Even prior to Cardano’s (CCC:ADA-USD) recent Alonzo hard fork, it was fast gaining ground on Ethereum (CCC:ETH-USD) and its decentralized app (dapp) dominance. Now that momentum is working towards reality for Cardano.
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That’s all I want to talk about today: The market opportunity for Cardano to disrupt Ethereum as it relates to dapps and what the Alonzo hard fork means for ADA and Cardano.
Eroding Ethereum Dominance
The idea that the defi revolution and the decentralized economy will largely run on Bitcoin (CCC:BTC-USD) as a gold analog and Ethereum as oil is becoming less and less likely. Forget the first half of that statement. I’m not here to argue the merits of Bitcoin in this article.
But I am going to assert that Ethereum is eroding and that its early market dominance in fueling the dapp space is far from certain moving forward.
It’s no secret that Cardano is fast establishing itself as a potential name with disruptive potential in the sphere. Investors who question whether Ethereum truly has an unassailable position are increasingly wondering aloud if Cardano could supplant it one day.
One way to understand the demand and potential there is to put some numbers behind the likelihood that dapps continue to be built on Ethereum.
A recent interview by Cardano founder Charles Hoskinson strongly indicates that the potential is quite high. The facts that he lays out regarding a shift in dapp development away from Ethereum should give investors pause.
There are currently approximately 3,800 dapps within the cryptocurrency landscape. Roughly 3,000 of those dapps are on Ethereum. That’s 79%.
In terms of value and transaction volume, a slightly higher 81% is attributable to Ethereum. Logically looking at that statement there is indeed a suggestion that Ethereum is dominant, and its position, safe.
Not so fast.
Changes Underfoot in Favor of Cardano
There’s an underlying trend that suggests Ethereum users aren’t satisfied. This bodes very well for Cardano and ADA.
Hoskinson points out something truly interesting for Cardano’s disruptor potential when he rhetorically asks: “How many of the top 15 dapps on Ethereum are looking to either migrate or become multichain?”
The answer according to him is that all have considered it and several are actively pursuing a migration from the Ethereum network.
I mentioned that Ethereum controls 79% of the dapp space as measured by usage. That too, is shifting in a direction that favors Cardano.
In 2020 a mere 31% of new dapps were deployed on Ethereum. That’s quite a stark figure. And it makes it really difficult to suggest Ethereum is the future and competitors including Cardano are simply flashes in the pan.
Hoskinson goes on to compare the shift as being analogous to that which occurred from Windows to IoS. If Cardano is indeed IoS, it’s clearly where investors will want to be moving forward.
That comparison is hardly the most germane news related to Cardano though. That distinction goes to the Alonzo Hard Fork.
From Testnet to Mainnet
On Sept. 12 Cardano’s Alonzo hard fork moved from the testnet to the mainnet. That means Cardano now supports smart contract functionality on its blockchain.
IOHK noted that 150 projects are being developed through the company’s (Cardano’s) Project Catalyst innovation program.
At the same time management was quick to note that development will not occur overnight and the full release of smart contract functionality is an ongoing process.
“There are high expectations resting on this upgrade. Some unreasonably so. Cardano watchers may be expecting a sophisticated ecosystem of consumer-ready DApps available immediately after the upgrade. Expectations need to be managed here,” the blog post reads.
Nevertheless, a clear trend has emerged. Companies including Cardano have emerged as a real threat to the established powers in the defi space.
Cardano is now the #3 cryptocurrency measured by market capitalization. There is little reason to bet against it now. In fact, I’d assert that there’s every reason to bet in favor of it.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.