Up-and-coming blockchains are putting a lot of pressure on Ethereum. Every crypto analyst has one question: Who can compete for the top blockchain spot?
Ethereum is a decentralized finance behemoth that has exploded in popularity in recent years thanks to events like “DeFi Summer” and the rise of nonfungible coins (NFTs).
However, Ethereum’s popularity may be contributing to its demise, as alternative protocols seek to chip away at or entirely absorb its market share.
The origins of Ethereum and Bitcoin
The mother of all blockchains, Bitcoin (BTC), was the first modern version of what is now known as cryptocurrency. Since then, various attempts have been made to give users with more capability, but most have failed. Ethereum, whose native Ether (ETH) unit is currently the second-largest cryptocurrency by market capitalization, has risen to the occasion.
A 74-page analysis has been produced by a media outlet that examines Ethereum’s ascension to this position, beginning with a comparison between Bitcoin and Ethereum’s history and current situation. Ethereum made it possible for users to establish smart contracts in a way that Bitcoin couldn’t, propelling Ethereum to its present position as the main blockchain for DeFi. It’s evident that Bitcoin is here to stay, and its DeFi capabilities have improved — largely through the use of layer-2 scaling solutions like Lightning Network, Portal, and DeFiChain. In the DeFi space, however, Ethereum is still ahead of Bitcoin, but will it maintain its lead?
Ethereum’s present strengths and disadvantages
In 2021, Ethereum had extraordinary growth, reaching 800,000 daily active users in November. It features real-world application use cases, with a total value locked in of over $150 billion across DeFi blockchain applications by 2021. Lending, derivatives, asset management, stablecoins, trading, and insurance are just a few of the services provided by decentralized applications on Ethereum. However, because of the blockchain’s growing popularity over the last several years, it has become a curse.
The more people who utilize the network, the more congested it becomes, and the higher transaction prices, also known as gas fees, become. These fees are in place to encourage network miners to participate in the network’s proof-of-work consensus method. The conversion to proof-of-stake and other changes in Ethereum’s entire transition to what is known colloquially as Ethereum 2.0 provide a solution to the congestion and scale issues. However, delays in the various stages of Eth2’s full rollout, as well as the growing popularity of competing smart contract blockchains, could cause Ethereum to lose its crown.
There are new youngsters on the block.
There are a slew of blockchain protocols vying for the top spot in the cryptocurrency rankings. Only a few have demonstrated great adoption, popularity, and real-world use cases in recent years, and they are now attracting the attention of people in the blockchain industry who would ordinarily gravitate toward Ethereum. Solana, Polkadot, and Algorand are three of the blockchains covered. The history, unique traits, environment, and scaling potential of each protocol are all detailed in order to see if any of these chains has what it takes to be the “Ethereum Killer.”
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.