Why Cardano will be the best Smart Contracts chain for institutions

Grayscale has increased its DeFi investment allocation on Cardano to 34.71%. This is compared to its 21.29% and 15.79% on Solana and Polkadot's allocations respectively. This data is from grayscale's smart contract platform ex-Ethereum fund. This fund stands at $1.7 million.

Last year Grayscale hinted that Cardano's ADA coin was undervalued compared to its competitors. The argument was that the market didn't consider Cardano's tremendous growth over the last year.

That Grayscale's report indicated that the Cardano network had recorded more payment value for every unit of market capitalization compared to its direct competitors, suggesting that it settled over $1.6 trillion in overall on-chain transactions over the preceding year.

In contrast, the Bitcoin platform settled at an overall value of $3.1 trillion in on-chain transaction value, while Ethereum recorded $2.8 trillion. The Grayscale's data indicated that Cardano's acceleration was explicit and may have been connected to the Alonzo hard fork.

The Grayscale report also stated that Cardano may have been undervalued compared to Ethereum on a market value for every active monthly user basis.

At the time, Cardano blockchain explorer indicated that the chain had over 2.8 million active users each month, while Ethereum had close to 7 million active users each month. Yet, Cardano has a lesser market value for each user of $30,000 than Ethereum's $55,000. Currently, Cardano boasts a market capitalization of $70 billion against Ethereum's $400 billion.

Then, the Cardano network was processing approximately 115,000 transactions each day. Most of those transactions were non-smart contracts in nature since most active dApps had not been deployed yet.

This year, the number of transactions has stayed at about the same level. However, the size of Cardano transactions throughput has increased. The number of batched smart contract transactions has also increased. It's not uncommon to find 2 ~ 8 transactions batched as one on the Cardano chain these days.

Cardano rolled out smart contracts following the successful launch of the Alonzo hard fork on its platform in early September last year. The rollout enabled the network to host decentralized applications that provide decentralized games, financial services, and more. Smart contracts allow Cardano to compete with the Binance Smart Chain and Ethereum, among others.

Cardano is regarded as a third-generation blockchain, which is a blockchain network made with a focus on scalability, compatibility, and sustainability and meant to give smart contract capabilities. The limits of networks like Bitcoin and Ethereum, which are regarded as first-generation and second-generation blockchains, respectively, are a topic that these blockchains aim to overcome.

• Scalability refers to a blockchain's capacity to accommodate an increasing number of users and terminals. With regard to global adoption, the majority of these schemes call for consumers in the billions. Throughput (i.e., transactions per second or TPS) and latency are common indicators of scalability.
• Compatibility refers to a blockchain's capacity to communicate with other blockchains and secondary sources like APIs, whether to exchange data or states across two platforms or to start processing on one another's networks.
• Sustainability has two different meanings: environmental and protocol/ecosystem. The former is achieved by on-chain governance and community finance or revenue sources, while the latter refers to the protocol's ability to run with minimal energy usage.

A group of initiatives called third-generation blockchains consists of Cardano, Ethereum 2.0, Solana, and Polkadot projects. These initiatives are frequently referred to as "Ethereum killers" on Twitter because they pose a threat to Ethereum's dominance in the field of smart contract platforms. However, the engineering of interoperability suggests that these initiatives aim to coexist with one other and Ethereum, creating a cross-chain, decentralized Web3 ecosystem. Contrary to popular belief, Cardano is really far more similar to Bitcoin than Ethereum, especially in terms of tokenomics, consensus mechanisms, and accounting practices.

Just towards the end of June 2022, the Cardano chain will be updated via the Vasil hardfork. It's projected that this scaling upgrade will likely more than quadruple Cardano's throughput. While the upgrade won't have a plug-and-play effect, as the dApps change their architecture to Vasil's upgraded node, congestion on the chain will reduce.

Cardano has been rewarding its ADA delegators (stakers) for safeguarding the network. Since July last year, more than 70% of all ADA in circulation has been staked by users, and the network currently has over 3000 active staking pools. The network has total staking funds of over a million unique addresses.

How Cardano is uniquely placed to be the best Smart contracts system.

1. Cardano is one the first proof of stake chain that actually works.
2. Cardano chain hasn't needed any reboot since its launch
3. Cardano boasts very cheap transaction fees
4. The Cardano node is architectured to accommodate smooth non-catastrophic upgrades.
5. The development team behind Cardano has a reputation for following formal research and engineering methods.

As Grayscale reported last year, despite the improved activity, Cardano still has a long way to establish a decentralized finance ecosystem that will keep it ahead of its competition.

Factors holding Cardano back

1. Poor education
2. Cardano scaling is still behind but catching up
3. An immature DeFi ecosystem
4. Lack of a native stablecoin
5. The impending launch of its overcollateralized Djed stablecoin will fix this problem.
6. Later on another native stablecoin, Ardana will launch which will end this concern for good.

Use cases for smart contracts

Smart contracts are extremely adaptable and can be applied to a variety of purposes. The following three application scenarios for Cardano smart contracts include decentralized applications and tokens.

Government initiatives

A few examples of the types of data that Cardano smart contracts can store on the blockchain include land documents, vehicle titles, and property records. The greater efficiency that this may inject into government initiatives is simple to foresee.

For instance, the seller must manually type out and sign the deed in order to transfer ownership of a car. The purchaser goes to the Department of Motor Vehicles (DMV) with the registration and the receipt, spends two hours in line, and thereafter submits an extra fee. They get a new title in the mail six weeks later.

All of that could be accomplished by a smart contract in a matter of minutes for a small transaction cost. There are countless ways that Cardano smart contracts might enhance government initiatives and reduce the amount of time-consuming bureaucratic procedures.

Voting

Voter fraud, and conspiracy charges of voter fraud from dishonest politicians, can be efficiently eliminated with the use of Cardano smart contracts. Without requiring outside parties to invade the privacy of the ID holder, user information can be securely kept and confirmed on the blockchain. Votes will be stored on an irrevocable blockchain database that cannot be changed or tampered with, making it more difficult for politicians to stir discontent by falsely alleging election fraud if they lose an election.

Insurance

Cardano smart contracts can help the insurance industry process claims more quickly. Due to the fact that all of this paperwork is recorded on the blockchain, a smart contract can verify that a driver has a current license, registration, and insurance plan. The agreement can then sanction a payment and give the driver and handyman their cash.

These are merely a few uses for Cardano smart contracts. Other instances include bookkeeping, selling and buying real estate, keeping track of medical information, and many more.

Roadmap

The creation of Cardano is divided into five main phases, each of which focuses on significant steps that must be taken in order for the network to become community-governed and self-sustaining. The project is actively completing unresolved problems from the Goguen era while concurrently constructing initiatives in the Basho and Voltaire eras.

• Byron-In September 2017, this phase saw the inaugural rollout of the Cardano blockchain's base layer, which operated as a federated network with nodes run by IOG and partner organizations.
• Shelley-In this phase, decentralization was introduced by gradually moving from a federated network to a peer-to-peer network controlled by community nodes, where anybody can join and run a node as part of the protocol.
• Goguen-This phase enabled dApps, DeFi, and other applications by adding multi-asset support (i.e., consumer tokens, NFTs) and smart contract capability to the blockchain.
• **Basho-**Through the use of extra layers and sidechains, this phase enables scalability and compatibility.
• Voltaire-In this phase, governance is introduced to support the Cardano blockchain's long-term self-sustainability with regards to community control of protocol changes, treasury expenditures, and more.

Cardano's technology

Since they are all decentralized ledgers with the ability to execute smart contracts, L1 smart contract platforms superficially resemble one another. Their technical differences may not seem important at first when user numbers are in the millions, but they will determine whether or not long-term goals are achieved as user numbers scale conceivably into the billions and extra randomness is introduced to the network in terms of stake allocation and given by the following.

Due to the design of its underlying protocol and accounting model, Cardano's design closely resembles a PoS-based, smart contract-enabled variant of Bitcoin rather than an update on Ethereum. This makes it fundamentally different from most of its contemporaries. Cardano's fundamental protocol Ouroboros and safe delegator-friendly architecture, the Extended Unspent Transaction Output (EUTxO) financial system, the project's Haskell foundation, special Layer-2 (L2) solutions, and target hosts are key technological elements that set it apart from its L1 peers.