As the native tokens from several different blockchain networks start to post significant gains in September, the term “Ethereum Killer” is gaining momentum. Smart contracts are the key feature that makes any other network eligible to be included in this category.
This is why the top blockchain networks in terms of market capitalization are Cardano, Solana (SOL), Binance Smart Chains (BSC), Polkadot(DOT) and Terra (LUNA). These native tokens have seen an incredible rise this year. Recently, Solana (SOL), has been the focus of attention after the bulls continued their rally despite a marketwide selloff that Sept. 8 brought Bitcoin below the $50,000 mark.
SOL has seen more than a double in price in the past 30 days, but it has declined to trade at $155 since then. Over the past 90 days, SOL has seen a staggering 7,871.16% increase in value year-to-date (YTD). These gains are far more impressive than ETH’s 63.77% gains in the last 90 days and 385.36% YTD gains. Ethereum’s market capitalization currently stands at $400 billion, which is almost 9 times SOL’s $47 billion.
Ethereum killer tokens: Post gains
Numerous networks have demonstrated promising prospects and gains. Cardano’s Alonzo hard fork was completed recently. It launched Plutus powered smart contracts on the network, which would enable it to host Decentralized Finance (DeFi), and Web 3.0 apps. ADA, the native token of Cardano, has seen a significant rise in value this year, despite a slow response to this milestone on the project’s roadmap. ADA trades around $2.40 and has posted 74.16% gains over the past 90 days and 1,273.86% gains YTD.
Marie Tatibouet is Gate.io’s chief marketing officer. She explained to Cointelegraph why Gate.io was the cryptocurrency exchange that started the Ethereum Killer movement. She spoke out about Ethereum’s inability to scale and said that the network can do only 15-25 transactions per second, with very low throughput.
She also mentioned that high demand and low throughput leads to bloated transaction charges that “are somewhat of control”. This could have an effect on the continuing boom in nonfungible token markets (NFT). She asked, “Does it really make sense to pay half an Ethereum in gas fees to create a JPEG?”
Cointelegraph was informed by a spokesperson for Solana Labs that “mining an NFT at high levels can be very expensive.” Recent minting fees reached 3 ETH. This is much more than the actual NFTs. Solana is faster than Ethereum and has lower prices, which is what it all boils down to when it comes to market shares.
Terra is another Ethereum killer prospect. This year, Terra has seen a remarkable performance. Terra, which is trading at $36.95, has its native token LUNA posting over 500% gains in 90 days and 5,477% gains YTD.
These significant gains often place a token in the spotlight because its underlying platform or technology is gaining more users and increasing adoption rates. Cointelegraph spoke to Lex Sokolin who is ConSensys’ global fintech head and chief economist. This company supports Ethereum’s infrastructure.
“DeFi protocols are apps that grow in proportion to the capital and users. DeFi is likely to be multichain and multipurpose. However, Ethereum will continue to hold the greatest amount of liquidity. The ecosystem is in a net-benefit if it can expand and incorporate other capital sources via bridges and exchanges.
Ethereum is in an important stage in its transformation to Ethereum 2.0 (Eth2), an entirely proof-ofstake (PoS), blockchain. This is after it underwent the London hardfork which brought in critical updates such as the EIP-1559. The aftermath of this fork is still being highly debated in the cryptocurrency community. The Ethereum Improvement Proposal, or EIP, was approved by developers and miners. It implimented a change to the network’s transaction pricing system.
Since a portion of gas fees were being burned after the upgrade, the change had a major impact on the inflation rate of tokens and miner’s revenue. Data shows that over 311,300 ETH tokens were burned with a nominal value of almost $1.1 billion. Current burn rate is 2.7 Million ETH tokens/year, which would mean that the inflation rate is 2.3% with issuances of 5.3 Million tokens/year.
This pricing mechanism is not only available on Ethereum, but Solana also uses 50% of its transaction fees for the regulation of the SOL token supply. According to Solana Labs, “The Ethereum London upgrade has changed miner incentives.” While some believed this would raise the MEV, there have been several solutions. However, the high cost of transactions on Ethereum remains a barrier to entry.
According to on-chain data, Ethereum is still the king
These “Ethereum killers” have seen impressive gains in their native tokens, but a closer examination of the on-chain data shows that Ethereum’s usage and volumes still outnumber the entire remaining smart contract platform marketplace.
Ethereum has a market capitalization currently exceeding $400 billion. This is significantly more than the rest. Cardano is the closest network in terms market cap, with a $76 Billion market capitalization. This is not even 20% of Ethereum.
DappRadar data shows that the total volume locked in DeFi protocols using the Ethereum blockchain is just above $100 billion. The second-ranked blockchain network in terms of usage is Binance Smart Chain (BSC), which has a TVL at $18 billion. This is less than 20% of Ethereum’s TVL in Ethereum.
Samy Karim, BSC ecosystem coordinator at Binance cryptocurrency Exchange, spoke to Cointelegraph to discuss the possibility of Ethereum maintaining its market share after the transition to Eth2 is completed:
DeFi must be fast, efficient, and decentralized in order to achieve mass adoption. Ethereum is the first smart contract-compatible chain that can leverage its existing communities to grow after Eth2 comes out. However, it is almost impossible to predict its market share based on its likely upgrade.
Ethereum is currently leading the NFT market. All the major NFT platforms including OpenSea and CryptoPunks, Axie Infinity (Rarible), Decentraland, Axie Infinity, Axie Infinity, Axie Infinity and Axie Infinity are built on Ethereum. The entire NFT market has been called a bubble by many, with the Chinese Communist Party being the latest to warn citizens of digital collectibles. Yet, the market continues its expansion.
Sokolin expressed his disapproval on this viewpoint, saying that: “We disagree to the categorization NFT ecosystem as an bubble — it’s a reconfiguration digital media structure. […] NFTs offer an alternative path, and having a meaningful economic structure is unlocking new business models.
Ethereum is not likely to feel the effects of this “bubble”, even if it goes “bust”. Tatibouet believes that, NFTs or no, Ethereum is still the market leader in smart contract platforms. However, the NFT market has allowed competitors to gain an edge over their peers.
The confidence in the potential of the financial markets is gradually rising as Ethereum builds momentum towards its final transition to PoS blockchain. Standard Chartered Bank, a British multinational bank, reviewed real-world applications of Ethereum’s blockchain network. It accordingly valued ETH structurally between $26,000 to $35,000. ETH has been showing bullish trading patterns like cup and handle, and could even reach $6,500 within the next few months.