Crypto investors have likely noticed the drastic price drops and bearish sentiment detectable throughout the crypto market.
Yet 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.
Ethereum’s native currency, ether (ETH), had a market cap of roughly $229.12 billion at the time of this writing. The Ethereum network is heading steadily towards the Merge, which will move the blockchain from the current proof-of-work (PoW) consensus mechanism to a proof-of-stake model that will offer improved processing times, lower fees and more scalability.
Until then, so-called “Ethereum killers” are building up 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 with lower transaction fees (aka “gas fees”), making some wonder how much longer Ethereum can hold onto its first mover advantage.
“The year 2022 will be the battle for Web3 and the next evolution of the internet,” says Ian Balina, founder of the crypto analytics firm Token Metrics. “Look for a heated race.”
So how do Ethereum’s competitors stack up?
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’s native currency, SOL, had a market cap of $15.79 billion at the time of this writing.
Solana is also backed by top venture capital firm Andreessen Horowitz – which isn’t always considered a good thing in the world of Web 3. Too much institutional interest could raise the eyebrows of decentralization diehards. Meanwhile, Ethereum has a loyal user base that many suspect won’t abandon it.
Nonetheless, Solana transacts at lightning speeds, and fees equate to a fraction of a cent per transaction. Since launching in 2020, it has experienced strong adoption and settled more than 50 billion transactions. Perhaps the most appropriate way to view Solana is as a potentially more mainstream Ethereum.
Cardano is a contender for a more environmentally sustainable alternative to Ethereum. Its native currency, ADA, had about a $18.25 billion market cap at the time of this writing. Crypto insiders are keeping an eye on Cadano, 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.
See Also: How to Stake Cardano
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.
DOT is the native cryptocurrency of the Polkadot platform. It had a market cap of $11.01 billion at the time of this writing.
Polkadot is known for a feature called “interoperability.” Its infrastructure connects several blockchains together into a single network, enabling them to exchange data without compromising their security. 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. Robust interoperability also creates the possibility for cross-chain collaboration, potentially leading to more collaboration among protocols.
Among smart contract blockchains, Ethereum still occupies the hearts of Web3 veterans and poses a strong possibility for widespread adoption. However, investors and advisors alike 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 right infrastructure to use to build the future of Web3.
Read More: What is the Ethereum Merge?