Ethereum backers have questioned whether Cardano’s smart contract models are up to the task. Shocked?
Cardano’s native token ADA fell 10% recently after critics slammed smart-contract testnet errors and said the blockchain wasn’t fit for purpose as a DeFi platform. Maybe lost on the critics was the fact that it’s called a testnet for a reason.
It comes just days after ADA hit new all-time highs in anticipation of the smart contract launch, securing its third-place market cap position. The coin was trading at $3.09 at the time. ADA hit a low of $2.33 on the same day massive manipulation drove the price of Bitcoin down. Not coincidentally, this also occurred on the day El Salvador made Bitcoin legal tender.
With smart contracts on Cardano, developers can create decentralized finance apps that lend, borrow, and trade assets without intermediaries. Many believe Cardano will be able to beat Ethereum, the market leader in smart-contracts.
Why? Because Cardano is light-years faster, cheaper and eco-friendly.
Even when Ethereum moves (sometime in 2022) to proof of stake and rolls out Ethereum 2.0, it will still only be able to process 100,000 TPS. Sounds like a lot? Actually, no. Cardano can process up to 1,000,0000 TPS. Ten times what even an upgraded Ethereum would possibly be able to do.
If you’re heavily invested in the success of a slower more expensive protocol that’s also bad for the environment how would you feel about Cardano?
Cardano Hate Is Real
But not everyone thinks Cardano is up to the task. Not surprisingly it turns out that the biggest haters are heavily invested in Ethereum, the protocol most likely to fall if Cardano is successful.
“Cardano was not built for the current DeFi landscape,” said Arcane Assets CIO Eric Wall. “Building certain types of common DeFi applications will require tons of workarounds,” he explained.
For a smart guy, Wall misses the point. Cardano wasn’t built for the current DeFI landscape-because that landscape is dominated by Ethereum. Cardano sought to build something better.
The main criticism was directed at Cardano’s “concurrency” issues. Concurrent user interaction issues surfaced as developers launched the long-awaited Alonzo testnet, which introduces smart contracts to the platform.
Due to concurrency issues, the first Cardano dApp, Minswap, said it had to prematurely shut down its testnet. Unspent transaction outputs (UTXO) are used to track users’ funds and are alleged to be the cause of Minswap’s concurrency issues. As a result, leading market maker Uniswap, which processes over 10,000 transactions per day, claims the network is unsuitable for use.
In 2016, Cardano’s first dapp couldn’t even do concurrent transaction processing (aka the very thing you need for DeFi), according to Ethereum supporter Anthony Sassano.
It claims that eUTXO “offers greater security, allows for fee predictability, and offers more powerful parallelization.”
IOHK addressed a common criticism that Cardano is flawed because it only allows one transaction per block. A service or application could use multiple UTXOs. The company published a new blog post explaining the smart contract design.
Sundaeswap, another Cardano-based exchange app, denied the one-transaction-one-block claims. “Quite the opposite. This is due to Cardano’s high transaction rate.” Sundaeswap claimed in a blog that many UTXOs could be governed by the same smart contract. It promised to do so soon. Defending Cardano’s approach, SundaeSwap said that centralization is one solution, but not the only one.
Maladex, another Cardano DEX building, defended Minswap, pointing out that it is still in beta.
Cardano founder Charles Hoskinson called the accusations “noise and FUD.”
Cardano: An Over-Promising Under-Achiever?
Undaunted, Wall poured cold water on Cardano’s scaling solution Hydra. Like Bitcoin’s layer-two scaling solution, the Lightning Network, it has multi party state channels “but for smart contracts.”
He said Cardano’s effort is “plagued by major UX challenges” and that Ethereum abandoned multiparty state channels due to inherent problems. This statement makes no sense. First, Wall isn’t a UX designer. Second, just because Ethereum abandoned multiparty channels has nothing to do with Cardano.
Cardano isn’t competitive with other smart contract platforms, despite their claims of scientific breakthroughs. Their promises were unfulfilled. The $90 billion market cap seems undeserved right now. Before that number is justified, the platform has much to prove.”
Again, Wall is taking shots that are unfounded. Of course Cardano isn’t competitive with other smart contract platforms. Why?
Because they haven’t rolled them out yet.
Furthermore, Cardano founder Charles Hoskinson has never been about market cap or share price. For Wall to take the company to task because he thinks the market cap isn’t deserved is stupid. If you have complaints about the market cap, talk to the market, not the protocol.
The FUD worked. Cardano’s ADA token has lost significantly since Monday, bringing its market cap to $78.8 billion-or roughly $12 billion below it’s all-time high. Cardano’s price was $2.46 at the time of this article. Smart contracts will be released on the Cardano blockchain on September 12th. Stay tuned.
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Jay Speakman is a technology writer based in San Francisco, California. He writes on the topics of blockchain, cryptocurrency, DeFi and other disruptive technologies. Clients include Avalanche, Be[in]Crypto, Trust Machines and several blogs devoted to blockchain gaming. He will not rest until fiat currency is defeated.