(Updated 10. September 2022)
VeChain and Cardano grew to the forefront of the crypto market in the bull market of 2020-2021. I’ve been following these two for a long time and will summarize the similarities, differences, and gauge which of them is the better investment.
VeChain has a slight edge over Cardano because Cardano lives in the shadow of Ethereum while Vechain is dominating its sector. Also, Vechain’s native token, VET, is deflationary while Cardano’s ADA has inflation. I conclude that Vechain is a better investment than Cardano.
In the rest of the article, I’ll give you a comprehensive understanding of the two projects and a base to make decisions.
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What are VeChain and Cardano?
Cardano is a competitor to Ethereum. It’s what we call “a programmable blockchain”. Cardano aims to attract developers to build stuff on top of it. Cardano aims to do this better than the current leader, Ethereum, by improving the technology and philosophy behind the development process. All Cardano’s improvements/uploads are actually peer-reviewed, like science papers.
Cardano’s mission is to improve on what Ethereum has done, and host applications in a safer, faster, more scalable and more decentralized manner, enabling more businesses, governments and people in general, to benefit from blockchain technology.
Vechain is also a blockchain, but with different functions and goals than Cardano. Vechain makes it easier for businesses to count their inventory, track goods all the way back to the producer, and stay on top of all the logistics. Vechain is the supply chain cryptocurrency project, which is one of the best use cases for blockchain technology.
VeChain’s mission is to decrease regulatory burdens and enable businesses to use blockchain to address actual financial and logistical challenges. They enable proof of authenticity for brands, helping the fight against counterfeit goods.
How are VeChain and Cardano similar?
- Marketplaces. Users can buy, sell, trade, and stake both of these coins on cryptocurrency exchanges around the world.
- Native coins backed. Both VeChain and Cardano have their native cryptocurrencies, VET and ADA respectively.
- Limited Supply. Both of these tokens have a limited maximum supply, 86.7 billion for VET and 45 billion for ADA.
- Staking. Both of these tokens can be staked to earn a reward for helping secure and run the blockchain.
- Smart Contracts. In Q3 of 2021, Cardano finally enabled smart contracts. VeChain supports them as well.
How are VeChain and Cardano different?
- Consensus Protocol. VeChain uses the Proof of Authority consensus system whereas Cardano utilizes the Proof of Stake consensus.
- Market Capitalization. At the time of writing, Cardano is roughly nine times bigger than Vechain in terms of market cap. (source)
- Burning. VeChain burns 70% of the transaction costs (in Vethor, not VET. Learn more about Vechain coin burns in this article) whereas Cardano burns none.
Tokenomics and Price History of ADA and VET
Both VET and ADA have surged in the past few years, but which has the best historical performance? Also, how are the different inflation rates, and general tokenomics compared to each other?
Let’s zoom out and look at the price movements from January 2020 to the summer of 2021. This will give us a good view of the two coins’ long-term performance and which has done better.
Historical Performance of Cardano (ADA):
Historical Performance of VeChain (VET):
They have performed rather similarly. In the bull market of 2020-2021, they both surged massively. Vechain did better, with over 20,000% returns. Cardano followed closely with almost 19,000%. In the bear market, Vechain has fallen over 90%, while Cardano is currently 85% below the ATH of 2021.
Looking at the two charts above, we can say that Vechain is a tiny bit more volatile, in both directions, historically speaking.
Difference: Inflation/Deflation Rate
Vehcain does not have inflation, as the rewards for staking it are paid in another coin. This makes Vechain deflationary because people regularly lose their wallets, effectively taking coins out of circulation. This is great for the price of VET, as deflation acts as a demand pressure.
Cardano has inflation. Below you see the planned inflation rate of ADA over time. If you want to read more about this, you can check out this article right here.
The fact that ADA is inflationary and VET is deflationary is a big win for Vechain when measuring them as potential investments. Remember, inflation is downward pressure on the price, while deflation is upward pressure.
The positive side of inflation is that it incentivizes use and development. Basically, it’s easier to attract new developers and users when ADA is being minted and given out as staking rewards. Some people argue that this is better, in the long term, than deflation. The reason is that increased adoption will increase demand faster than inflation increases supply.
Future Outlook for Vechain vs Cardano
I think that Vechain has a brighter future than Cardano for two simple reasons:
- Vechain dominates its sector, and Cardano lives in the shadow of a giant – Ethereum.
- Vechain is partnering up with tons of big companies and institutions; Cardano is lagging behind in this sense.
Now, don’t get me wrong. I think Cardano is a great cryptocurrency. But Vechain is just better. It also has much more room to grow, as its market cap is 9x smaller.
I have speculated a bit on where the prices of these coins might go in other articles. Check it out:
Oh, and if you’re investing in Ethereum and want to get a sneak peek at my personal investment and trading strategy, read this article:
Conclusion: Vechain Is The Better Cryptocurrency
In my opinion, VET is an incredible investing prospect for traders with long-term perspectives. While ADA has competition from the likes of Ethereum and Solana, VET is quite independent in the crypto market with no such competitors, consequently dominating its sector. Moreover, VET is deflationary, and ADA is inflationary, further cementing VET as a better investment.
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