Crypto: Why is cardano surging past solana?
Cardano's (ADA-USD) price is sky-rocketing and leaving its rival solana (SOL-USD) floundering in its wake, but what has caused the sudden investor interest in the cryptocurrency heralded as "the ethereum (ETH-USD) killer"?
The price of cardano was $0.64 (£0.51), up 12.75% on Monday — a rise of 31.9% in the last week.
No other blue-chip cryptocurrency has made such gains amid the recent market volatility.
In comparison to cardano's price action, solana has fallen in the past week by 10.8%, to sit at $39.68.
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Solana is considered cardano's rival in terms of speed of settlement, smart contract capability and minimal transaction fees.
Investors consider both cryptocurrencies as blue-chip blockchain technologies, both were created in 2017 and both chains can deploy smart contracts, such as NFTs.
However, cardano has a wider community of support, which seems to have driven much of the price action.
Cardano's recent price action has seen it leap ahead in the cryptocurrency market capitalisation rankings, to sit at number six, with solana falling to ninth position.
Experts have predicted that June and July could become "the summer of Cardano".
The crypto has a major update in June known as the Vasil Hard Fork, followed by another in July which, according to one crypto analyst, “will make a large impact on the crypto industry".
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Last week a tweet from cryptocurrency analyst Peyton said: “I just finished a call with the 20 smartest investors in cryptocurrency, and they all said that the Vasil Hard Fork coming to cardano is going to add an immense amount of utility.
“The projects launching on ADA after the hard fork will make a large impact on this industry.”
The Vasil Hard Fork will allow more data to fit into each smart contract transaction, improving speed of settlement, decreasing transaction fees and expanding the utility of cardano's smart contracts, according to Peyton.
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Smart contracts allow for the blockchain transaction of currencies, land deeds, ownership of artwork, distribution of royalties and personal health data.
Cardano's July update, known as the Ouroboros Genesis, will allow investors to move the USDC (USDC-USD) stablecoin from the ethereum blockchain to the cardano blockchain, utilising the Milkomeda "bridge" application.
This has been described as a pivotal moment in cardano’s interoperability with the wider cryptocurrency ecosystem.
Cardano's current market capitalisation is over $21.6bn, according to data from Messari.
But, Cardano's advantages could become defunct with the advent of ethereum 2.0.
If ethereum successfully incorporates its "sharding" upgrade, also due this summer, it could solve the blockchain's current scalability problems and allow settlement scales of 100,000 transactions per second.
This would be a substantial improvement when compared to its current rate of 30 transactions per second, which causes excessive transaction fees.
However, Peyton believes that ethereum is already being challenged by cardano and that the Vasil Hard Fork will greatly increase this "challenged" perspective.
He added that even after August's ethereum upgrade, "the gas fees will not change and that this is the thing that most people debate, which are the costs to make a transaction on ethereum".
The cryptocurrency analyst said: "It is extremely expensive to transact with ethereum, and becomes even more during large NFT drops and similar scenarios."
Yahoo Finance reached out to the solana and ethereum development teams for comment, but they have yet to respond.