Cardano vs. Ethereum: A Battle for Blockchain Supremacy

Economic

Summary:

Cardano and Ethereum are leading blockchain platforms, but how do they compare? Dive into their strengths, weaknesses, investment potential, and the future of these technological powerhouses. Discover which platform aligns best with your goals.

In the ever-evolving landscape of cryptocurrency, two prominent players stand out: Cardano (ADA) and Ethereum (ETH). Both platforms aim to revolutionize various industries through blockchain technology, but they take distinct approaches. This article delves into the core differences between Cardano and Ethereum, exploring their strengths, weaknesses, and potential futures.

The Founding Fathers: Visionary Roots

Cardano: Founded in 2017 by Charles Hoskinson, a co-founder of Ethereum, Cardano emerged from a desire to address scalability and security limitations in existing blockchains. It emphasizes a research-driven approach, employing a team of academics and engineers to develop a robust and secure platform.

Ethereum: Launched in 2015 by Vitalik Buterin, Ethereum established itself as the pioneer of smart contracts, self-executing code that automates agreements on the blockchain. Ethereum prioritizes rapid innovation and fosters a vibrant developer community.

The Technological Showdown: Architecture and Consensus Mechanisms

Cardano: Cardano utilizes a unique two-layer architecture. The first layer, Ouroboros Genesis (settlement layer), employs a proof-of-stake (PoS) consensus mechanism called Ouroboros, known for its energy efficiency and security. The second layer, Shelley (computation layer), allows for smart contracts and greater scalability.

Ethereum: Ethereum currently relies on a proof-of-work (PoW) consensus mechanism, similar to Bitcoin, which requires significant computing power and raises concerns about energy consumption. Ethereum 2.0, a major upgrade with a planned switch to PoS, is under development, but its exact launch date remains uncertain.

Smart Contracts: The Engine of Innovation

Cardano: While Cardano launched smart contract functionality later than Ethereum, it has taken a meticulous approach. Plutus, Cardano's smart contract language, prioritizes security and is based on formal verification methods to minimize vulnerabilities.

Ethereum: Ethereum boasts a well-established developer community and a vast ecosystem of decentralized applications (dApps) built on its smart contract platform. However, Ethereum faces scalability challenges, leading to high transaction fees and network congestion.

The Investment Landscape: Price and Market Capitalization

Cardano (ADA): As of May 21, 2024, Cardano ranks as the 8th largest cryptocurrency by market capitalization, with ADA trading around $0.00014. Its price history reflects periods of significant volatility, with strong potential for growth balanced by the inherent risks associated with the cryptocurrency market.

Ethereum (ETH): Ethereum holds the position of the second-largest cryptocurrency by market capitalization, with ETH trading around $3,300. While Ethereum's established presence translates to a higher price point, its price is also susceptible to market fluctuations.

The Future Unfolds: A Tale of Two Blockchains

Cardano: Cardano's focus on research and a methodical development process positions it for long-term scalability and security. As its smart contract ecosystem matures and adoption grows, ADA has the potential to become a major player in the blockchain industry.

Ethereum: Ethereum's established developer community and vast dApp ecosystem solidify its current dominance. The successful launch of Ethereum 2.0, addressing scalability concerns, could solidify its position. However, delays or technical hurdles during the upgrade process could pose challenges.

Choosing Your Path: A Matter of Priorities

For investors and developers, the choice between Cardano and Ethereum hinges on individual priorities:

For those prioritizing security, scalability, and a research-driven approach, Cardano might be a compelling option.For those seeking a mature platform with a vast dApp ecosystem and established developer community, Ethereum remains a strong contender.

Ultimately, the ongoing competition between Cardano and Ethereum benefits the entire blockchain industry. As both platforms continue to innovate and evolve, they pave the way for a future powered by secure, efficient, and transformative blockchain technology.

Beyond the Binary: A World of Possibilities

It's important to remember that Cardano and Ethereum are not the only players in the game. Numerous other blockchain platforms are vying for attention, each with unique strengths and functionalities. Investors and developers should conduct thorough research to identify the platform that best aligns with their specific needs and risk tolerance.

This analysis provides a starting point for understanding the key differences between Cardano and Ethereum. As the cryptocurrency landscape continues to evolve, staying informed and conducting your own research is crucial before making any investment decisions.

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Risk Warnings and Disclaimers

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Owen Li

Economic

Central Bank

Investors have boosted bets for an interest-rate hike by the Bank of Japan by July following an unexpected reduction in its bond buying during a regular operation this week.

Overnight indexed swaps suggest about a 70% likelihood that the central bank will raise its benchmark rate by then, up from around 50% earlier this month.

The shift in market positioning comes amid downward pressure on the yen, which is being driven by the wide gap between low interest rates in Japan and much higher borrowing costs in the US. There are also increasing expectations that a BOJ rate hike in July may be preceded by an announcement at its June meeting of a broader cut to bond buying.

The yen was steady in Tokyo on Wednesday while moves in Japanese bonds were muted, with yields on 20-year and 30-year debt having recently climbed to the highest in a decade. The benchmark 10-year yield was within striking distance of of 0.975%, the highest since 2013.

Christopher Willcox, the head of Nomura Holdings Inc.'s trading unit, said in an interview Wednesday that the 10-year yield “can possibly get to exceed 1% at some point” because inflation will likely remain elevated.

“Undoubtedly, these markets are going to be more interesting,” he said.

Willcox added that the yen could still strengthen to as much as 140 to the dollar this year, with the expectation of the BOJ announcing “limited tightening,” possibly in October. The currency traded around 156.38 at 1 p.m. in Tokyo.

Investors are divided on the outlook beyond July.

One market gauge suggests that traders are only expecting about one further hike this year on top of the BOJ's move made in March.

Yet Pacific Investment Management Co. sees the prospect of three more moves this year. Vanguard Group Inc.'s head of international rates Ales Koutny expects hikes to around 0.75% by the end of the year. Goldman Sachs Group Inc. sees the BOJ lifting rates twice a year until they reach 1.25% to 1.5%.

Some investors think the BOJ won't sharply increase interest rates because companies that are used to super-low borrowing costs would cut back spending. Others regard neglecting rate hikes as likely to cause the yen to weaken even more, which would inflate import costs.

If the BOJ raises interest rates twice a year, the yield on medium-term bonds and especially five-year notes will be affected, said Tadashi Matsukawa, head of PineBridge Investments Japan Co.'s fixed income management department in Tokyo.

Source: Bloomberg

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Glendon

Economic

Workday Inc. (WDAY), a leader in cloud-based financial management and human capital management (HCM) solutions, is set to report its fiscal 2025 first-quarter earnings on May 23rd, after the closing bell. Here's a comprehensive analysis of what to expect based on analyst predictions, industry trends, and Workday's past performance.

Analyst Expectations: Continued Growth on the Horizon

Analysts are generally optimistic about Workday's Q1 performance, anticipating continued growth across key metrics. Here's a breakdown of the consensus estimates:

Earnings Per Share (EPS): $1.57, representing a 19.9% year-over-year increase.

Revenue: $1.97 billion, reflecting a 17.2% growth from the same period last year.

Subscription Revenue: Analysts project subscription services revenue to reach $1.81 billion, up 18.4% year-over-year.

Subscription Revenue Backlog: The backlog, which indicates the total value of future subscription services contracted but not yet recognized as revenue, is expected to reach $20.31 billion, a significant increase from the $16.65 billion reported in the previous year's Q1.

Workday's Strengths: Fueling Growth

Several factors position Workday for a strong Q1:

Rising Demand for Cloud HCM and Finance: Organizations are increasingly migrating to cloud-based solutions for HCM and finance functions. Workday's robust cloud offerings cater to this growing demand.

Focus on Artificial Intelligence (AI): Workday has been at the forefront of integrating AI into its HCM and finance solutions. This focus on automation and advanced analytics enhances user experience and decision-making capabilities, attracting customers.

Strategic Acquisitions: Workday's strategic acquisitions, like Peakon (employee wellbeing) and VNDLY (talent management), expand its offerings and strengthen its competitive edge.

Potential Challenges: Headwinds to Consider

Despite the positive outlook, Workday faces some potential headwinds:

Competition: The HCM market is highly competitive, with established players like SAP and Oracle, and newer entrants like Rippling, vying for market share.

Macroeconomic Concerns: A potential economic slowdown could lead businesses to tighten spending, impacting Workday's sales.

Integration Challenges: Integrating acquired companies and their technologies can be complex and time-consuming, requiring ongoing investment.

What to Watch For in the Earnings Report

Here are key areas to pay attention to in Workday's Q1 earnings report:

Subscription Revenue Growth: This metric directly reflects customer adoption and spending on Workday's core offerings.

Customer Acquisition and Retention: Insights into new customer wins and churn rates will shed light on Workday's sales and marketing effectiveness.

Gross Margin and Profitability: Margins indicate Workday's pricing power and efficiency in managing expenses.

Guidance for the Remaining Fiscal Year: Management's outlook for the rest of the fiscal year will provide clues about their confidence in future performance.

Beyond the Numbers: Strategic Initiatives

Workday's earnings report shouldn't solely focus on financial metrics. Here are some strategic initiatives to consider:

Progress on Integrating Acquisitions: Investors will be interested in updates on how Workday is integrating recent acquisitions and leveraging their capabilities.

Product Innovation: Details on product roadmaps and new offerings will shed light on Workday's commitment to staying ahead of the curve.

Customer Satisfaction: Insights into customer satisfaction metrics will provide valuable information about Workday's ability to deliver value to its clients.

By analyzing both financial results and strategic initiatives, investors and potential customers can gain a comprehensive understanding of Workday's current position and future trajectory.

Conclusion: A Pivotal Quarter for Workday

Workday's Q1 earnings report will be a critical benchmark for assessing its progress in a competitive landscape. Continued growth in subscription revenues, customer adoption, and successful integration of acquisitions will be crucial for Workday to solidify its leadership position in the cloud-based HCM and finance market.

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Samantha Luan

Economic

After three hot inflation reports helped push back the timing of the Federal Reserve's long-anticipated interest rate cuts in the first quarter, investors were hoping to see signs of cooling producer prices this week. Instead, ahead of Wednesday's all-important consumer price index reading, markets got a warning sign.

The producer price index, a measure of the prices manufacturers and service providers receive for the goods they sell, jumped 0.5% in April, topping the consensus 0.3% forecast, the Bureau of Labor Statistics reported Tuesday. However, because March's figures were revised from an 0.2% gain to an 0.1% decline, things might not be as bad as they seem.

As Capital Economics' chief North America economist Paul Ashworth explained in a Tuesday note, the “bigger-than-expected” jump in producer price inflation in April was “mainly due to downward revisions to earlier months.” As a result, year-over-year producer price inflation accelerated only slightly from 2.1% in March to 2.2% last month.

Ashworth also noted the slight rise in the annual rate of producer price inflation for goods was largely the result of a 5.4% increase in gas prices. And with crude oil prices falling recently, he argues that trend “should be more than reversed in May.”

However, Ashworth noted rising producer price inflation can impact one key part of the Fed's favorite inflation gauge: the core personal consumption expenditures (PCE) price index.

“PPI can have a particularly big impact on core services excluding housing, aka supercore. In that respect, April's news was mixed but, on balance, encouraging,” he wrote.

While goods prices jumped 0.4% in April, it was the 0.6% jump in services prices that accounted for three-fourths of the headline gain in producer price index. Services inflation hit its highest level since July 2023 last month. However, a huge 3.9% monthly jump in portfolio management service costs caused much of the increase in services inflation.

For Greg Daco, chief economist at EY, that means there is “no reason to be alarmed.”

“Strong stock market performance drove part of the gains,” he wrote on X, referencing the jump in portfolio management service costs. “But airfares [were] down sharply, auto insurance [was] flat, and general consumer goods markups [were] down.”

It's the long-forecast, bumpy last mile of the Fed's inflation fight

For years now, Fed chair Jerome Powell has warned the path to taming inflation will be “bumpy,” and economists have cautioned the “last mile” of the Fed's inflation fight will be the most difficult. Now, those forecasts are proving prescient after multiple hot inflation reports in 2024.

For Quincy Krosby, chief global strategist at LPL Financial, the latest producer price inflation report is yet another sign that investors anticipating near-term interest rate cuts may be overly optimistic amid the difficult final battle with inflation. “Once again, the probability for interest rate cuts have been slowed as the Fed's timetable to initiate a rate easing cycle is thwarted by stubbornly higher prices,” she told Fortune via email.

Still, investors mostly brushed off the higher-than-forecasted inflation reading. The Dow Jones Industrial Average was essentially flat by midday Tuesday, while the S&P 500, and the tech-heavy Nasdaq Composite were in the green, if only slightly.

Scott Helfstein, SVP and head of investment strategy at Global X, argued this muted investor reaction is the result of inflation and Fed policy becoming less important than economic growth and earnings in recent months.

“Companies have adjusted to the new reality of higher prices and continue to look for technology solutions to manage for profit,” he told Fortune via email. “The last mile on inflation was always going to be the hardest, but we should be comfortable with these numbers.”

And David Russell, global head of market strategy at TradeStation, also noted that, despite the slight rise in producer price inflation, the Fed doesn't want to cause more economic pain than necessary by holding interest rates too high for too long. “Investors know the Fed wants to be done hiking rates, so today's PPI report might end up as little more than background noise. It doesn't change the narrative, at least not yet,” he told Fortune via email.

All eyes are on the consumer price index

April's producer price inflation report wasn't great news for the economy or markets, but it's also not a huge cause for concern for most experts. However, if Wednesday's consumer price index, which measures inflation for average Americans, comes in higher than expected, that's a different story.

“Right or wrong, the CPI tends to have a bigger short-term impact on the markets, so the picture could look much different 24 hours from now,” Chris Larkin, managing director of trading and investing at E*TRADE from Morgan Stanley, explained. “If the CPI also comes in above expectations, the interest rate picture may be thrown into doubt…more hot inflation data could make the debate about whether 2024 will contain even a single cut.”

Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, backed up that idea, arguing the “most important data release is tomorrow's CPI print.”

“Today's PPI is a bad omen for tomorrow's CPI number – despite the relationship between the two being somewhat complicated – and if the market is spooked by today's higher-than-expected PPI number, then it will be even more disturbed by a higher-than-expected CPI number tomorrow,” he told Fortune via email.

Still, like Global X's Helfstein, Zaccarelli argued the stock market can still perform throughout the year due to strong corporate profits and steady consumer spending—even if there may be a bit of volatility and “the inflation data is going to keep the Fed on edge.”

Source: Fortune

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FastBull Featured

Remarks of Officials

Local time on May 14th, Fed Chairman Jerome Powell participated in the Foreign Banker's Association in Amsterdam. He claimed that the Fed needs to remain patient and wait for more evidence that high interest rates are dampening inflation, so the Fed needs to maintain restrictive monetary policy for a longer period. At the same time, he expected inflation would stay low, but the stubborn inflation data in the first quarter weakened his confidence in low inflation, which left the Fed unable to confirm whether or when it would be able to cut interest rates.

Moreover, the lack of significant progress in further curbing inflation in the U.S. in the first quarter is noteworthy. The Fed doesn't think it will be a smooth path, but inflation is higher than expectations. This suggests that the Fed needs to remain patient and let restrictive policies work.

The Fed's next move is unlikely to be a rate hike and it is more likely to keep policy rates at current levels. Current Fed policy is, in many ways, restrictive enough to dampen economic demand. Time will tell if the policy is restrictive enough to bring inflation down to the 2% target.

The economy is performing very well and the labor market is strong. However, there are signs of a gradual cooling and rebalancing of the labor market, in part due to increased labor supply from increased immigration. Currently, the labor market is roughly as tight as it was before the pandemic.

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FastBull Featured

Data Interpretation

On May 14, at 8:30 a.m., ET, the US Bureau of Labor Statistics released the April PPI data as follows:

U.S. PPI increased by 2.2% year-on-year in April, compared with the expectation of 2.2% and the previous reading of 1.8% (revised); it rose by 0.5% month-on-month, higher than the expected 0.3% and the previous -0.1% (revised).

The PPI for final demand (excluding foods, energy, and trade services) rose 0.4% MoM in April, higher than the previous reading of 0.2%, and was up 3.1% on a 12-month basis, the biggest gain in a year.

Stripping out volatile food and energy prices, the core PPI rose 2.4% YoY in April, slightly higher than expectations of 2.3% and in line with the previous value. Also, it increased by 0.5% MoM, higher than the previous value and the estimated 0.2%.

Most of the rise in the index for final demand in April was due to a 0.6% increase in the index for final demand services. Prices for final demand goods moved up 0.4%.

Specifically, the increase in US PPI in April was mainly driven by the surge in service costs, with energy prices being the second most important factor. Actually, food prices dropped during the month.

Later, Fed Chair Powell commented on the PPI data: "The PPI reading is broadly mixed, but I did not call it hot." In my opinion, the Fed doesn't know if inflation is going to be sticky.”

The US PPI rose more than expected in April, suggesting that the process of disinflation has a long way to go. The PPI data, which is better than expected, sparked market concerns about stubborn inflation in the US. Traders have lowered their expectations for the Fed to cut rates. As of now, there is a 96.7% probability that the Fed will keep rates unchanged in June, and a 3.3% probability of a 25 bps cut.

US PPI in April

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FastBull Featured

Daily News

[Quick Facts]

1. Fed's Schmid says interest rates are likely to stay high for some time.

2. Fed's Mester says it's too early to conclude that inflation has stalled.

3. U.S. PPI data are mixed.

4. Fed's Powell says the Fed is likely to keep rates higher for longer.

5. ECB's Wunsch indicates no rush for further rate cuts after first cut in June.

[News Details]

Fed's Schmid says interest rates are likely to stay high for some time

Kansas Fed President Jeffrey Schmid said in a speech on Tuesday that as policymakers are waiting for evidence of easing price pressures, interest rates may stay high for some time. Monetary policy is currently in the right place, and inflation is expected to return to the Fed's 2% target.

I will be patient in this process and will keep an eye on key indicators over the long term, said Schmid, I will not read too much into single-month data. I'm not sure whether the U.S. will go back to the low interest rate environment that prevailed in the decade before the pandemic.

Fed's Mester says it's too early to conclude that inflation has stalled

Cleveland Fed President Loretta Mester said on Tuesday that it is appropriate for the Federal Reserve to leave interest rates unchanged as it waits for evidence of further easing of price pressures. It is too early to conclude that the Fed's disinflation process has stalled or inflation will reverse. There is no urgency to consider a rate hike, as a rise in short-term interest rates could create new instability in the financial system.

U.S. PPI data are mixed

The U.S. April PPI released by the Bureau of Labor Statistics increased by 2.2% from a year ago, a new high since April 2023, slightly higher than the previous reading of 2.1%. It rose by 0.5% from a month ago, which was higher than expectations of 0.3% and the previous revised number of -0.1%. Core PPI increased by 2.4% YoY, slightly higher than the expected 2.3%, and by 0.5% MoM, sharply exceeding the previous reading of 0.2% and the expectation of 0.2%.

This data came in well above expectations, suggesting that sticky inflation appears to be becoming more stubborn. However, the actual impact of this report may not be as shocking as it initially seems due to the downward revision of the March data.

Fed's Powell says the Fed is likely to keep rates higher for longer

Fed Chairman Jerome Powell said at an event hosted by the Foreign Bankers' Association in Amsterdam that the Fed needs to remain patient and wait for more evidence that high interest rates are dampening inflation and inflation continues to cool. Therefore, the Fed needs to keep interest rates higher for a longer period.

Inflation was expected to be lower, but inflation data for the first quarter of this year cut into that confidence. It may take longer to gain the confidence needed to lower rates than previously expected.

The fact that the U.S. did not make significant progress in further curbing inflation in the first quarter tells us that we need to be patient and allow restrictive policies to work.

Housing inflation has been somewhat puzzling. The current lag in the impact of rising rents on the CPI data is more prolonged than we thought.

The labor market has been very strong, showing signs of a gradual cooling and coming into a better balance, in part due to increased labor supply from immigration as well as slower demand.

The U.S. PPI data actually sent a rather mixed signal. I wouldn't call the PPI data overheated, but it was somewhat "mixed", said Powell. The Federal Open Market Committee doesn't know if inflation is going to be sticky.

The Fed's next move is unlikely to hike rates. Rather, it is more likely to keep policy rates at current levels.

ECB's Wunsch indicates no rush for further rate cuts after first cut in June

European Central Bank (ECB) Governing Council member Pierre Wunsch said on Tuesday that it should not be in a hurry to cut interest rates further after the first possible step in June.

Wage pressures remain, which is keeping services inflation high. We should move step by step and don't be too hasty.

Profit margins for businesses need to come down. Productivity has to increase. We will not be able to assess this accurately soon. It would be a mistake to wait until everything is clear before starting to cut interest rates as that would be too late. In the absence of negative shocks, (cumulative) rate cuts of 50 basis points are possible and will mot pose too much risk. However, we must remain cautious because it is uncertain what level rates will eventually reach.