Ethereum killers or just pretenders? But Ether remains king for now. The problem of excessive gas prices has resurfaced in the Ethereum community, as “Ethereum killer” networks continue to gain traction.
The moniker “Ethereum killer” is resurfacing in the cryptocurrency markets, as the native tokens of many alternative blockchain networks have experienced large increases in September. To be regarded as a member of this category, every alternative network must contain one key characteristic that serves as the Ethereum network’s backbone: smart contracts.
With this in mind, the most well-known blockchain networks by market capitalization that generally fall under this umbrella include Cardano (ADA), Solana (SOL), Binance Smart Chain (BSC), Polkadot (DOT), and Terra (LUNA). This year, the native tokens of these networks have gone on a tear. Most recently, Solana (SOL) has been in the limelight as bulls continued to drive its climb despite a marketwide selloff on Sept. 8 that pushed Bitcoin down below $50,000.
Over the previous 30 days, the price of SOL has more than doubled, but it has now dropped to about $155 per share. Almost the previous 90 days, the token has increased by over 300%, with a year-to-date gain of 7,871.16%. (YTD). In comparison, ETH’s 90-day gains of 63.77% and 385.36% YTD gains pale in comparison. The market value of Ethereum is presently at $400 billion, nearly nine times the market capitalization of SOL ($47 billion).
Ethereum killer tokens post gains
Several networks have demonstrated excellent growth and possibilities. Cardano recently completed its Alonzo hard fork. Which enabled the network to support decentralised finance (DeFi) and Web 3.0 apps using Plutus-powered smart contracts. ADA, the project’s native token, has seen a significant increase this year despite the project’s native token’s poor response to this milestone in the project’s timeline. ADA is now trading at about $2.40, with a 90-day gain of 74.16% and a year-to-date gain of 1,273.86%.
The Ethereum killer movement began for two reasons, according to Marie Tatibouet, chief marketing officer of Gate.io, a cryptocurrency exchange. “As things stand, Ethereum is especially sluggish and can only perform 15-25 transactions per second with very poor throughput,” she added, referring to the network’s lack of scalability.
She went on to say that because of the high demand and limited throughput, the second issue is inflated transaction costs, which are “a little out of hand.” This might have an influence on the market for nonfungible tokens (NFTs), which is now booming. “Do you really want to pay half an ETH in gas costs to mint a JPEG?” she said.
“Minting an NFT at peak levels may be quite costly,” a Solana Labs spokesman explained. A minting charge recently reached 3 ETH, which is more than many genuine NFTs. Solana provides quicker speeds and lower costs than Ethereum, which is essentially what market share is all about”.
Terra is another potential
Terra is another Ethereum killer potential whose token has performed exceptionally well this year. LUNA, the company’s native token, has gained more than 500% in the previous 90 days and 5,477% year to date, and is now trading at approximately $36.
Due to its underlying platform and technology gaining more users and growing acceptance rates, such large increases frequently place a token in the limelight. Lex Sokolin, global fintech co-head and chief economist of ConSensys, a blockchain technology business that backs Ethereum’s infrastructure, stated:
“DeFi protocols are applications that grow with the number of users and capital. It is likely that DeFi will be multichain and multipurpose, though the largest amount of liquidity will remain secured by Ethereum. However, expanding and incorporating other capital sources through bridges and exchanges is a net good for the ecosystem.”
The London hard fork
After the London hard fork, which brought in critical upgrades like the EIP-1559, Ethereum is now in an important stage of its metamorphosis to Ethereum 2.0 (Eth2), a fully proof-of-stake (PoS) network. The Ethereum Improvement Proposal (EIP) included a modification in the network’s transaction pricing structure, which was agreed upon by the developers and miners.
Because a percentage of gas fees is now being burnt as a result of the upgrade, the change primarily impacted token inflation and miner earnings. Over 311,300 ETH tokens have been destroyed, with a theoretical worth of over $1.1 billion, according to statistics. The current burn rate is 2.7 million ETH tokens per year, implying a 2.3% inflation rate with 5.3 million tokens issued each year.
Solana burns 50% of its transaction fees to restrict the quantity of the SOL token. And Ethereum isn’t the first blockchain network to use this sort of pricing system. “The Ethereum London upgrade changed miner incentives,” the Solana Labs spokesperson added. Some anticipated this would raise the MEV, and methods have been developed to solve this. But the cost of transactions on Ethereum remains a barrier to entry”.
On-chain data says Ethereum is still king
The native tokens of these “Ethereum killer” networks have seen significant increases. However, a deeper examination of the on-chain statistics indicates that Ethereum’s use and volumes continue to overwhelm the rest of the smart contract platform industry.
Ethereum has a market value of more than $400 billion. Which is substantially greater than the rest of the cryptocurrency industry. Cardano is the nearest network in terms of market value. With a market capitalization of $76 billion, less than 20% of that of Ethereum.
Samy Karim, BSC ecosystem coordinator at Binance cryptocurrency exchange, discussed the chances of Ethereum keeping its market dominance when the transition to Eth2 is complete:
“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 it’s next to impossible to forecast its potential market share on the basis of its probable upgrade.”
Ethereum leads the market
Ethereum is now leading the market in the NFT area. All of the major NFT platforms, including OpenSea, CryptoPunks, Axie Infinity, Rarible, and Decentraland, are based on Ethereum. However, sceptics have labelled the entire NFT industry as a bubble. With the Chinese Communist Party being the most recent to do so. When it issued a warning to Chinese citizens about digital collectables, and yet the sector continues to grow.
Sokolin has expressed his dissatisfaction with this viewpoint. He said, “We disagree with the classification of the NFT ecosystem as a bubble. It is a reorganization of the digital media structure”. NFTs provide an alternative route, and having a significant economic system enables a new business model to emerge”.
However, even if this “bubble” goes “bust,” Ethereum’s influence will be minimal. “NFTs or not, Ethereum is still the industry leader in terms of smart contract platforms”, according to Tatibouet. The NFT market, on the other hand, has aided rivals in acquiring a competitive advantage”.
The financial markets are gradually gaining faith in Ethereum’s potential. As it continues to gain pace toward its ultimate transition to a PoS blockchain. The real-world use cases of the blockchain network examined in a research by the British multinational bank Standard Chartered Bank. Which valued ETH “structurally” between $26,000 and $35,000. ETH is now exhibiting bullish trading patterns. And it has the potential to reach $6,500 in the next months.