What’s an ‘Ethereum killer?’
The term "Ethereum killer" refers to a blockchain directly competing with Ethereum. These competing chains will have many of Ethereum's features, but they tend to use different technologies, claiming to improve Ethereum's shortcomings. Often, an Ethereum killer will have faster transaction speeds and lower gas fees, an area Ethereum has struggled with as demand soared in late 2021.
All these competing blockchains use the smart contract technology first introduced on Ethereum. Smart contracts are coded programs that perform preset functions when certain conditions are met. Since smart contracts run on code, they make trustless transactions possible in DeFi (decentralized finance).
Like its main competitors, "Ethereum killers" focus on encouraging Web3 developers to create dApps on their blockchains. In addition to DeFi dApps like decentralized exchanges (DEXs), Ethereum competitors have many other Web3 projects like NFT markets and play-to-earn games.
Examples of Ethereum competitors
Ethereum inspired many developers to create competing smart contract blockchains. However, only a few ETH killers have become crypto market leaders. Below are a few of the most noteworthy non-Ethereum smart contract chains:
Solana (SOL)
Solana is one of the newest layer-1 blockchains and has attracted great excitement from both institutional and retail investors. Launched in 2020, Solana is a smart contract blockchain that uses a unique consensus algorithm called proof-of-history (PoH). This complex system allows Solana's blockchain to create unique "timestamps" that verify transactions at lightning-fast speeds.
Indeed, one of Solana's major selling points has been its fast confirmation times. At roughly 65,000 transactions per second (TPS), Solana is one of the fastest cryptocurrencies. Its blockchain is also eco-friendly and doesn’t cost much.
Although Solana has seen tremendous adoption since its launch, some in the crypto space have raised concerns over its centralization. Solana has fewer nodes than Ethereum, and it's tied to many venture capitalists and centralized crypto exchanges (CEXs).
Solana has also experienced dozens of network outages and multi-million-dollar hacks since it went live. For instance, hackers used a vulnerability in the Solana-based Slope wallet to drain roughly $4.5 million from crypto wallets in 2022. Critics argue Solana's "move fast and break things" approach may have put the chain's security at risk.
Cardano (ADA)
Created by former Ethereum developer Charles Hoskinson, Cardano is a smart contract blockchain that uses a proof-of-stake (PoS) consensus mechanism. Although the Cardano blockchain officially launched in 2017, it's still technically under development.
In contrast to Solana, the Cardano team has deliberately taken a slow and steady approach to building its blockchain. Everything in the Cardano ecosystem has to go through multiple peer reviews to confirm its safety and efficacy. Cardano also has partnerships with research facilities such as the Tokyo Institute of Technology and the University of Wyoming.
On top of its methodical development schedule, Cardano is well-known for its connections to high-profile government institutions. For instance, Cardano partnered with the Ethiopian government to use blockchain technology in the African country's education system. Charles Hoskinson also visited Washington, D.C., on numerous occasions to discuss the potential of blockchain technology.
The Cardano blockchain uses a cryptocurrency called ADA to pay for transactions and reward validators. Typically, ADA ranks in the top 10 cryptocurrencies by market cap and is now available on most centralized crypto exchanges (CEXs).
Polkadot (DOT)
Like Cardano, Polkadot is a smart contract blockchain created by a former Ethereum developer Dr. Gavin Wood. The British computer scientist proposed Polkadot in 2017, and the blockchain went live in 2020. DOT is the native cryptocurrency in Polkadot and can be used for paying transaction fees, voting, or staking in the chain's PoS consensus mechanism.
The Polkadot Network has a complex architecture that involves a main "Relay Chain" and various "Parachains" used to create dApp projects. Polkadot also houses an auction system to determine which projects can put their dApps on Parachains.
However, Polkadot doesn't brand itself as a separate crypto ecosystem. Similar to crypto projects like Cosmos, Polkadot is committed to enhancing communication between blockchains (aka "blockchain interoperability"). Rather than choosing between Polkadot and Ethereum, it should be seamless for Web3 users to interact with countless dApps via Polkadot's ecosystem.
Avalanche (AVAX)
Avalanche is another smart contract blockchain that uses a PoS. Developed at Cornell University, the Avalanche blockchain went live in 2020, and it boasts fast transaction speeds with minimal gas fees. Brooklyn-based company Ava Labs coordinates development on Avalanche.
One way Avalanche distinguishes itself from competitors is in its three-tiered blockchain structure. Developers can access different features using Avalanche’s P-Chain, X-Chain, or C-Chain.
The P-Chain helps people launch their blockchains in the Avalanche ecosystem, while the X-Chain focuses on creating Avalanche-based tokens. Lastly, the C-Chain connects to the Ethereum Virtual Machine, which means dApps on Ethereum can connect to the Avalanche network. A few popular Ethereum dApps like Curve Finance and Aave have already been launched on Avalanche’s C-Chain.
AVAX is Avalanche’s native cryptocurrency. Users holding AVAX can deploy this coin for staking, paying network fees, or blockchain governance.
Ethereum vs. competitors: Will Ethereum survive?
Despite the rise in Ethereum killers, most crypto analysts don't believe Ethereum will "die" anytime soon. As the world's first smart contract blockchain, Ethereum has a significant lead over its competitors. Most cryptos in Web3 are still concentrated on Ethereum protocols, and there's a large community of developers and validators on the Ethereum blockchain.
At the time of writing, Ethereum has a total of $31.5 billion locked in its DeFi protocols, representing more than 50% of the total value locked (TVL) in all DeFi applications.
Although Ethereum has a strong community, it has significant scalability issues. Most Ethereum replacements attract users and developers with the promise of cheaper fees and quicker transaction speeds. Even with Ethereum's recent upgrade to PoS, the main Ethereum blockchain is slower and more expensive than alternatives like Solana and Cardano.
Also, as more chains like Polkadot introduce blockchain interoperability, it's unclear whether Ethereum will maintain its competitive advantage. Some crypto enthusiasts see interoperability as the future of Web3, which may mean Ethereum competitors gain a larger share of the TVL.
Whether Ethereum remains the dominant smart contract blockchain will largely depend on the success of Ethereum's recent upgrades.
How does ‘the Merge’ impact Ethereum?
Speaking of upgrades, the Ethereum blockchain completed its highly anticipated "Merge" in September 2022. This significant change migrated the original Ethereum proof-of-work (PoW) chain to a PoS chain.
The immediate effect of the Merge was that it made Ethereum almost 100% more energy-efficient. Also, the Merge significantly cut the daily issuance of ETH, which could reduce ETH's total token supply.
While the shift to PoS doesn't solve Ethereum's issues with network congestion or gas fees, it can lay the groundwork for future upgrades. Ethereum developers are planning to introduce many new features that are designed to improve the main chain's efficiency. For instance, developers may introduce "Shard" chains that can record and process transactions faster than the current Ethereum blockchain.
It's unknown how long it’ll take the Ethereum team to implement these new features, but developers aim to reach 100,000 TPS. For context, the current Ethereum blockchain can only handle about 30 TPS.
Ethereum layer-2 scaling solutions
In addition to Ethereum's post-Merge upgrades, there are many layer-2 blockchains that are already making it cheaper and faster to interact with Ethereum. Unlike ETH killers, these layer-2 blockchains are built on top of Ethereum and are focused on making the main blockchain more convenient.
Currently, Polygon is one of the leading layer-2 blockchains built on Ethereum. It uses smart contracts to offer scalability solutions that interact with the Ethereum main chain. Thanks to Polygon's considerable growth, it's available on most of Ethereum's largest dApps, including Uniswap and Aave.
Although Polygon is the most significant layer-2 blockchain, it's not the only project attempting to enhance Ethereum's scalability. Projects like Optimism and Arbitrum are other layer-2 blockchains that work with many Ethereum dApps.
The growth in layer-2 scaling solutions may keep Ethereum competitive even as ETH killers steal some of the crypto market share.
Wrapping up
There's no denying the rise in Ethereum competitors, but Ethereum still dominates as the leading smart contract platform. ETH killers may have faster transaction speeds and lower fees, but each has unique strengths and weaknesses. Also, as Ethereum moves forward with its post-Merge upgrades, it might erase some of its competitors' value propositions.
While Ethereum may lose market share as more competitors enter the market, it still has a significant lead in the smart contract space. Plus, thanks to the growth in layer-2 scaling solutions, it's becoming easier for users to interact with Ethereum without paying exorbitant fees.
At Worldcoin, we envision a future where all blockchains can co-exist. Increased collaboration and communication among blockchains will help spur innovation in the crypto sector. To make the first step easier, we’re putting a share of our crypto in the hands of every individual on the planet for free. We’re also airdropping free DAI tokens to anyone who downloads our app. Subscribe to our YouTube channel to learn more about the crypto ecosystem.
