Ethereum is an open-source platform popular for its applications and its native coin, Ether (ETH). In terms of market capitalization, it is second only to Bitcoin, the first cryptocurrency to go to market. Being a second-generation blockchain, Ethereum was the first chain to enable its users to develop decentralized apps and games, which made it a popular destination for their developers. It also features smart contract functionality, which enables complex transactions on the network, such as trading NFTs.
However, Ethereum is not without its shortcomings, most notably the exorbitant gas fees and slow transaction speeds. To this end, several blockchains have been developed to solve these issues, all in a bid to take some of Ethereum’s market share.
When Ethereum was launched back in 2015, the founders did not expect to be faced with as much demand as the network garnered. The proof of work (PoW) consensus system the blockchain was built on could only handle a little over ten transactions per second. Seeing as the platform sees an average of nearly 1.4 million transactions daily, this led to major congestion on the network. With this congestion came high transaction (gas) fees, which is a pain point for many businesses hosting their services on Ethereum.
What’s more, this PoW system requires loads of computational power to complete even one transaction. This means the blockchain requires a large power outlay to run efficiently. On average, the Ethereum blockchain consumes 54.47 TWh every year, which exceeds the annual consumption of some countries. Peru, for example, only consumes 49.01 TWh annually.
However, this blockchain is currently in the middle of launching Ethereum 2.0, an update that will see it change to the proof of stake (PoS) model. Once this update is effected, it will reduce the power consumption by 99.95%. Till then, these are the blockchains that bank on solving Ethereum’s shortcomings in a bid to take a portion of their market share.
Founded by Charles Hoskinson, one of Ethereum’s co-founders, Cardano is an open-source platform that allows dApp development and features smart contract functionality. This platform prides itself on being the first research-oriented blockchain, as all of its launches and updates are extensively peer-reviewed.
Additionally, it runs on the PoS consensus model, which allows it to process up to 266 transactions per second (TPS) against Ethereum’s 13. The Cardano team is also working on launching Hydra, a solution that will enable it to scale up to 1 million TPS. In comparison, even after Ethereum 2.0 is launched, it will only be capable of handling up to 100,000 TPS.
Binance Smart Chain (BSC)
BSC is a blockchain that was built to be compatible with the Binance Chain native to the famous exchange by the same name. BSC users can develop dApps and other applications based on smart contracts, all while enjoying the high speed and low-cost transactions on the network. At 39.2 TPS, this chain is at least three times faster than Ethereum.
What’s more, this chain is compatible with the Ethereum Virtual Machine (EVM), which enables apps hosted on the Ethereum network to run on BSC. However, since it is owned and run by the Binance company, the blockchain is, in effect, centralized, a factor that is frowned upon by many crypto enthusiasts.
Solana is a web-scale blockchain that hosts more than 250 projects. At 50,000 TPS and a block time of approximately 600 milliseconds, it is the fastest blockchain in the market today. Each transaction costs around $0.00025, which is way less in comparison to Ethereum’s $6.5 transaction cost on average. It also offers dApp and smart contract functionalities. Their native token, SOL, ranks 7th largest crypto by market cap at the time of writing.
Though Solana has managed to create a fast, scalable decentralized network with all the security features, its superior technology may not be enough to surpass Ethereum. However, the viability of this network will set it up as a major player in the blockchain space, right alongside Ethereum.
This blockchain utilizes multiple chains in its infrastructure, which are connected via one network that enables their interoperability. These alternate chains are called parachains, and they help reduce congestion on the main network without compromising on security or transaction speeds. In theory, this network can accommodate up to 1 million TPS, thanks to these parachains. The network’s native currency, DOT, is used as a governance token, as well as the medium of payment for dApps and smart contract applications.
This is another open-source project that enables users to make governance decisions for the price of 8,000 tokens. It also features top-notch security, and scalability. The open governance model is the factor that attracts most investors to this blockchain.
This is an open-source network that’s based on the PoS model and features smart contract functionalities. It boasts transaction fees ten times lower than those of Ethereum. It also features a cross-chain bridge named rainbow, which enables its interoperability with the Ethereum chain.
This is another open-source network that allows its users to create and exchange digital money on the platform. The Stellar team claims that all financial institutions of the world can run on their network. They utilize blockchain technology to keep their network in sync across all devices.
This is a blockchain that lends itself to being viable with several commercial applications, in addition to offering attractive utilities. It is compatible with smart contracts, which enable transactions on the network that need no intermediaries.
Ethereum was the first blockchain to market to enable the development of decentralized apps and games on their platform. It also came with smart contract functionality, which enabled intermediary-less transactions of digital tokens and NFTs. However, it is characterized by high gas fees and long transaction times due to congestion on the network. Due to this, several projects were created to take advantage of these shortcomings, just to get a piece of Ethereum’s large market share.