- Ethereum’s high gas fees have many blockchain developers looking at alternatives to build their projects.
- Cryptocurrencies Solana, Cardano and Polkadot have all surged this year on the back of increasing adoption.
- These tokens have been dubbed ‘Ethereum Killers’ by the community but proponents believe that it’s not a fight at all but about collectively building Web 3.0.
Ethereum is the cryptocurrency to beat when it comes to smart contracts. And, the likes of Solana, Cardano, Polkadot and others are hot on its heels.
Ethereum’s native token, Ether (ETH), is the second largest cryptocurrency in the world with a market value of $560 billion. It’s the most widely used platform for non-fungible tokens (NFTs), decentralised finance (DeFi) and other use cases. In October, when the total locked value in DeFi hit $245.5 billion, Ethereum accounted for more than half at $150 billion, according to data collated by CryptoRank.
Who are the ‘Ethereum Killers’?
In general, cryptocurrencies that have a native third-generation blockchain — Bitcoin being the first-generation and Ethereum being the second — have been proposed as ‘Ethereum Killers’ by the crypto community. That means currencies that are decentralised, secure, enable smart contracts, offer a DApps platform, scale well for fast transactions at low cost, and can work with other blockchains.
Ethereum, being even larger, is the only reason they are seen as challengers. However, according to Solana co-founder Raj Gokal, it’s not a fight at all, despite what others like Chris Burniske — partner at venture capital firm Placeholder — may believe.
Despite pretty words, L1 knives are fully out. In #crypto, generally, people want their biggest bags to win. This… https://t.co/IN7GkkXrVX
— Chris Burniske (@cburniske) 1636495604000
@cburniske it’s not just pretty words, man. it really doesn’t have to be a fight. more key pairs are better. users… https://t.co/FP4Qbsl2EH
— Raj Gokal (@rajgokal) 1636549163000
Growth of Ethereum and Ethereum killers in 2021
|Cryptocurrency||Market value as of 1 Dec 2021||Price as of 1 Dec 2021||Price as of 1 Jan 2021||Increase in percentage|
|Ethereum (ETH)||$560.16 billion||$4734.09||$730.37||548%|
|Solana (SOL)||$67.34 billion||$222.20||$1.8421||11,962%|
|Cardano (ADA)||$53.09 billion||$1.59||$0.1753||807%|
|Polkadot (DOT)||$37.62 billion||$37.64||$8.3068||353%|
Source: Calculations done using data from CoinMarketCap as of 1 December 2021 at 5:00 pm Indian Standard Time (IST)
Why is there a need for ‘Ethereum Killers’?
At the time of public launch in 2015, Ethereum’s native tokens — Ether — were worth about $1. Their value rose to $10 by 2017, $200 in 2019 and $4800 today. The bull run affirmed beliefs of investors that backing a good project and rewarding miners who invested in costly computing hardware is a formula that works.But, users and developers had a few complaints. While Ether tokens are divisible upto 18 decimal places allowing for a quintillion fractional units, the advantage of precise micro-transactions is lost in practice due to ‘gas fees’ — transaction fees that can translate to hundreds of dollars in some cases.
While Ethereum is now being upgraded to solve for speed of transactions, the energy-guzzling nature of mining, and other technical changes, the reduction in gas fees is yet to be seen despite over a million Ether having been burned since the London Hard Fork came into play.
Examples of developers and users who actually use the Ethereum blockchain to get things done, include the stablecoin Tether, the Sandbox metaverse and the Aave DeFi protocol. Other projects have opted for Solana, Cardano or Polkadot even if they believed Ethereum would be the right one, in order to circumvent its high and volatile gas fees.
There are more projects on Ethereum than Solana, Cardano and Polkadot combined
|Blockchain||Number of projects|
Source: Respective blockchain repositories, as of 17 November 2021
Will Ethereum be able to survive the disruption?
Analysts peg that Ethereum will be successful, but its competitors will slowly chip away at its market value. Solana, Cardano, and Polkadot are only three of the hundreds of crypto coins out there that promise to do just what Ethereum does, only better.
To be fair, these cryptocurrencies have the advantage of being able to learn from Ethereum’s mistakes.
“Ethereum cannot be killed, it’s impossible,” the Solana chief said in November. The cryptocurrency’s ongoing makeover is promised to boost the speed of transactions by over 7,000-fold hitting 100,000 transactions per second, according to the network’s founder Vitalik Buterin.
The makeover will move ethereum to a less energy-intensive mining process and, according to network founder Vitalik Buterin, could boost speed by over 7,000-fold to 100,000 transactions per second.
The upgrade will likely be completed next year and it remains to be seen whether it will be able to hold onto its crown — or if it will run out of steam and time.