Ethereum is like the best and worst parts of New York: Grayscale

Grayscale, a digital asset manager, has published a report about smart contract platforms. It compares the Ethereum (ETH), blockchain to New York City’s best and worst.

This report compares Ethereum, the great-granddaddy of smart contract networks, to other blockchains like Polkadot(DOT), Avalanche/AVAX), Polkadot/DOT, Cardano (ADA), Stellar (XLM), and Stellar (XLM). This report is published in the wake the launch of a crypto fund that is dedicated to smart contract platforms other than Ethereum.

Grayscale examined the three major digital cities: Avalanche, Solana and Ethereum in a section called “digital cities”. Grayscale compared Ethereum with the Big Apple, noting similarities in their respective issues.

“Ethereum is a New York City. It is huge, expensive and congested in some areas. It also has the largest application ecosystem with more than 500 apps, which have a combined value of more than $100 billion. This is 10x greater than any other network.

“Users, developers and investors can take comfort in the fact that Ethereum will continue to be the centre of gravity for app innovation and liquidity because of the large community and amount of capital invested into its smart contracts. A Polygon L2 solution, such as Polygon, is likened to a NYC skyscraper: it scales by growing upwards,” said the report.

According to the firm, users could move to other blockchains like moving to a smaller city because of the high gas prices and congestion on Ethereum due to overwhelming demand for Decentralized Finance (DeFi) and Nonfungible Tokens (NFTs), over the past two-years.

The report stated that Ethereum fees had exceeded $10 per transaction and smart contract platforms such as Stellar, Algorand Solana and Solana experienced strong growth in daily transactions.

Grayscale described Solana like Los Angeles. He noted that Solana is a structurally distinct network that is faster and focuses more on different use cases, such as Mango Markets’ on-chain order book. This requires high transaction speeds and low fees.

“Solana’s architecture is based on a different consensus mechanism, which prioritizes speed and lower costs but at the expense of more centralization. Solana runs transactions through an efficient L1 chain. The report states that the system runs approximately 2300 transactions per second as at March 15, 2022.

Avalanche has been compared to Chicago because its economy is similar to NYC’s, but it has a smaller network. Transactions are also cheaper and less congested and development is more centralized.

Grayscale wrote that game-specific subnets, such as Crabada and partnerships with companies like Deloitte, should give Avalanche more differentiation than apps on other chains. This will help Avalanche to create a unique identity moving forward.

Related: Grayscale prepares for legal battle against the SEC over Bitcoin ETF

Grayscale, despite the comparisons, highlighted the positive use cases for smart contracts platforms moving forward. The firm pointed towards DeFi in particular and the emerging Metaverse sector.

“We believe that the market opportunity for DeFi applications and Metaverse apps is more than the $2 trillion market capital of the entire digital asset market.”

The report said that smart contract platforms are the operating platform on which DeFi and Metaverse apps build on and leverage transactions. This ultimately drives value to the base chains as users accumulate native tokens for fee.

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