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Here are just a few of the cryptocurrencies that could take market share from Ethereum.
Key points
- Ethereum is losing market dominance, but we might not see one new smart market king. Instead, several cryptos may emerge on top.
- Solana, Avalanche, Cardano, and Polkadot are all in the running.
Looking for the next Ethereum (ETH) has become somewhat of a holy grail for crypto enthusiasts. Ethereum was the first crypto to introduce smart contracts, and still hosts the lion’s share of applications. But the world’s second-biggest crypto struggles with network congestion and high gas fees.
Until Ethereum can complete its long-awaited upgrade, several other smart contract cryptos are lining up to take market share. The most likely scenario is that the market will evolve to have five or six dominant players instead of the Ethereum monopoly we see today. The following cryptos all have a lot of potential and could be future market leaders.
1. Solana (SOL)
Solana shot into the top-10 cryptocurrencies by market cap last year. At the start of the year it was languishing in 120th place, before a price increase of over 11,000% put it in fifth position by the end of the year. The reason? Solana’s one of the fastest cryptocurrencies around. In theory, it will be able to process about 65,000 transactions per second (TPS) — compared with the 15-45 TPS Ethereum can currently manage.
Now, Solana has had some technical difficulties that could have been caused by the exponential growth of the platform. But the outages haven’t stopped Solana’s growth. It now has over 1,500 projects at some stage of development on its ecosystem.
2. Avalanche (AVAX)
Avalanche has three separate blockchains under its hood and it boasts the fastest time to finality in the industry. Though, it’s worth pointing out that Fantom (FTM) makes the same claim. Without getting too technical, finality is the point where a transaction can’t be altered — it’s a little bit like the difference between the time it takes to swipe your credit card and the time it takes for the merchant to actually receive the money.
Avalanche doesn’t have as many apps as Solana, but it is ahead in terms of total value locked (TVL). TVL is the value of all the assets across all apps on the platform. Avalanche has $10.5 billion at time of writing, putting it in fourth place, according to DeFi Llama. Ethereum is still ahead of the pack here, with almost $130 billion in TVL.
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3. Cardano (ADA)
In the fast-paced cryptocurrency world, Cardano is a bit like the tortoise slowly plodding behind a host of hares. It takes a slow-and-steady approach to development, with a focus on peer reviewing each step rather than rushing to be the first with various new technologies. As a result, it only launched its smart contract capability in September last year — and even then it’s taken time to roll out apps.
Nonetheless, Cardano has a clear roadmap for the future, and one would hope its careful manner means it is less likely to be hit by security or technical issues. There is a risk it could get overtaken by newer, more nimble crypto projects. It certainly isn’t going to win any short-term races, but it may eventually dominate. It’s a good crypto to keep on your radar.
4. Polkadot (DOT)
Polkadot has taken some big strides in recent months. Polkadot stands out because it solves a different Ethereum issue: interoperability. Polkadot helps blockchains communicate with one another, something Ethereum is not great at. Interoperability will be crucial for the evolution of the cryptocurrency industry as a whole, especially as various Ethereum alternatives grow in popularity.
Polkadot uses a series of project-specific blockchains called parachains that feed into its main system. Several of those parachains are now operational, causing Polkadot’s TVL to grow by over 1,400% in the past month. It still has a way to go to catch Avalanche, but this dramatic growth shows what Polkadot could be capable of.
Bottom line
For all the talk of finding the next Ethereum, today’s crypto industry is a different place from when Vitalik Buterin launched Ethereum in 2015. There are many more cryptocurrencies, the technology has evolved, and the market is much more mature. If crypto continues on its current trajectory, we’re unlikely to see another dominant player hosting 90% of the applications on its network.
It’s also worth noting that Ethereum is still a major player. It is in the process of a staged upgrade to solve its scalability and sustainability issues. It’ll take a big step later this year with the merge to a more eco-friendly validation model. But we won’t see the full upgrade until at least 2023.
Ethereum still has a first mover advantage and a lot of developers are willing to put up with the higher costs because they are familiar with the system. Plus, Ethereum is more road tested than any of the other cryptos listed here — making it more dependable in terms of security and technical outages. Rather than looking for the next Ethereum, it might be worth looking for five or six smart contract cryptos that may join Ethereum in leading the pack.
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