed, which outruns Ethereum in leaps and bounds, coupled with low fees, makes it worthy as a potential Ethereum killer.
Despite the gains, analysts are cautious.
“Cardano's ada, binance coin, solana and other tokens have soared in price over the last few weeks, as excitement has built up around their potential use in decentralized finance (DeFi) and non-fungible tokens (NFTs),” MarketsInsider reports, while issuing a warning from crypto analyst Nikolaos Panigirtzoglou at JPMorgan that the surge could be unsustainable.
"Is the hype with cardano, binance, solana, [and other] alternatives to ethereum justified,” he asks. “Will there be enough traffic in these networks [and] wallet addresses, to justify these kinds of valuations?"
Cardano, Solana and other alt coins certainly are banking on there being enough traffic to justify their valuations. Smart contracts have a long runway ahead of them as awareness grows about the benefits of these applications. The chase to catch up to – and even pass Ethereum as the dominate force in DeFi and DAap has only just begun.
Joyce Pavia Hanson