What are the Most Promising Ethereum Alternatives? Part 1
Even though Ethereum is the current king of smart contracts, anything can happen in the future. If an exploit is found or Ethereum 2.0 gets continuously delayed, there may be another smart contract platform that overtakes Ethereum.
Ever since its release in 2015, Ethereum has been the dominant blockchain-based smart contract platform. For those who are unaware, smart contracts are contracts where the terms of agreement are written in code and executed automatically, compared to traditional contracts which are written and enforced by law. They are responsible for a massive share of the cryptocurrency market, and many of the largest projects in the space would not be around if not for these contracts. For example, every DeFi app, token, and NFT has been created using a smart contract. Being the main smart contract platform brings lots of attention and users to Ethereum, which is why it has a valuation over $200 billion and is known as the “king of the smart contract platforms.”
However, Ethereum is not guaranteed to keep this title in the future. Ethereum is still a new technology, and is prone to bugs, exploits, and other unforeseen events. Furthermore, the Ethereum blockchain is currently slow and expensive, and it has competitors that are much faster and cheaper. If Ethereum developers are unable to deliver on their promise to fix its scaling issues, it would likely fade into obscurity as better alternatives sprang forward.
It is easy to see why the lucrative and revolutionary sector of smart contracts would entice other projects to begin building their own platforms and protocols to compete with Ethereum. In fact, there are over thirty three smart contract platforms in the top 100 cryptocurrencies, and even more in the lower rankings. Let’s take a look at some of the most promising smart contract platforms, what they offer, and how they could compete or collaborate with Ethereum.
Cardano is the second largest smart contract platform behind Ethereum. It was created in 2017 by Charles Hoskinson, an Ethereum co-founder, as an “Ethereum killer.” It uses a proof of stake consensus model and offers users 5–7% APR through staking ADA, the native asset of the Cardano blockchain. Cardano has taken a scientific and peer-reviewed approach to their technology, and thus has made much slower progress than their competitors. In fact, they have yet to enable smart contract functionality on the Cardano blockchain, and it is currently only able to send and receive ADA transactions. However, this will change in Fall 2021. Additionally, Cardano can currently handle 50 transactions per second, compared to Ethereum’s 14, and plans to scale to up to 2 million transactions per second through a scaling solution known as Hydra. They also have some significant partnerships, and their biggest is with the Ethopian government.
Even though they technically do not have any dApps or tokens on their blockchain yet, they are one of the biggest and hyped cryptocurrency projects and are bound to garner developer attention after they roll out smart contract functionality.
Solana is a relatively new smart contract platform that emphasizes speed as its main feature. As of today, the Solana blockchain can handle 50,000 transactions per second, which easily makes it the fastest smart contract platform. Since the project is relatively new, there is not a large ecosystem of decentralized applications building on Solana, but that is poised to change in the near future. In a recent fundraising round, Solana raised $300 million dollars from venture capital firms that will be used to grow their ecosystem and incentivize developers to use their platform. Additionally, Solana is partnered with FTX, one of the world’s largest cryptocurrency exchanges. FTX chose Solana as the blockchain that they will use to build their Serum decentralized exchange, which could have faster settlement times than the NASDAQ.
As expected, Solana’s speed does come at a cost. It is relatively centralized compared to other smart contract platforms, and running a node requires specialized and expensive hardware. The team is looking into fixing this issue, but it is much easier to look into something than it is to actually fix it.
Some projects are taking a dual blockchain approach and choose to see Solana as an Ethereum complement. For example, Audius runs their decentralized application on Solana to take advantage of high speeds and low transaction costs, while using Ethereum for their AUDIO token to have security and stability.
Algorand, one of the most discussed cryptocurrencies on the cryptocurrency subreddit, is also a competitor in the smart contract platform space. It was created by Silvio Micali, a blockchain professor at the Massachusetts Institute of Technology, in 2019. It was originally created to solve the scalability trilemma, which is the idea that a blockchain cannot be scalable, secure, and decentralized. Through their pure proof of stake consensus model, Algorand attempts to solve this problem by having over one thousand validator nodes while also achieving over 1,000 transactions per second.
Much like many new blockchains, it has yet to see many developers use their platform to build dApps. However, many speculate that Algorand will be the blockchain of choice for Central Bank Digital Currencies, or CBDCs. If this is true, and a large government like the United States uses Algorand’s technology for their digital currency, the blockchain is bound to receive more attention and popularity.
Even though these are some of the potential coins that can overtake Ethereum, there are many more that are worthy of consideration. Keep an eye out for Part 2 of this series, where Near Protocol, Harmony, Tezos, and more will be analyzed!
By Lincoln Murr