The "Ethereum Killer" Hypothesis: Are They Dead On Arrival?

These emerging blockchains, dubbed “Ethereum killers” aim to control a king-size share of the decentralized finance (DeFi), non-fungible tokens (NFTs), and Smart Contracts sectors.

Understanding Ethereum and Ethereum Killers

Ethereum is a decentralized, open-source blockchain ecosystem that allows developers to build decentralized applications (dApps) on its network. Ether (ETH) serves as the network’s native token, which means payments for services or goods on the Ethereum blockchain get settled with ETH. Over the years, ETH has grown to become the second-largest cryptocurrency based on market capitalization, behind Bitcoin.

Created and launched in 2015 by Vitalik Buterin and seven other co-founders, Ethereum had the first-mover advantage on its side, which helped it secure its place as the leading blockchain decentralized ecosystem for financial services, apps, and games.

That said, the first-mover advantage is only one of several factors behind the network’s meteoric growth. The underlying technology behind Ethereum, which allowed it seamlessly to integrate the dApp and Smart Contracts industry, played a crucial role in its rise to prominence.

At its early stages, its Smart Contracts and dApps functionalities earned it its reverence as a revolutionary technology, which motivated many developers to form communities around Ethereum, further bolstering the blockchain’s prominence.

However, as the industry evolved, many rivals to the Ethereum blockchain began popping up across the years, with each claiming to have superior technology to Ethereum’s. More than that, these emerging rivals aim at usurping market control and replacing Ethereum as the de-facto crypto blockchain, earning them the tag “Ethereum killers.”

Ethereum killers are generally open-source blockchains that have built their networks around improving one or more fundamental shortcomings of Ethereum, like network speed or high transaction costs.

The prevalent hypothesis is that a second or third-generation blockchain, like Cardano, Binance Smart Chain, Solana, or Polkadot, could usurp a large chunk of Ethereum’s market share by presenting a better ecosystem before Ethereum rids itself of its shortcomings. However, some have also hypothesized that none of the existing self-acclaimed Ethereum killers can successfully outrank Ethereum.

To understand what the fuss about overtaking Ethereum is all about, let us examine the fundamental shortcomings of the blockchain.

Ethereum’s Fundamental Shortcomings

One of the primary problems bedeviling the Ethereum network, and many other crypto blockchains today, is scalability.

When Buterin built and launched Ethereum in 2015, he could not foresee the level of demand the platform attracts today. That said, as demand grew, the Proof-of-Work (PoW) consensus mechanism used by Ethereum gradually became outdated, given that it could only handle about 13 transactions per second (TPS).

Recent reports show that Ethereum records an average of 1.3 million transactions daily. Due to the lack of throughput, as you can imagine, the network has become incredibly congested, causing gas fees to skyrocket to ridiculous highs. For businesses that rely on the Ethereum network for regular operations, this is a big issue.

Apart from the highly volatile gas fees on the network, transactions require significant computational power and time, making it very energy inefficient. Estimates show that Ethereum consumes about 54.47 TWh per year, more than the amount consumed by Portugal and Hong Kong, with 48.03 TWh and 44.73 TWh, respectively.

Ethereum 2.0

That said, Ethereum is on the verge of implementing its most robust update yet termed Ethereum 2.0 (ETH 2.0). The ETH 2.0 update would completely revolutionize Ethereum as it transitions the network from a Proof-of-Work validation mechanism to the more efficient Proof-of-Stake (PoS) consensus mechanism. This transition should help the network cut down its energy consumption by a whopping 99.95%.

Ethereum recently implemented a minor update, the London hard fork, ahead of ETH 2.0. The hard fork introduced the highly-anticipated EIP-1559 upgrade (Ethereum Improvement Proposal), which provided a fix to the gas fees volatility issue and made Ether a deflationary asset through the introduction of coin burning. However, this fix did not last long as gas fees on the network remained volatile, albeit in a relatively lesser manner.

That said, as Ethereum gears up for the ETH 2.0 rollout, which should launch early next year, other blockchains in competition hope to use this window as an advantage to take chunks from Ethereum’s market share. However, will this plan work? Let us meet some of the Ethereum killers before we answer this question.

Meet the Prospective Ethereum Killers

While this list is not exhaustive as there are many cryptos vying to take Ethereum out, below are the major competitors to Ethereum.

Cardano (ADA)

Launched in 2017 by one of Ethereum’s co-founders, Charles Hoskinson, it comes as no surprise that Cardano tops the list of Ethereum killers. This network boasts of a research-based approach to development, which means that every upgrade or product rollout undergoes thorough peer-reviewed testing at each stage before launch or implementation.

While this attribute helps the network develop and rollout top-notch products and services, it comes with an unavoidable disadvantage; time. It took Cardano four years since its launch to roll out the much-needed Smart Contract functionalities due to draw out delays from its vetting process.

Nonetheless, Cardano is a third-generation blockchain with significantly better scalability and eco-friendly prospects than Ethereum.

Binance Smart Chain (BSC)

Binance is generally known as the world’s largest cryptocurrency exchange. However, this company also operates one of the world’s most robust crypto ecosystems with its Binance Smart Chain.

While, like Ethereum, BSC is a programmable blockchain, it allows project developers to connect with potential investors through its massive trading platform. This potent combination is a significant advantage for Binance over Ethereum and most blockchain networks.

Over the past months, Binance has come under increased scrutiny and regulatory challenges from authorities across the globe. Binance has also received intense criticism for running what many believe is a more centralized system than most, defeating the purpose of cryptocurrency. The primary appeal of a decentralized system is that it eliminates the need for a third party. However, Binance often places itself in the middle of transactions.

While this network might not be as technologically potent as other Ethereum killers on this list, and its centralized nature has alienated some crypto purists, Binance stands a great chance as the fabled Ethereum killer thanks to its popularity.

Solana (SOL)

At the moment, Solana is arguably the hottest blockchain in the crypto space. Compared to the meager 15 – 45 TPS Ethereum runs, Solana boasts a jaw-dropping 50,000 TPS.

Solana’s blockchain currently hosts over 400 projects, including the second-largest stablecoin USD Coin (USDC) and many others. The network also hosts wallets, decentralized exchanges (DEX), and other decentralized finance (DeFi) projects.

One fundamental setback faced by Solana towards claiming the Ethereum killer title is its inability to support Solidity (Ethereum’s programming language). However, Solana has asserted that works are currently underway to bridge this gap, adding that its Rust programming language is popular with developers.

Polkadot (DOT)

Last on our list for the title of Ethereum killer is none other than Polkadot. Like Cardano, Polkadot came through the dissatisfaction of an Ethereum co-founder, Gavin Wood.

Where Polkadot steals the show is with its interoperability property, which allows it to serve as a link for blockchains to communicate with each other. This functionality has earned it the nickname “the internet of blockchains”.

Final Verdict: Can Ethereum Killers Live Up to Their Name?

While the native tokens of the Ethereum killers listed in this article have all recorded exceptional performances over the years and currently dominate the top ten crypto rankings in terms of capitalization, on-chain data shows that Ethereum remains king and would continue to do so in the near to mid-term.

Ethereum’s utilization and volume completely eclipse that of the networks mentioned earlier. The closest to Ethereum in market cap, Binance Coin (BNB), has to grow its $80.9 billion market capitalization six times to reach that of ETH’s, $495.8 billion.

Meanwhile, on-chain analytics provider DappRadar recently revealed that the Ethereum blockchain has over $100 billion in total volume locked (TVL) on DeFi protocols built on the network. The network in the second position, Binance Smart Chain, has a TVL of $18 billion, less than 20% of Ethereum’s.

Speaking on the possibility of Ethereum cementing its dominance in the DeFi and Smart Contracts space once ETH 2.0 rolls out, BSC ecosystem coordinator Samy Karim noted that:

“It has to be quick, efficient, and decentralized at the same time for DeFi to attain mass adoption. Ethereum is one of the first smart contract compatible chains that can leverage its pre-existing communities to grow once Eth2 is out but [is] next to impossible to forecast its potential market share [based on] its probable upgrade.”

Ethereum also leads the NFT space, with most of the established NFT marketplace like OpenSea, CryptoPunks, Axie Infinity, Rarible, and Decentraland all having their roots in Ethereum.

While Ethereum needs to facilitate some fundamental revampment on its blockchain and fast, it is clear that no other network comes close.

To sum it up, in the words of Binance CEO Changpeng Zhao, Ethereum is the only Ethereum killer. Zhao warned that failing to scale up its network is the only way Ethereum can fall to competition. With ETH 2.0 coming up in a few months, it is unlikely for ETH to lose its place as the king of DeFi and Smart Contracts.

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