<aside> đź’ˇ By comparing Cardano with each rival chain, Cardano still stands out its great architecture and robustness of the technology proven by the academic peer-reviewed papers as well as the all critical aspects of the chain: sustainability, security, and scalability. Since Cardano is still the early stage of the development, the exposure to the large number of security testing needs to be met. As far as Cardano follows its road map with no extreme delay of the schedule, it has a great potential to grow and become one of the most stable and reliable public blockchain infrastructures of the world.
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Cardano chain makes use of Proof of Stake (PoS) consensus mechanism as opposed to the energy-intensive Proof of Work (PoW). That makes Cardano chain more energy-saving and sustainable than the chains operated by PoW consensus mechanism. More about difference between PoS and PoW consensus mechanism is in Ch.1.1. Proof of Work vs Proof of Stake. The data shows that Cardano places forth in terms of energy consumption per transaction per node ****(using total energy consumption and the number of nodes in the network) ****following Solana, Algorand, and Avalanche. And Cardano places first regarding per single node energy consumption (by actually running a node using a computer with different performance) followed by Polkadot, Tezos, and Algorand. For more detail of the comparison of energy consumption by chain, you can check Ch.1.2. Comparison of Energy Consumption.
Cardano is currently powered by technology proven by 147 academic peer-reviewed papers; Ouroboros is an example of technology that has been proven and implemented through this rigorous process. Although Cardano is in a slightly earlier stage of development than other chains and has not been exposed to security checks by a large number of users, there are, so far, no known critical security incidents or network oligopolistic tendencies which could affect the security of blockchain and are usually observed in other chains. More about Ouroboros consensus mechanism and security concern of each chain is in Ch.2.1. Consensus Mechanism: Ouroboros.
Cardano’s Extended Unspent Transaction Output (EUTXO) offers greater security allowing for smart contract execution cost to be predictable and provides benefits of scalability by enforcing more parallelism. Through Haskell, Cardano’s smart contract languages, Plutus and Marlowe, can offer a high degree of formal assurance. Cardano blockchain network’s two layer structure can avoid congestion and high transaction fees. Also, delegation mechanism allows every ADA owner to participate in the consensus and reap the rewards.
As competition among chains has become very intense in recent years, interoperability is getting more important to attract more active developers to the chain. So far Ethereum has far and away the most builders, with nearly 4,000 monthly active developers, followed by Polkadot, Cosmos, and Bitcoin. Cardano increased the number of developers by 90% in 2021 and stood at over 350 monthly developers. Once full EVM compatibility is implemented in the chain, chain architecture and stability in terms of transaction fees and speed will become more important in attracting more developers and users. More detail of ledger model, language, interoperability and the number of developers of each chain are found in Ch.3.1. Ledger Model, Language And More.
Chains such as Algorand, Solana, and Avalanche have almost negligible transaction fees. Unless one needs to make a large number of transactions, Tezos and Cardano also have the small enough transaction fees compared to Bitcoin or Ethereum. Solana and Cosmos show faster transaction speed than other chains. They are followed by Avalanche, Algorand, Tron, and Polkadot. Cardano has a little slower speed than those chains. Cardano can, however, theoretically achieve 1 million Transaction Per Second (TPS) by Hydra, a Layer 2 scaling solution. Ethereum after “the Merge” also potentially hits 100,000 TPS. To know more about transaction fee and speed of each chain, you can read Ch.3.2. Fee and Speed of Transaction.
The research on Cardano chain and comparison with other rival chains has been done in three essential aspects of the chain: sustainability, security, and scalability. As far as the chain provides values in those three aspects, I believe, the chain keeps attracting the new participants including validators, developers, entrepreneurs, and end users and keeps growing its ecosystem. In the following, I compare Cardano chain with each rival chain one by one.
vs Bitcoin - Bitcoin is the oldest blockchain and has been worked for 13 years without encountering any critical destruction of the system. Its security stability is worth mentioning. However, its huge energy consumption by PoW consensus mechanism could be serious concern to attract more participants in the network. Also, some dominance of the players in the network could be the security concern; 60% of traffic is handled by just three internet service providers; in January 2022, Ghash, a mining pool, began approaching 50%, which nearly made 51% attack possible. In both of these two respects, energy consumption and the presence of dominant players in the network, I think, Cardano has a better system so far.
vs Ethereum - Ethereum is enjoying its great advantage of the early start with far and away the most builders, with nearly 4,000 monthly active developers. Also, the concern about its energy consumption will be released after the successful merge of the mainchain and Becon chain scheduled in September 2022 and shift from PoW to PoS consensus mechanism. As more developers join the ecosystem, the update of the system would also accelerate. However, there are several concerns. First, Ethereum broke the immutability of the chain at the time of The DAO hack in 2016, which may make certain number of people stay away from Ethereum. Second, there is a dominant client, Prysm, on Ethereum, who controls > 68% of nodes on the Beacon Chain. Although the advantage of early start is enormous, Cardano still has attraction by its immutability since launch, more simple and sophisticated architecture, and less oligopolistic tendencies on the chain.
vs Tezos - Tezos also employs energy saving PoS consensus mechanism. Because the number of nodes are small compared to other chains, the energy consumption per transaction per node is a little high compared to other PoS chains. Also, the extremely high wealth concentration is the clear concern of the chain. Two high profile lawsuits by the US government are also time and resource consuming for the chain development. In terms of the number of nodes, energy consumption, and weath concentration, I believe, Cardano would attract more participants than Tezos.
vs Algorand - Algorand is another chain employing PoS consensus mechanism. Its energy consumption is the lowest level among all chains and the hardware requirement is also fare. Although it is not sure that how much assurance of randomness could be achieved by the Verifiable Random Function used in its Pure Proof of Stake consensus mechanism, the system seems reasonably simple and sophisticated. The several concerns come from the domination of the player. The chain is run by ~140 permissioned, relay nodes controlled by the Algorand Foundation. And also, >60% of the token supply is controlled by founders and insiders. In addition to that, despite only launching in 2019, “state bloat” is already worse than Bitcoin’s (13 year history) and Ethereum’s (~7 years history). Given the dominance of these players, Cardano appears to be more attractive as a public infrastructure entity than Algorand.
vs Cosmos - Cosmos BFT including Tendermint consensus mechanism chooses a leader deterministically from the ordered list of validators. This deterministic approach might not assure the complete randomness. The number of developers is third, following Ethereum and Polkadot. Its vision of Inter-blockchain communication (IBC) protocol, which enable chains to communicate with the creation of certificates is worth mentioning, and Ethereum have taken Cosmos as their ideal solutions. Although it has the slight concern about concentration of used zones; about 80% of the activity happens in just 5 most-used zones among 42 zones: Osmosis, Terra, Cosmos, Crypto.com, and Juno, Cosmos would be one of the strongest competitors of Cardano.
vs Solana - Solana achieves the lowest energy consumption, highest speed, and lowest fee of transaction. However, the hardware requirement of running a node is extremely high. And also, PoH consensus mechanism which is applied to Solana chain has not yet been widely tested and potentially vulnerable. In fact, in 2022, there were several incidents reported regarding the security of Solana chain; a seven-hour outage when the network was flooded by an NFT project with a fixed floor on April 29; Solana’s blockchain clock lost track of time on May 26; and a four-hour outage due to a consensus failure on May 31. Very recently, on August 3, 2022, it was discovered that many crypto wallets have been massively withdrawn, with a value of up to several million USD. Because of frequency of security concerning incident on Solana, it still needs some time to confirm its security robustness of the protocol.
vs Polkadot - Polkadot is one of the fast growing chains and achieved the second largest number of developers following Ethereum. However, the sequential Phragmén method (based on self-stake and the stake voted to them from nominators) of its nominated Proof of Stake consensus mechanism brings some security concerns. Although its aims to reduce the power of the stakeholders with the large amount of tokens is understandable, it results in the unfavorable situation that a stakeholder with small amount of tokens dominate the chain: Zug Capital holds10% of stake in Polkadot with only less than 1k$ DOT. Also the number of node itself is smaller than other rival chains. In addition to that, GRANDPA BFT protocol was mathematically shown that it cannot achieve liveness if the adversary is allowed to reschedule the message delivery order. And hackers have exploited code vulnerabilities twice, draining millions of dollars before being stopped. In spite of its popularity, regarding its great concern of its consensus mechanism, I believe, Cardano would have much potential of the steady growth and development of its chain.
vs Avalanche - Avalanche, I think, is one of the greatest projects, although it is a little behind in terms of the current number of developers, it shows lowest level of energy consumption, highest level of speed and lowest level of fee of the transactions. Its novel consensus mechanism, Snowman consensus, shows the very interesting leaderless consensus mechanism, which guarantees the high level of security. Blueberry upgrade will unlock interoperability of entire Avalanche ecosystem which will be analogous to IBC on Cosmos. Also, because its development language is Solidity, there is still large potential of gaining the popularity among developers who shift from Ethereum. The only thing to be mentioned is that Avalanche was a collaborator with the Luna Foundation Guard (LFG), led by South Korea-based Do Kwon, which oversaw the $55 billion collapse of the LUNA token and stablecoin TerraUSD (UST), so the TerraUSD incident may have had an impact on their development roadmap at a level we cannot observe.