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Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation.
Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, personal finance education, top-rated podcasts, and non-profit The Motley Fool Foundation.
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Key Points
Only one of these coins has a clear investment thesis.
TRON (TRX 0.17%) and Cardano (ADA -0.94%) sit on opposite sides of a practical divide. TRON aims to be a low-cost stablecoin platform for processing everyday payments. On the other hand, Cardano aims to be a carefully engineered smart contract platform with novel design choices and an intentionally slow-moving governance model.
Could either of these coins make investors into millionaires, or at least a fair bit richer?
Image source: Getty Images.
TRON’s core value proposition is to move dollar-pegged stablecoin tokens cheaply and quickly, collecting fees along the way. Today, it hosts roughly $79 billion of stablecoins, with Tether (USDT 0.00%), the market’s biggest stablecoin issuer, accounting for about 98% of that base; for what it’s worth, it’s also the chain with the most parked value of USDT in the crypto sector, if only by a hair.
TRON currently has about 2.6 million daily active wallet addresses, and a total decentralized finance (DeFi) total value locked (TVL) of nearly $6.4 billion, which, while hardly anything in comparison to Ethereum, the market’s leader by TVL, is consistent with a chain optimized for payments first. On Sept. 16 alone, it generated chain revenue of $1.5 million from its activity, up from $386,418 three years earlier. So this is a blockchain with real users and a growing volume of real economic activity, suggesting that it has at least a decent fit between its offerings and what people are looking for.
The catch is that TRON’s market cap is already $32.4 billion.
For it to make anyone into a millionaire, it would need to rise in value by at least 1,000%, and it would require a major investment of $100,000 even with those extremely high returns. The odds of that happening are low, as the chain would need to attract a vast amount of stablecoin capital and retain it over time. And that process would likely be stymied over the medium term by the recent emergence of a handful of new stablecoin-oriented blockchains.
Could this coin still be a good investment for general wealth building? Perhaps yes, but this is also where it’s important to notice one of the network’s idiosyncratic risks.
By some accounts, TRON is the blockchain where more than half of all cryptocurrency-related criminal activity occurs. Recent efforts on the chain to seize assets associated with criminal groups, terrorists, and entities facing international economic sanctions have ramped up, but the reputational damage such activity causes is bound to persist. If there’s one coin that’s likely to suddenly crash as a result of law enforcement or regulators bringing down the hammer on illegal money laundering or other unsavory deeds, in my judgment, it’s most certainly TRON — and that makes it a much riskier investment than its stablecoin-centered design would suggest.
Even so, in theory, if stablecoins remain the crypto economy’s working capital, and they probably will, a cheap, widely integrated rail like TRON can keep capturing value from transactions. That means it still has a clearer, if still fairly modest, path to future value accrual than most of its smaller rivals.
Cardano’s feature set is considerably larger than TRON’s, though its market cap at $31.6 billion faces the same scaling constraints when it comes to the coin’s millionaire-maker potential. Don’t expect it to make you into a millionaire.
The chain’s smart contracts emphasize formal, peer-reviewed methods and transaction cost determinism, with its tooling rooted in the programming language Haskell and its derivatives. In principle, that design enables the development of secure and auditable decentralized applications (dApps) for DeFi and other purposes. But, it also raises the learning curve for app developers relative to other platforms, as Haskell is not as widely known compared to, say, Ethereum’s smart contract language and tooling.
And that’s part of the reason its on-chain traction is limited.
Cardano’s DeFi TVL sits around $373 million, with daily active wallet addresses near 27,000, and its stablecoin footprint is quite tiny at roughly $39 million. Put differently, the market has not yet rewarded Cardano with durable demand comparable to much faster and much cheaper competitors like Solana that boast large app ecosystems. Nor has the fact that Cardano is somewhat faster and cheaper than Ethereum led it to steal and retain a significant capital share.
As implied by the above, one significant issue is that it’s not clear what problems Cardano solves better than its competition. Nor is it very clear how the chain’s leaders plan to change that with their ongoing development work.
Regrettably, for those looking to get rich quickly, neither of these coins is likely to deliver gargantuan, life-changing returns to anyone who invests today.
Yet, if your goal is to make a prudent long-term allocation and you must pick between the two, TRON gets the nod by a nose. Its payment rail already moves the largest stablecoin at global scale, and its cost structure and compatibility advantages lower adoption friction. Furthermore, the issue of on-chain crime, while a big risk, presently looks like it’s being managed just enough to prevent a total disaster for holders.
But overall, there are better investments for wealth-building out there in crypto, so it’s probably best to find one of those instead.
Alex Carchidi is a contributing Motley Fool healthcare and cryptocurrency analyst covering biotech, pharma, cannabis, and digital asset companies. Previously, Alex was a bench scientist and science writer at several biopharma companies and began his career as a researcher at the Ragon Institute of MGH, MIT, and Harvard. He holds a bachelor’s degree in biology from Boston University and a master’s degree in business administration with a concentration in finance from the University of Massachusetts Amherst.
Alex Carchidi has positions in Ethereum and Solana. The Motley Fool has positions in and recommends Ethereum and Solana. The Motley Fool has a disclosure policy.
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