Solana (CRYPTO: SOL) and Cardano (CRYPTO: ADA) are two cryptocurrencies that are quite similar in terms of their capabilities, objectives, and target users, but they're quite different in terms of their merits as investments. Both were designed to beat the royalty of the cryptocurrency market, specifically Ethereum, but only one can really be said to have succeeded.
Here's which one is more worthy of your investment of $1,000 this year and why.
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Two segments determine this match up
The first considerations with these two coins is that they aren't the same size, nor do they attract the same amount of interest from developers and investors, generally speaking, despite both catering to decentralized finance (DeFi) applications, among many others.
Solana's market cap is currently around $88 billion. Cardano's market cap is roughly $29 billion. But the more important factor are their volumes: Cardano's volume over the preceding 24 hours was $654 million on Friday morning, whereas Solana registered slightly more than $3.7 billion in volume. So proportionally, Solana gets a lot more traffic per dollar of its market cap.
That stems from a handful of factors, including two entire categories of cryptocurrency that are well-represented on Solana's chain, but almost entirely absent on Cardano.
Cardano has almost no notable coins devoted to providing artificial intelligence (AI) infrastructure on its ecosystem, and almost no AI agents hosted on its chain whatsoever. Solana has many hundreds of AI infrastructure and AI agent projects, several with market caps above $1 billion, which indicates momentum as well as widespread buy-in by investors. That means new developers of AI projects will find a much deeper ecosystem to link into on Solana moving forward, which is important because the AI segment could eventually be gargantuan if AI agents end up using cryptocurrencies to manage their financial resources.
Furthermore, meme coins with large followings and large market caps are practically nonexistent for Cardano, whereas they're a significant proportion of all the activity on Solana's chain. The unintended consequence is that this kind of activity generates greater demand for the primary underlying token in the blockchain. And so there's simply far less opportunity to passively benefit on that front with Cardano, versus Solana.
Things might not be the same forever
The list of reasons to invest in Solana rather than Cardano doesn't stop there.
Overall, Solana's development cycle tends to be much faster, which means the chain can implement new features and, thus, capture growth from emerging segments far more reliably. Its gas fees also tend to be dramatically lower, which incentivizes both short-term traders as well as long-term investors to do their business on the chain rather than elsewhere, where it'd be more expensive to do any transactions.
To top it off, programs intended to run on Solana are coded in a common programming language, Rust, rather than a somewhat esoteric one. Cardano uses Plutus, its native smart contract programming language. It might be advantageous for a chain to have its own system for articulating its smart contracts, but it's also a barrier to wider adoption because it requires new developers to learn the language before getting started. And there isn't any indication that Cardano's self-developed language is being used as a template for other systems, either, which does not bode well for the blockchain's longevity.
Therefore, there isn't too much of a contest between Solana and Cardano. Solana is the better investment by far.
But in the few years you should hold onto Solana to get the most exposure to its growth, it's possible Cardano will become a more attractive investment. The places to watch will be the key battlegrounds mentioned above: AI infrastructure and meme coins. A decent proxy for Cardano's chances to overtake Solana is its proportional gain in volume over time -- but don't hold your breath.
Should you invest $1,000 in Solana right now?
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Alex Carchidi has positions in Ethereum and Solana. The Motley Fool has positions in and recommends Cardano, Ethereum, and Solana. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
