Today, we’ll look deeper into Ethereum vs Cardano, or ETH VS ADA. We’ll talk particularly around how smart contracts work on both of these different blockchain technologies. We’ll do a deep dive into some of the reasons that we feel Cardano is a better application for smart contracts vs Ethereum.
One of the things that we’re seeing in 2021 is some definitive Ethereum gas fees going out of control. We can see that they peaked earlier this year at $373.80, which is crazy high! Although we’re seeing it settling down a little bit over this fall, it still fluctuates between $88 and $150, which is really a lot to be able to execute every single smart contract out there.
So, as the gas fees are costly, executing smart contracts becomes a lot expensive. And that’s why we’ll look at Cardano and it’s cheaper cost.
For Ethereum, the base cost to create an operation is a whopping 3,200 gas. Added to the base cost is another 2,100 gas for entering a new transaction into the block itself. This alone puts the creation price at 5,300 gas. So here’s an example scenario for better calculation, assuming the gas is a 100 Gwei:
5,300 Gas * 0.0000001 Ether per Gas * $4,000 per Ether = $21.20
So that’s $21 for the deployment of the contract itself. This is, however, far from the final cost that we’ll see. For larger applications, such as PancakeSwap, their application is a collection of contracts, all talking and working together. There will be multiple deployments, each of which needs to pay the $21.20 fee per empty contract.
Moving on, contracts also needs to be stored somewhere. And according to Ethereum’s whitepaper, Ethereum has a cost for storage of 20,000 gas per 256 bits. A kilobyte of data then ends up in a whopping 640,000 gas, which is just over $250.
The above picture is a real example for what we just mentioned. It is running at about 8,000 KB in length. Although we can dig out a simpler example, this is to show you that such larger contracts legitimately exists. So for storing 8,000 KB at 6,400 gas per KB, we get a price of over $2,100. That’s just to execute this single contract, and there are contracts that are larger in size this this one!
Now that storing the contract is paid for, the final step for Ethereum is to run initialization function for the contract. This is a block of code that is written to allocate variables or do whatever else you want on the deployment. This is the most variable of all the costs as it depends on what you want to do here. It could be free or could be the largest price by far.
Let’s assume you want to allocate a simple array that may be used later for some operation. Allocation of memory for a contract costs 200 Gwei per bytes. If your application was memory hungry, and wanted to take a single gigabyte for internal storage, it would cost over $80 million.
You can choose to be more conservative with your memory and take fewer kilobytes of data for internal states and user states. That would ultimately cost you $1,600.
These just seem like exorbitant prices for me to be able to even make this a realistic world use case.
Summing up the price we have here, if you expect to deploy even a moderate-sized contract, a budget upward of $5,000 is required just to cover the deployment. Small contract can get away with $500 if you want to try to make it really small and compact. Ultimately, it’s highly unlikely that you’ll be able to get much smaller than $500.
Simply put, Ethereum’s main chain is suffering from multiple compound issues at once. One, Ether is surging in price, meanwhile everything is more expensive when converted to US Dollars.
Two, the network has a limited bandwidth, with limited space that is increasingly causing bidding wars for space on the block.
Three, the network is hitting major network effects. As everyone floods onto the platform, the value of the platform rises, and thus, people are willing to pay more and more just to join the party.
At the end of the day, deploying to Ethereum is likely a bad idea for most projects. If you’re looking for alternatives, there’s another different layer 2 chain that can boast much lower prices along with many of the benefits that Ethereum brings.
All this comes down to us, proposing deployment to be on Ada, or Cardano. Using smart contracts on Cardano involves 2 steps – deploying to the network, and transferring the ownership.
Now, let’s dig into the cost of deploying smart contracts on Cardano, or Ada. To deploy the contract, you are required to lock the contract amount, or number of Ada, for which the contract is being executed. This can be as minimal as $0.01.
Then comes the transaction fee, which is usually less than $0.35 per transaction. Now, even if the price of Ada goes up 10x or 100x, the transaction fee will still be minimal, staying under $30. This is literally next to nothing!
And from the example we came through the above, it will cost less than only $0.36 to deploy a full smart contract. And even better than this cost is the speed of transaction. Ada can actually transact at over 100 times the speed of Ethereum. So not only is it cheaper, it’s a lot faster too.
Now, let’s look a little bit into NFTs, which is probably the most common use case of smart contracts. There are 2 steps to NFTs – deploying to the network, obtaining the storage, and then transferring from person A to B.
With Ada, there’s no direct minting cost for each NFT but it must remain a minimum of 1.5 Ada. So this is a bare minimum of how much Ada is required in order to be able to perform the minting of the NFT.
So the total cost of deploying a full smart contract on Ada comes down to less than $2. As we see more and more NFTs transferred across the network, we’ll potentially see this become a huge win as we start to see some of these platforms arise.
Ultimately, we can see that Ethereum’s smart contract can cost anywhere from $80 – $300, and NFTs costing $100 – $900+. However, Cardano smart contracts on the other hand are less than $0.36, with the NFTs summing up to less than $2. And when we look at the other benefits that Cardano sticks along with it, Cardano Ada is the obvious winner here. For more informtion, here’s another guide about 4 reasons Cardano is better than Ethereum.
Thank you for sticking with me to the very end. We hope this has been valuable information to your journey with cryptocurrencies. You can keep track of our blog or YouTube channel to stay updated about crypto every day. And as always, make sure to keep your kids protected with CleanRouter and CleanPhone. This lets you have the ultimate parental controls with how your kids use their phone 🙂
If you’d like to learn more about Ethereum vs Cardano, kindly check out the video below:
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