Ethereum has dominated the smart contract platform space since its launch in 2015. As the first blockchain to support general purpose programmability, Ethereum enabled a new world of decentralized applications powered by self-executing smart contracts. However, Ethereum is not without its flaws. Its high gas fees, congestion issues, and difficulty to scale have opened the door for competitors to gain traction.
What are the key advantages of Ethereum?
As the first mover in smart contract platforms, Ethereum benefits from strong network effects and a robust developer ecosystem. Some of Ethereum’s key advantages include:
- Large developer community – Ethereum has the largest developer community working on decentralized applications (dApps), with thousands of developers worldwide.
- Most dApps – More dApps are built on Ethereum than any other blockchain. Major applications include decentralized finance (DeFi), non-fungible tokens (NFTs), metaverses, DAOs, and more.
- Ethereum Virtual Machine – The EVM allows developers to create and deploy applications that run exactly as programmed without downtime or third party interference.
- Proof-of-Stake – Ethereum’s transition to PoS consensus will make Ethereum more scalable, secure, and sustainable.
- First mover advantage – As the first smart contract platform, Ethereum benefits from strong brand recognition and network effects.
These key advantages have helped cement Ethereum as the leading blockchain for decentralized applications. However, Ethereum is not without weaknesses that competitors aim to capitalize on.
What are Ethereum’s weaknesses?
While Ethereum dominates the smart contract space currently, it does face some technical limitations and weaknesses:
- Scalability – Ethereum can only process 15-45 transactions per second (TPS), resulting in network congestion and high gas fees.
- Speed – Transaction confirmation times can be slow, sometimes taking several minutes to confirm.
- Storage – Storage of smart contract data is costly, making large scale applications expensive.
- Programming – Solidity programming language has a steep learning curve.
- Upgrades – Moving Ethereum infrastructure to PoS and sharding has faced multiple delays.
These weaknesses around scalability, speed, cost, and upgrades have opened opportunities for competitors to gain traction by addressing Ethereum’s shortcomings.
What other blockchain platforms are rivaling Ethereum?
Several platforms have emerged as competitors to Ethereum in recent years. The top blockchains rivaling Ethereum include:
Solana
Solana prioritizes scalability, speed, and low fees. It uses proof-of-history and proof-of-stake to achieve transaction speeds of 50,000 TPS and fees of $0.00025 per transaction. Solana has seen huge growth in 2022, with over $11 billion locked in DeFi and 600+ projects launched.
Cardano
Cardano uses Ouroboros proof-of-stake to allow secure, scalable smart contracts. It aims to be more decentralized and open source focused than Ethereum. Cardano is still earlier stage but has major development underway.
Polkadot
Polkadot is a sharded multichain network that allows external blockchains to connect to its relay chain. This interoperability aims to improve scalability and flexibility for decentralized apps. Polkadot is newer but offers a unique value proposition.
NEAR Protocol
NEAR uses sharding to improve scalability, with the aim of hosting Web3 dApps that can compete with today’s web apps. NEAR focuses on usability and has low fees, attracting developers of consumer dApps.
Algorand
Algorand uses a pure proof-of-stake blockchain that can confirm transactions in under 5 seconds, with flexibility to scale to 46,000 TPS. Algorand focuses on enabling decentralized finance and exchange solutions.
Avalanche
Avalanche is a layer 1 blockchain that offers 4,500+ TPS, sub-second finality, and low fees. It’s interoperable, supporting multiple VMs for different apps. Avalanche has seen growth especially among DeFi apps.
How do the key Ethereum rivals compare on metrics?
Here is a comparison of how the top Ethereum competitor platforms stack up across some key metrics:
| Platform | Consensus | TPS | Avg. Fees | Interoperability |
|---|---|---|---|---|
| Ethereum | Proof-of-Work (moving to PoS) | 15-45 | $2-$20+ | Limited |
| Solana | Proof-of-History + PoS | 50,000+ | $0.00025 | Limited |
| Cardano | Ouroboros PoS | 250 | $0.30 | Limited |
| Polkadot | Nominated Proof-of-Stake | 1,000 | $0.10 – $1 | High |
| NEAR | Nightshade PoS | 100,000 | $0.00001 | Limited |
| Algorand | Pure Proof-of-Stake | 46,000 | $0.001 | Limited |
| Avalanche | Snowman PoS | 4,500 | $0.20 – $0.90 | High |
As the table shows, platforms like Solana, NEAR, and Algorand can process orders of magnitude more transactions per second compared to Ethereum, with negligible transaction fees. Cardano offers enhancements but lags on scalability currently. Polkadot and Avalanche offer high interoperability between blockchains.
How are developers responding to Ethereum rivals?
The emergence of rival blockchains has captured the attention of many developers who have grown frustrated with Ethereum’s limitations. Here are some trends in how developers are responding:
- Porting dApps – Popular Ethereum dApps are being ported to run natively on rival chains like Solana, NEAR, and Polkadot to benefit from higher scalability.
- Building on layer 2 – Scalability solutions like Arbitrum, Optimism, and zkSync enable developers to build on Ethereum layer 2 while benefiting from Ethereum’s security.
- Multi-chain development – Developers are increasingly adopting a multi-chain strategy by deploying applications across Ethereum, layer 2s, and rival blockchains.
- Waiting and seeing – Many developers are sticking with Ethereum to wait and see if Eth2 and sharding deliver on scalability promises.
Overall, Ethereum still dominates developer activity but competitors are offering compelling options for developers struggling with Ethereum limitations. This is forcing Ethereum to improve in order to avoid losing developers.
Does Ethereum have an answer to the competition?
Ethereum has major upgrades coming that aim to address its weaknesses around scalability, fees, and speed:
- Eth2 – Transition to proof-of-stake will improve security, energy use, and support shard chains.
- Shard chains – Breaking the blockchain into shards will enable parallel transactions and higher TPS.
- EIP-1559 – This fee change smooths fee volatility and improves fee predictability.
- Layer 2 scaling – Rollups like Arbitrum and Optimism will take load off layer 1.
Ethereum has faced delays in rolling out these upgrades. But once live, they hold promise to make Ethereum more scalable, sustainable, and lower cost. This could enable Ethereum to maintain its developer network effects despite the growing competition.
Will the “Ethereum killer” emerge?
The term “Ethereum killer” refers to blockchains aspiring to overtake Ethereum’s dominant position in DeFi, NFTs, and crypto dApps. The likelihood of an Ethereum killer emerging depends on a few factors:
- Network effects – Ethereum has first mover advantage and the largest developer ecosystem, providing inertia against disruption.
- Eth2 realization – If Ethereum can realize its Eth2 vision, it may successfully address current weaknesses.
- Rival maturity – Competitors like Solana, Polkadot, and NEAR are still maturing and adopting niche use cases currently.
- New entrants – A future platform could emerge and innovate beyond existing chains in the rapidly evolving space.
Realistically, no competitor is positioned yet to completely dethrone Ethereum. However, it’s likely we’ll see an expanded multipolar environment, with several platforms significantly eating into Ethereum’s market share across different crypto verticals.
Conclusion
Ethereum pioneered smart contract functionality, fueling a massive ecosystem of decentralized applications across DeFi, NFTs, DAOs, and more. However, congestion, high fees, and scaling difficulties have limited Ethereum adoption and spurred the rise of rival blockchains. Competitors like Solana, Cardano, Polkadot, NEAR, Algorand, and Avalanche aim to solve Ethereum’s pain points around scalability, fees, and speed. This has kickstarted a “multi-chain” future as developers deploy across multiple networks. Ethereum still maintains advantages in its developer community, network effects, and roadmap upgrades like Eth2 and sharding. While no single “Ethereum killer” is imminent, competitors will likely continue carving out market share in niches where Ethereum falls short. Ultimately, end users and developers will benefit from having options across a decentralized web of Ethereum and Ethereum alternatives powering Web3.
