There's one new paradigm in play that might make Cardano (CRYPTO: ADA) a better cryptocurrency to buy than Solana (CRYPTO: SOL). It doesn't have much to do with the technology underpinning either chain, but it is something that investors should probably know about today rather than when it might start making a price impact, which could take a few years. Let's analyze what's going on and determine whether it makes Cardano worth considering, or whether it will continue lagging behind.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » The pace of ecosystem development matters One of the most important factors supporting an investment thesis for buying a coin is whether there is a lot of activity on its chain.
When projects on a chain are appealing to users because they offer an important decentralized finance (DeFi) service or other valuable capability, it attracts capital, boosting the price of the native token in the process. At the same time, if there's no compelling reason to park capital on a chain, money tends to flow elsewhere to find a return via investment, or to be used to pay for utility of some kind. For investors, understanding the level of activity on a chain is not enough to make a sound decision.
Instead, getting a sense of how much activity might increase in the future is key, as it's future usage that would drive prices up for those who invest today. There's no surefire way of determining whether a chain will be more in use in the future than it is today, but if there are a lot of interesting or valuable projects in development in the chain's ecosystem, it's a vote in favor of there being future demand. Cardano is significantly smaller than Solana, with a market cap of $23.6 billion compared to the other coin's market cap of $74.3 billion.
Therefore, with all else being equal, one would expect that the volume of ongoing software development for the projects hosted on each coin's ecosystem would be proportional to the chain's size, suggesting that Solana would have roughly 3 times as much development activity as Cardano. It's difficult to measure how much software development activity is going on, but there are a few composite metrics that can approximately track how many times developers make substantive additions or changes to a chain's projects. One such composite metric, created by the crypto data provider Santiment, shows that Solana experienced around 464,000 ecosystem development events in the last 12 months, whereas Cardano experienced 389,900 events.
So Cardano is seeing a huge amount of developer activity in its ecosystem for its size, and it isn't just a blip.
