Cardano (CCC:ADA-USD) is the world’s sixth-largest cryptocurrency. With a fully diluted market capitalization of around $90 billion, ADA is one of the behemoths in the crypto space.
There is a good reason for that; Cardano isn’t just another fad or meme token. Instead, Cardano has risen to prominence as one of the first credible alternatives in the proof-of-stake protocol arena.
Proof-of-stake cuts out the mining part of the cryptocurrency process, eliminating a huge portion of the costs and environmental burden found in traditional proof-of-work cryptos like Bitcoin (CCC:BTC-USD) and Ethereum (CCC:ETH-USD).
Indeed, Cardano hit new highs this summer as it debuted smart contracts. It appeared that Cardano was about to have a moment. Instead, a scrappy competitor, Solana (CCC:SOL-USD) emerged. So where does Cardano stand today, and is it still a good holding in comparison to other fast-moving rivals?
Cardano’s Intended Use Case
For a long time, the big appeal to Cardano was that it was the clearest Ethereum alternative.
Ethereum, of course, has generated a massive amount of activity on its network thanks to decentralized finance “DeFi” projects. However, Ethereum has been a victim of its own success. With so many transactions, fees have gone through the roof, making the use of Ethereum painful for smaller purchases.
Cardano was supposed to be the solution for this. Cardano was built by an ex-Ethereum executive, after all, with the mission of improving on Ethereum’s weaknesses.
Since Cardano uses a proof-of-stake rather than a proof-of-work algorithm, it consumes far less computing power to process transactions. It seemed inevitable that Cardano would take market share once its smart contracts were up and running.
Solana Crashes the Party
Alas, things didn’t quite stick to the plan. A new rival, Solana, emerged from obscurity this year. The price of Solana started the year at $1.60. It’s now up to around $230 per token, for a more than 100 times return on investment inside of a year.
Solana has enjoyed these breathtaking gains because it was the fastest to market with a low transaction fee DeFi marketplace. Solana isn’t perfect by any means; it had a massive network outage this summer, for example. But it’s been a good enough platform that has quickly allowed cryptocurrency applications to reach new heights.
While Cardano may have a more solid technical backing, a big part of winning is simply having a minimum viable product out in the actual marketplace.
Solana has achieved a massive first-mover advantage from getting so many high-profile non-fungible token (NFT) projects onto its ecosystem.
By contrast, as our Mark Hake recently explained, Cardano still lacks a killer app that will help it regain parity with Solana.
The window of opportunity is still wide open with Ethereum bogged down by its excessive transaction fees. If Cardano can seize the moment, ADA buyers at today’s prices should do well.
As a Cardano holder, it must be disappointing watching Solana take off as quickly as it has. For years, the promise of Cardano has been to create a vibrant DeFi and smart contract ecosystem. Instead, Solana emerged seemingly out of nowhere and stole Cardano’s thunder.
That being the case, it seems cryptocurrency is a large enough market to have more than one ultimate winner. That’s particularly true in the DeFi space.
So while Cardano is not making the most of the current market opportunity, that’s not necessarily a reason to give up on the project altogether.
As it is, Cardano’s investors have sat through an awfully long timeline to get to where ADA is today. So Cardano’s backers are unlikely to give up now, particularly as real technical achievements have been obtained in 2021.
Meanwhile, with ADA’s price down by a third off the highs, there looks like a decent buying opportunity here amid a broader crypto surge.
On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.