Ethereum is an open-source, blockchain-based, decentralized software platform used for its own cryptocurrency, ether. It was first conceptualized by Vitalik Buterin in 2013 and received funding through crowdsourcing in 2014. The platform was finally launched in 2015. It enables smart contracts and Distributed Applications (ĐApps) to be built upon its blockchain. Products like DeFi (decentralized finance) were built using its blockchain with now a total value locked of a whooping $100B in a recent report by Coindesk.
The NFT market now attributes to the growth of Ethereum with the top NFT platforms built using the blockchain. Axie Infinity, a Pokemon-inspired blockchain game is the biggest taker. The game has now reached a total of $1M daily active users. In recent data by Crypto.co, AXS (Axie Infinity), the native token of the platform has now a total market cap of $4,112,399,676. While SLP (Smooth Love Potion), the uncapped utility token of Axie has now a total market cap of $217,682,636. The surge in prices of blockchain projects built in the platform created a demand. The increased demand for ETH (ethereum) has caused its price to soar.
In December 2020, the price of ETH (ethereum) was only $700. Its price started to climb in January at $,1000. On May 10, ETH (Ethereum) recorded its newest all-time high after surpassing the $4K mark. But the price of the altcoin has dropped as a result of BTC (bitcoin) price swings along with other major altcoins. But with the NFT market growing strong, ETH (Ethereum) is slowly picking up. In recent data by Crypto.co, ETH (Ethereum) is now at $3,527.36 and a total market cap of $405,668,177,122.
But Ethereum blockchain is now up against strong competitors in the market which includes Binance Smart Chain (BSC), Polkadot, Cardano, and Avalanche. Let’s take a look at its competitors and what they have to offer.
Ethereum’s Biggest Contenders
The rise of competitors breaks monopoly in any industry. The presence of strong competitors creates motivation for blockchain network developers. It also creates a wide array of services for users and developers. Moreso, it opens other investment opportunities for investors in the crypto market.
Here are the blockchain networks that aim to unseat Ethereum.
Binance Smart Chain (BSC)
Launched by Binance in September 2020, Binance Smart Chain (BSC) is a platform that aims to lower transaction costs and provide solutions to scalability concerns that have constantly plagued the crypto industry. It aims to provide a space to create DApps and other DeFi products.
It also offers interoperability by implementing the Ethereum Virtual Machine (EVM), which allows it to run Ethereum-based applications like MetaMask. It is an independent blockchain that runs parallel with Binance Chain, Binance’s native chain.
The platform utilizes a combination of proof-of-authority (PoA) and proof-of-stake (PoS) as its consensus mechanism. Binance Smart Chain can process around 160 TPS with full network usage. Transaction fees range from $0.01 to $0.03 making it one of the most competitive smart contract networks in the market.
Binance Smart Chain gained popularity in 2021 as a result of users increasing demand for alternatives due to surging fees in ethereum. Currently, there are now more than 450 projects built on the network.
BNB (Binance Coin), the native coin of the network has now a total market cap of $71,836,406,640.
Polkadot is a blockchain network dubbed as the blockchain of blockchains or multichain. It was founded in 2016 by Gavin Wood, former CTO and co-founder of Ethereum.
The blockchain comprises three chains: the Relay chain, Parachains, and Parathread.
The relay chain is responsible for security, consensus, and cross-chain interoperability across the whole network. But its functionality does not include smart contracts.
Parachains on the other hand are blockchains that connect to the Relay chain and delegate their consensus and security computations to it. They are built for a single purpose only. One can be for a fast transaction and the other is for smart contract implementation. Projects have to lease a slot on the Relay Chain through a slot auction so they can run a parachain on Polkadot.
Parathreads has almost the same function as parachains except that instead of leasing, it utilizes a pay-as-you-go model instead of leasing a slot. This is ideal for projects that don’t require continuous access to the network.
The blockchain utilizes a nominated proof-of-stake (NPoS) as its consensus mechanism. This allows those staking DOT tokens to nominate validators they feel will best serve and secure the network. But it also counters the entry of bad actors into the platform since nominators will lose their stake if they nominate a bad actor.
Polkadot can process 1,000 transactions per second. The gas price in the blockchain is not used to compensate the validators but primarily to restrict spammers from flooding the network or causing congestions with useless or extraordinarily heavy transactions. The actual gas costs will depend on the computer power needed, and the amount of data to be saved.
At present, there are 350 projects built on the platform. DOT (Polkadot) has now total market cap of $31,180,651,929 in data by Crypto.co.
Cardano is an open-source and decentralized, and public blockchain platform. It was founded in 2015 by Charles Hoskinson, another Ethereum co-founder. The platform was named after Gerolamo Cardano, a famous Italian mathematician who is well known for his achievements in algebra. ADA (Cardano), the native cryptocurrency of the platform was named after Ada Lovelace. She was an English mathematician often referred to as the “first computer programmer”.
Cardano was designed to overcome issues such as scalability, interoperability, and surprisingly regulatory compliance. Cardano has been working with governments in Africa particularly in Ethiopia. It has recently partnered with the Ethiopian Ministry of Education that paved the way for the creation of 5 million digital IDs for students. This will provide each student a secure and tamper-proof academic record they can hold for life.
It utilizes the proof-of-stake (PoS) as its consensus mechanism. During its first testing in 2017, it was reported that the platform was able to process as many as 257 transactions per second (TPS). But with the implementation of its many-headed Hydra, it is said that it will be faster than Visa’s processing capabilities of 65,000 transactions per second (TPS). The average transaction fee is around 0.16 to 0.17 ADA (Cardano) or about $0.34 at the ADA (Cardano) current price at $2.03.
In February, Cardano founder Charles Hoskinson stated in a report that they have more than 100 commercial projects in the pipeline.
In recent data by Crypto.co, ADA (Cardano) has now reached a total market cap of $89,065,864,347.
Avalanche is one of the fastest-growing blockchain networks in the crypto market today. In 2018, Emin Gün Sirer, a professor at Cornell University, founded Ava Labs which was behind the creation of Avalanche.
The blockchain network is using proof-of-stake (PoS) as its consensus mechanism. It offers a solution to the issue of scalability that’s been choking cryptocurrencies and the DeFi markets. Avalanche has a transaction speed of 4500 TPS. Dubbed as a “platform of platforms”, it is consists of thousands of subnets creating a single interoperable network. It’s like a one-stop-shop where you can buy everything you need. Very convenient for users and developers alike. With most networks, transaction fees are then used to incentivize miners or validators. With Avalanche, transaction fees are required to prevent spamming that may cause bottlenecks in the network. Gas fees come with a fixed price and are not used as an incentive for validators but are burned instead. For a better understanding of their transaction fees, you may visit their website here.
In recent updates, there are more than 225 projects that are built-in Avalanche and the numbers continue to grow.
AVAX (Avalanche), the native token of the platform has now a market cap of $7,165,646,778 in recent data by Crypto.co. The price of its token skyrocketed after the launching of “Avalanche Rush” a $180M incentive program that aims to attract leading DeFi projects into its ecosystem.
ETH 2.0: The Future of Ethereum
Despite the growing number of its competitors, Ethereum remained a favorite niche for developers. But the issue of scalability, interoperability, and bloating gas fees continue to persist in the network.
In December 2020, ETH 2.0 Phase 0 was launched and shifted from proof-of-work (PoW) to proof-of-stake (PoS). This paved the way for the creation of the Beacon Chain that will act as the central coordination and consensus hub of Ethereum 2.0.
The upgrade will also introduce sharding to the blockchain network which will increase the efficiency of its resource usage. The Ethereum Virtual Machine (EVM) will also be replaced by Ethereum WebAssembly (ewasm) which will make it possible to execute Ethereum app code right in today’s web browsers.
Currently, it supports between just 15 and 25 transactions per second (TPS). In a report by Coindesk, there are over 3,000 dapps currently running on the Ethereum blockchain. The average gas fee recorded an all-time high at $236 in August 2020. Though gas fee has tremendously dropped at an average of $44-50, it is still relatively high compared to its competitors.
The upgrade to ETH 2.0 is expected to be completed later in 2021. Once the upgrade is done, the Ethereum blockchain will end Bitcoin’s supremacy as the most dominant cryptocurrency. It is also expected to finally end the issue of scalability, interoperability, and high gas fees plaguing the network. But this remains to be seen. And as it progresses to its upgrade, more and more blockchain networks will continue to rise and challenge its position.
In recent data by Crypto.co, ETH (ethereum) total market cap is now at $405,668,177,122.