The term ‘Ethereum killer’ is starting to pick up speed once again in the cryptocurrency markets, as native tokens from several competing blockchain networks are posting significant gains during September.. For any alternative network to be considered part of this category, it must have an essential feature that serves as the backbone of the Ethereum network: smart contracts.
With this in mind, the most prominent blockchain networks by market capitalization that generally fall into this realm are Cardano (ADA), Solana (SOL), Binance Smart Chain (BSC), Polkadot (DOT), and Terra (LUNA). The native tokens of these networks have exploded this year. Solana (SOL) has recently been in the limelight after bulls leading their rally continued even in the face of a market-wide selloff on September 8 that brought Bitcoin back below the $ 50,000 mark. .
SOL’s price has more than doubled in the last 30 days, but has since declined to trade around the $ 155 mark.. The token has posted gains of more than 300% in the last 90 days with extraordinary gains of 7,871.16% so far this year (YTD). By comparison, these gains dwarf ETH’s gains of 63.77% in 90 days and 385.36% to date. Ethereum’s market cap is currently around $ 400 billion, which is almost 9 times SOL’s $ 47 billion market cap.
Killer Ethereum Tokens Post Profits
Several networks have shown promising prospects and earnings. Cardano recently completed its Alonzo hard fork which launched Plutus-powered smart contracts on the web that would allow it to host decentralized finance (DeFi) and Web 3.0 applications. Even though its native token, ADA, showed a lackluster response to this milestone in the project’s roadmap, it has still seen a substantial increase this year. ADA is trading at around $ 2.40, posting 74.16% gains in the last 90 days and 1,273.86% gains to date.
Marie Tatibouet, chief marketing officer at Gate.io, a cryptocurrency exchange, described to Cointelegraph the two reasons that started Ethereum’s killer move. Speaking about the network’s lack of scalability, he said: “As it stands, Ethereum is particularly slow and can only perform 15-25 transactions per second with very poor performance.”
Additionally, he mentioned how high demand and underperformance lead to the following reason, inflated transaction fees that “are a bit of a control.” This could have an impact on the ongoing boom seen in the non-fungible token (NFT) market. She said, “Do you really want to pay half an ETH in gas fees just to create a JPEG?”
On this, the Solana Labs spokesperson told Cointelegraph: “Coining an NFT at maximum levels can be very expensive. Recently, a minting fee reached 3 ETH, which is more expensive than many real NFTs. Solana offers faster speeds and lower prices than Ethereum, which is really what it comes down to in market shares. “
Another killer Ethereum prospect whose token has seen outstanding performance this year is Terra. Its native token LUNA has posted over 500% gains in the past 90 days and 5.477% gains to date, and is currently trading at around $ 36.
These significant gains often put a token in the limelight as its underlying platform and technology gain more users and increase adoption rates. Cointelegraph spoke with Lex Sokolin, Global Co-Head of Fintech and Chief Economist at ConSensys, a blockchain technology company that supports Ethereum infrastructure, who stated:
“DeFi protocols are applications that grow with the number of users and capital. DeFi is likely to be multi-chain and multi-purpose, although the greatest amount of liquidity will remain secured by Ethereum. However, expanding and incorporating other sources of capital through bridges and exchanges is a net good for the ecosystem ”.
Ethereum is currently in a major stage of its transformation to Ethereum 2.0 (Eth2), a fully proof-of-stake (PoS) blockchain after undergoing the London hard fork that brought crucial updates like EIP-1559. , the consequences of which are still highly debated in the cryptocurrency community. This Ethereum Enhancement Proposal (EIP) which was agreed upon by developers and miners involved a change in the transaction pricing mechanism for the network.
The change mainly affected the inflation rate of the tokens and the miner’s income, as a part of the gas tariffs is now burned after the update. According to data, More than 311,300 ETH tokens have been burned, with a notional value of nearly $ 1.1 billion. The current burn rate is 2.7 million ETH tokens per year, which would put the inflation rate at 2.3% with the issuance of 5.3 million tokens per year.
Ethereum is not the only blockchain network that implements this type of pricing mechanism, as Solana burns 50% of its transaction fees to regulate the supply of the SOL token.. Solana Labs spokesperson further said: “The Ethereum London update changed the incentives for miners. Some believed this would increase the MEV and solutions have been launched to address this, but the cost of transactions on Ethereum continues to provide a barrier to entry. “
On-chain data says Ethereum is still king
Although the native tokens of these “Ethereum killer” networks have posted impressive gains, a closer look at on-chain data reveals that Ethereum utilization and volumes still dwarf the entire remaining smart contract platform market.
Ethereum currently has a market capitalization of over $ 400 billion, which is significantly higher than the rest of the market. The closest network in terms of market capitalization is Cardano, with a market capitalization of $ 76 billion, not even 20% like that of Ethereum.
According to data from DappRadar, the total volume blocked (TVL) on DeFi protocols built on the Ethereum blockchain is just over $ 100 billion. In terms of utilization, the second-largest blockchain network is Binance Smart Chain (BSC) with a TVL of $ 18 billion, less than 20% of Ethereum’s TVL in DeFi.
BSC ecosystem coordinator at crypto exchange Binance Samy Karim spoke to Cointelegraph about the chances of Ethereum retaining its market share once the transition to Eth2 is complete:
“It has to be fast, efficient and decentralized at the same time for DeFi to achieve mass adoption. Ethereum is one of the first smart contract-compliant chains that can leverage its pre-existing communities to grow once Eth2 comes out, but it’s nearly impossible to forecast its potential market share based on its likely upgrade. “
Ethereum is also currently leading the market in the NFT space with all of the largest NFT platforms, OpenSea, CryptoPunks, Axie Infinity, Rarible, and Decentraland, all built on Ethereum. However, the entire NFT market has often been classified as a bubble by naysayers, and the Chinese Communist Party has become the latest addition when it warned Chinese citizens about digital collectibles, and yet the market continues. expanding.
Sokolin has expressed his disagreement on this perspective, saying: “We do not agree with the categorization of the NFT ecosystem as a bubble – it is a reconfiguration of the structure of digital media. […] NFTs offer a different path and having a significant economic system is unlocking a new business model. “
However, the impact of this “bubble” even as it is collapsing is limited for Ethereum. In Tatibouet’s opinion, “NFT or not, Ethereum remains the market leader when it comes to smart contract platforms. However, the NFT market has helped competitors gain an advantage over their peers.”
As Ethereum continues to gain momentum towards its final transition to a PoS blockchain, the confidence that financial markets are showing in its potential is slowly increasing.. A report by the British multinational bank, Standard Chartered Bank, discussed the real-world use cases of the blockchain network and consequently valued ETH “structurally” between $ 26,000 and $ 35,000. As of now, ETH continues to show bullish trading patterns, such as ‘cup and handle’, and even has a chance of hitting $ 6,500 in the coming months.