The impact Ethereum has had on the blockchain space cannot be overstated. The general-purpose blockchain protocol envisioned by Vitalik Buterin has completely redefined what we thought could be achieved with blockchain technology. It has inspired a wave of innovation that continues to fuel the ongoing evolution of the blockchain space. If Bitcoin marked the beginning of the blockchain revolution, Ethereum ushered in the second phase of the journey. Today, Ethereum continues to be the second most popular blockchain protocol and, arguably, the one with the most utility.
But even though Ethereum has been proven to be a powerful and versatile platform, it’s still a very novel technology, which means that there are plenty of kinks to be ironed out. Naturally, this is bound to encourage the emergence of competitors that try to do things better, faster, and more efficiently. Despite being still in its infancy, Ethereum has already seen a number of Ethereum challengers that have been trying to become the leading smart contract platform in the world. Recently, the competition in that space has become increasingly heated as high gas prices on Ethereum have prompted people to look for Ethereum alternatives. This year, both Cardano and Polkadot’s native token DOT, has seen big gains on the back of this demand. Meanwhile, the Binance Smart Chain has made significant traction this year, which has helped the BNB token become the third-largest cryptocurrency by market capitalization.
These and other signs all point to the conclusion that there is a significant demand for blockchain platforms that are capable of running decentralized apps more efficiently and at a lower cost. The question is can we really expect to see an Ethereum killer anytime soon? Well, to answer that question, we first need to understand why this demand exists in the first place.
Ethereum alternatives: The epitome of an Ethereum killer
Bitcoin and the early wave of blockchain protocols inspired to share a common problem related to the difficulty of maintaining the delicate balance between high transaction speeds, security and decentralization. This is especially true about a general-purpose blockchain like Ethereum, which doesn’t just process simple transactions, but also execute the smart contracts that make the dApp space tick. Given the large amount of computation happening on Ethereum, the limited scalability of the blockchain is a real problem that leads to network congestions and higher transaction fees. This is the problem that every Ethereum competitor has been trying to solve and more than a few blockchain protocols have risen on the promise of being able to do what Ethereum does, but doing it better and more efficiently. The perfect Ethereum killer, therefore, has to have a high transaction throughput, top-notch security and low transaction fees.
The old guard
As mentioned above, Ethereum has been facing challengers almost since its inception. Projects like EOS even started their life on Ethereum before migrating to their own mainnet. EOS is one of a group of early Ethereum challengers that also include Cardano, Tron, Stellar Lumens and others. These projects have had some success over the years, but they have yet to threaten Ethereum’s position in a significant way. A recent report by venture capital firm Outlier Ventures found that Ethereum remained the most actively developed blockchain protocol, while “Ethereum killers Tron, EOS, Komodo and Qtum are seeing a decrease in core development metrics”.
Still, at least one of the initial batch of Ethereum competitors is performing strongly today. We’re talking about
As already mentioned, Cardano’s native token, ADA, has enjoyed big gains on the crypto market. Even more encouragingly, according to the Outlier Venture report, Cardano is second in terms of development activity, only behind Ethereum and ahead of the biggest blockchain network, Bitcoin.
Cardano was founded in 2015 by Charles Hoskinson, one of the co-founders of Ethereum. The blockchain boasts a proof-of-stake protocol called Ouroboros, which is based on peer-reviewed academic research.
While according to the report EOS is going through a period of weakness, the project still deserves a mention on these pages, not least because of its record-breaking initial coin offering that raised more than $4 billion. Having started its life on Ethereum, in 2018 the EOS token migrated to its own mainnet called EOS.IO.
The new blood
The growing demand for smart contract and dApp platforms has prompted the emergence of a new crop of potential Ethereum killers. Let’s take a look at some of the projects that show most promise.
The growing popularity of Polkadot has been reflected by the rising price of its token. The blockchain protocol has managed to attract a vibrant community of developers and is enjoying a healthy amount of development activity, according to the Outlier Ventures report.
The blockchain protocol is designed around three key elements: relay chain, which is the main chain of the network; parachains which run parallel and are connected to the relay chain; and bridges. The platform seeks to facilitate cross-chain interoperability.
Polkadot scored a notable win earlier this year, after gaming NFT platform Enjin announced plans to switch from Ethereum to a Polkadot parachain.
Another recently launched project protocol that already attracts significant development activity, Avalanche was born after conducting a successful initial coin offering in 2020. The platform supports the Ethereum Virtual Machine, which enables cross-chain operability for Ethereum assets.
One of Avalanche’s most interesting characteristics is that it has three different chains that run on two different consensus algorithms – Avalanche, which supports fast transactions, and Snowman, which offers secure smart contracts.
Binance Smart Chain
Since its arrival on the crypto scene, Binance has been a force to be reckoned with. The platform quickly became the largest crypto exchange in the world and then used its leading position in the crypto space to make other significant moves, including launching a proprietary blockchain for decentralized trading, a crypto token called BNB, and a stablecoin. One of its more recent moves might just be the most impactful of all, as the launch of Binance’s second chain, the Binance Smart Chain (BSC), has positioned the company as a direct competitor to Ethereum.
The BSC is a separate blockchain designed to run smart contracts. Similar to Avalanche, the chain has support for the Ethereum Virtual Machine. It also supports all languages used for writing smart contracts on Ethereum. All this makes it easy for Ethereum dApps to transition to the BSC and benefit from the blockchain’s impressive speed and low gas fees compared to Ethereum.
The BSC uses a proof-of-staked-authority consensus algorithm, which is a combination of delegated proof-of-stake and proof-of-authority. This model involves electing validators who take turns in confirming transactions on the network and producing blocks. Becoming a validator on the BSC requires a BNB stake. Under this consensus model, the BSC is able to achieve block times of around three seconds.
In addition to BNB, the BSC supports ERC-20 tokens, as well as tokens issued under its own standards.
Another promising Ethereum challenger, Solana uses a novel consensus algorithm to achieve high transaction throughput of 50,000 TPS. The algorithm, dubbed proof-of-history, uses a recursive verifiable delay function to hash incoming events and transactions. Every event has a unique hash and count as a function of real-time. Each node is equipped with a cryptographic clock, which allows network participants to agree on the correct order of events.
In addition to proof of history, Solana boasts a number of other innovations, including Sealevel – the protocol’s smart contracts parallel runtime. Unlike the EVM, where only one contract at a time modifies the blockchain state, Sealevel can process ten of thousands of contracts in parallel.
Solana’s rise to prominence has also been reflected in the price of its token, SOL. Since the start of the year the token’s price has increased roughly 30 times and is currently trading at around $48.
Could there be an Ethereum killer… and do we need one?
From what we’ve seen so far, there are plenty of blockchain protocols vying for Ethereum’s throne in the dApp space, with some of them showing real promise and drawing interest from both developers and investors. However, overtaking the second-largest blockchain network in the world is hardly an easy task. The Outlier Ventures report proves that the platform maintains a fairly sizable lead over the competition. At the same time, Ethereum seems to be on the offensive.
Boasting superior speeds and lower fees seems to be a common thread among Ethereum rivals. But Ethereum is currently in the middle of an ambitious transition to proof-of-stake that is expected to make the protocol cheaper and faster. This puts Ethereum in a position to erase the main advantage of its challengers while retaining its lead in terms of development activity and user base. Not to mention the number of promising Layer 2 solutions that seek to solve Ethereum’s scalability issues. Meanwhile, the platform’s biggest rivals are bound to slow down as dApp activity on their networks increases.
Considering all this, it’s hard to say whether any platform has a shot at becoming an Ethereum killer. But who needs an Ethereum killer, anyway? The fact that many Ethereum competitors are already compatible with the EVM hints at a possible future where all these great smart contract platforms coexist peacefully and contribute to the dApp space in their own ways. And perhaps collectively they would inspire the next big wave of innovation across the industry.