Ethereum is a decentralized financial giant that has grown significantly over the past few years, inspired by events such as the “DeFi Summer” and the rise of non-fungible tokens (NFTs).
However, Ethereum’s popularity can lead to its decline, as other protocols are either eroding its position in the market or trying to consume it altogether.
Birth of Bitcoin and Ethereum
Bitcoin (BTC) is the mother of all blockchains and was the first modern iteration of what is now widely known as cryptocurrency. Since then, there have been many attempts to provide great functionality to users, but most of the time it has been unsustainable. Faced with challenges is Ethereum, whose native Ethereum (ETH) coin has become the second largest cryptocurrency by market capitalization.
Cointelegraph Research has released a 74-page report that begins by examining Bitcoin along the history and current position of Ethereum and delves into the rise of Ethereum to this position. Ethereum has provided users with a way to create smart contracts in ways that Bitcoin couldn’t. This puts Ethereum in its current status as DeFi’s main blockchain. It is clear that Bitcoin is well established and its DeFi capabilities are evolving, primarily relying on Layer 2 solutions that support scalability such as Lightning Network, portals and DeFiChain. However, Ethereum is still in front of Bitcoin in the DeFi space, can I stay there?
Ethereum’s current strengths and weaknesses
Ethereum showed unprecedented adoption in 2021 and peaked at 800,000 active users per day in November. There are real-world adoption use cases, with total DeFi applications running on the blockchain in 2021 exceeding $ 150 billion. Services provided by Ethereum’s decentralized applications include lending, derivatives, wealth management, stablecoin, trading and insurance. However, its popularity is also a curse, as blockchain adoption has increased over the last few years.
Download the complete report with charts and infographics here.
The more networks are used, the more congested they are and the higher the transaction costs, also known as gas charges. These fees help give incentives to engage in the proof-of-work consensus mechanism utilized by network miners. There are answers to congestion and scaling issues. It’s a switch to Proof of Stakes and other upgrades as Ethereum fully transitions to what is colloquially known as Ethereum 2.0. However, delays in operation at various stages of the full deployment of Eth2, coupled with the growing popularity of other smart contract blockchains, can rob Ethereum of its head.
Block new kids
There are many blockchain protocols that are trying to reach the top of the crypto chart. In recent years, very few have shown strong adoption, popularity, and real-world use cases, and are beginning to draw attention from some of the blockchain spaces that normally go to Ethereum. The Cointelegraph Research report is divided into three of these blockchains: Solana, Polkadot, and Algorithm. Learn more about the history of each protocol, its unique characteristics, ecosystem, and potential for expansion to determine if any of these chains have what it takes to be an “Etherium Killer.”
Solana reports that it can handle more than 50,000 transactions per second (TPS), but the network has not yet reached these levels, but at a fraction of the cost per transaction, it is faster than Ethereum. Provide. Polkadot brings interoperability to images and allows different chains to work together seamlessly. However, this hasn’t been fully started yet, and it’s unclear how Polkadot will work if it really matters. Algorand is a blockchain created by the best crypto resources, with high TPS, low network charges and no history of downtime. Its recruitment indicators show a slow but steady pace — will that strategy ultimately become a winning strategy?
Solana, Polkadot, and Algorithm behave very differently from each other, each superior to Ethereum in its current form. It’s true that the future is multi-chain and the path to interoperability may be perfect, but only the best can gain an edge in DeFi space.
Can Ethereum maintain its position after 2022?
Ethereum is fiercely competing in Solana, Polkadot, Argoland and more. Each provides a solution to Ethereum’s current problems. If the full deployment of Eth2 does not go well or the delay persists, these up-and-coming protocols will gladly take the place of Ethereum as King of DeFi.
This article is for informational purposes only and does not represent investment advice, investment analysis, or an invitation to buy or sell financial instruments. Specifically, this document is not a substitute for personal investment or other advice.
