Crypto industry insiders remain optimistic – at least from a long-term perspective – and embrace this moment as somewhat of a race to see which blockchain projects survive and become leaders in a decentralized future.
Among the most epic rivalries in the wild crypto west is those between Ethereum – the original smart contract blockchain – and the projects created to improve Ethereum’s technology.
So-called “Ethereum killers” are building momentum and occupying a growing share of the non-fungible token (NFT) market, although Ethereum still maintains the lion’s share of NFT transactions. Notably, these new blockchains seem to be doing it all with faster, environmentally cleaner technology and lower transaction fees (aka “gas fees”), making some wonder how much longer Ethereum can hold onto its first-mover advantage.
Ethereum’s top competitors
“Ethereum is the clear leader,” Balina tells CoinDesk, “but these other blockchains are on-boarding new users at a faster pace due to Ethereum’s high gas fees and low transaction speed.”
Four of the top “Ethereum killers” today are Solana, Cardano, Tezos, and Polkadot. Let’s take a look at each.
Solana uses “proof-of-history” to validate transactions, unlike Ethereum’s proof-of-work consensus model. Large institutions such as JPMorgan and Bank of America have expressed their confidence in Solana, even saying it could become the “Visa of the digital asset ecosystem.”
Too much institutional interest could raise the eyebrows of decentralization diehards. Solana is backed by top venture capital firm Andreessen Horowitz – which isn’t always considered a good thing in the Web 3. Meanwhile, Ethereum has a loyal user base that many suspects won’t abandon it.
The most appropriate way to view Solana is as a potentially more mainstream Ethereum. Since launching in 2020, it has experienced substantial adoption and settled more than 50 billion transactions. Nonetheless, Solana transacts at lightning speeds, and fees equate to a fraction of a cent per transaction.
Cardano is a contender for a more environmentally sustainable alternative to Ethereum. Its native currency, ADA, had about an $18.25 billion market cap at the time of this writing. Crypto insiders keep an eye on Cardano, which has performed modestly because of the recent release of Cardano’s first decentralized finance (DeFi) exchange, SundaeSwap.
Time will tell whether Cardano can unseat Ethereum or if similar learning curves will occur as more users transact on the Cardano blockchain.
Coming fast on the scene is Tezos, another smart contract-capable blockchain used to issue new digital assets and create decentralized applications, or dapps. XTZ is the native cryptocurrency of Tezos. The currency had a market cap of $1.73 billion at the time of this writing.
Several notable projects have launched on Tezos, including those in the fashion, music, gaming, and art industries. Tezos was one of the first networks to use a proof-of-stake (PoS) consensus mechanism. It also has unique governance features built-in: Participants who stake at least 8,000 tokens on the network receive voting rights, which allow them to have a say in its governance. Tezos is also known for its dapp security.
Polkadot is known for a feature called “interoperability.” Its infrastructure connects several blockchains into a single network, enabling them to exchange data without compromising security. Robust interoperability also allows cross-chain collaboration, potentially leading to more collaboration among protocols.
Interoperability is, therefore, essential for the future of Web3, in which services, products, and currency will move throughout what many hope will be a decentralized digital ecosystem.
Among smart contract blockchains, Ethereum still occupies the hearts of Web3 veterans and poses a strong possibility for widespread adoption. However, investors and advisors should stay informed about newer smart contract blockchains that present innovative solutions to Ethereum’s shortcomings. As the demand for new dapps and DeFi protocols increases, everyone will be looking for the proper infrastructure to build the future of Web3.
The trends in crypto are NFTs, Blockchain games, Ethereum killers, and DeFi.
1. NFT – Solana, Ethereum, Enjin, Chilliz
2. Blockchain games – Enjin, Axie Infinity, Decentraland, Illuvium, Alice, Meme Lordz, Crypto Blades
3. Ethereum killers – Solana, Cardano, Polkadot, Binance Smart Chain
4. Defi – Luna, 1inch, Pancake, Sushi, Uniswap, Compound, Aave.
1. NFT. Ethereum is the least attractive because of the highest market cap. Solana goes straight after it. Enjin and Chilliz are the best in terms of profit potential here.
2. Blockchain games. A prominent leader here is Meme Lordz, but that is mainly because it has yet to release its product. Its market cap is entirely based on market expectations and is very low. AXS, MANA and ALICE are proper names in blockchain games and have substantial first-mover advantages, but will they have enough steam for the rest of the bull run?
No one knows. The gaming industry is ever-changing, and the market’s focus can quickly switch to something new. To Illuvium, for example. It will release an open beta in Q1 2022 and is all set to disrupt the industry while sitting at a relatively low market cap.
3. Ethereum killers. Regarding ETH killers, everything gets pretty simple and depends on the market cap.
4. Defi. Again with Mcap in mind, 1inch is the leader here. It combines features of the most projects in this list: Pancake, Sushi, and Uniswap. Compound and Aave are the leaders in lending, and it’s doubtful that someone ever comes close to them in terms of TVL. Luna is an absolute leader in defi stablecoins, and if we compare it to Tether (leader in centralized stables), it appears very undervalued.
Coins like ETH and LUNA should take the lead in your mind simply because they have excellent burning mechanisms which hugely favor growth.
Again, ETH is the safest bet here, especially until ETH 2.0, when 30% of the coins will be released from staking, and ETH becomes Proof-of-Stake. Keep that in mind while preparing your portfolio.
If you’ve done a lot of research and feel passionate about the specific innovation being driven by a lesser-known altcoin, then investing in it might be as much about personal belief as a return on investment.
In either case, experts say you should only invest what you’re willing to lose.
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