TL;DR
- Ethereum broke ground as the first protocol to introduce decentralized applications (dApps) via smart contracts. The protocol quickly grew in popularity due to the usefulness of dApps.
- Cardano, Polkadot, and Solana were all conceived because their developers believed Ethereum, as it currently stood, would run into major scalability problems.
- All four protocols differ with regards to consensus mechanisms, performance (transactions per second and fees), economics, and overall strengths and weaknesses.
- Ethereum’s extremely large economy and ability to upgrade and adapt indicates it will likely remain as the dominate Web3 economic hub for years to come.
As the cryptocurrency markets march forward, investors continually work to understand the underlying technologies and the protocols that might dominate the future. The winning narrative over the past three years has been the “multi-chain” future. The idea is that Bitcoin will be gold 2.0 and a basket of other layer-1 (L1) protocols will serve as Web3’s major economic hubs.
Currently, the four most prominent cryptos in that basket are Ethereum vs. Cardano vs. Polkadot vs. Solana. This article steps back to compare these four side-by-side in order to see where they’re at and where they might be going.
Development History
The history between these four protocols is like a nerd version of Game of Thrones.
Vitalik Buterin proposed the Ethereum whitepaper in 2013. His big idea was dApps fueled by smart contracts. When Buterin assembled his team, both Charles Hoskinson and Gavin Wood were in the inner circle. Ethereum launched in 2015 and became extremely popular because of the usefulness of dApps.
At some point during all of this, both Hoskinson and Wood foresaw that Ethereum would run into scalability problems. So both men departed and went separate ways. Hoskinson launched Cardano in 2017, and Wood launched Polkadot in 2020. All the while, a developer named Anatoly Yakovenko kept tabs on all of this, and launched Solana in 2020.
The key takeaway here is that Hoskinson, Wood, and Yakovenko all believed Ethereum’s scalability issues would lead to its ultimate undoing. Thus, they saw an opportunity to build a better technical solution that might be able to handle true mass adoption. That’s the story.
With this broader context in mind, let’s delve into the protocols.
Macro Comparison
First, let’s knock out the similarities.
Ethereum, Cardano, Polkadot, and Solana are all open source, permission-less, decentralized, proof-of-stake (POS), L1 blockchain protocols. The only exception here is Polkadot, which is actually a layer-0 (L0) blockchain ecosystem. All four support the development of dApps via smart contracts. Generally, you can conceptualize these protocols as global computer blockchain networks that allow anyone to engage in commerce, entertainment, and self-expression.
Now, here’s the differences:
Ethereum
Ethereum initially launched as a proof-of-work protocol. As previously mentioned, the innovation behind dApps helped Ethereum become the second largest cryptocurrency by market cap with 20% market dominance. The protocol has over 3,600 dApps and is the run-away leader in terms of DeFi and NFT market numbers.
But high transaction fees, scalability and environmental issues forced the…
David learned about bitcoin in 2015 and has closely followed the crypto industry since then. His professional interests center around bitcoin, layer-one blockchain protocols, decentralized finance, and clean energy. An attorney by trade, David has held licenses to practice law in the State of Hawaii and in US federal courts.
