- Solana (SOL-USD): Solana’s lightning-fast TPS and proof-of-stake protocol mean it will continue to gain ground on ETH.
- EOS (EOS-USD): Protocol, price and much faster block build times favor EOS as it claws away ETH users.
- Polkadot (DOT-USD): Polkadot is a blockchain agnostic hub where Ethereum locks users into its architecture.
- Cardano (ADA-USD): Cardano is playing the long game and could pull ahead of Ethereum in a major way.
For most crypto investors, there are two names that dominate the space: Bitcoin (BTC-USD) and Ethereum (ETH-USD). Most investors will have some exposure to one or both of the names because they simply control such a massive portion of the market’s capitalization.
There are bearish investors for both assets of course. Ethereum, though, seems to be more consistently bearish. There are a few reasons for that, primarily including gas fees and scalability concerns.
Those gas fees can be found here. The gas fee is the amount paid to complete a transaction on the Ethereum blockchain. Then there’s the issue of scalability. Ethereum can process roughly 15 transactions per second. This is a relatively low rate. As more decentralized apps are built on the network gas fees will rise. Basically, Ethereum must shift to a proof of stake network to overcome this, but that won’t happen for some time.
That has opened the doors for multiple alternative cryptos that ETH bears have piled into.
Solana burst onto the scene in 2021 and has stayed there. A good part of the reason that has happened is that the network possesses transaction speeds far in excess of Ethereum. Those transaction speeds can be found here. They vary depending on when you’re looking, but have recently hovered close to 2,000.
But Solana boasts an even more impressive theoretical TPS of 65,000 and gas fees that are almost zero — the current cited average fee is a fraction of a penny. The network uses a proof-of-stake protocol. That gives it an added benefit over Ethereum in that proof-of-stake protocols don’t rely on mining.
That’s important because proof-of-work protocols rely on energy-intensive computer farms to validate transactions. These protocols require massive amounts of electricity and contribute to environmental degradation.
EOS isn’t among the most often discussed Ethereum killers. Nevertheless, it has several positive factors in its favor. For one, it boasts a quick transaction time of 0.5 seconds. Ethereum transaction times can range between 10 to 20 seconds. That means EOS can simply add more blocks to the blockchain quicker.
EOS offers free transactions as well. It has been duly noted that Ethereum suffers from expensive gas fees leading to pricey transactions on its network. EOS relies on a technology called delegated proof-of-stake. That means validators are chosen at random and rewarded with EOS tokens.
These factors mean that Ethereum users may migrate toward EOS the longer Ethereum continues to suffer the same troubles.
Polkadot is in essence, a hub for all blockchains. Its purpose is to connect disparate blockchains and allow information to flow freely from one to another. Polkadot refers to this as its relay chain. A good way to understand it is to imagine heterogeneous inputs entering a machine. In this case, those inputs are Web 3.0 information. The relay machine converts that information into a standardized information packet that is then sent to the next blockchain.
Users on the Ethereum blockchain can easily share data with other assets built on the Ethereum blockchain. But you can’t interoperate with blockchains built on different platforms. So users are essentially locked into Ethereum. If they want to build functionality or transfer data they are limited to doing so on Ethereum blockchain assets.
That’s the benefit of Polkadot. And it is launching parachains, which are being used to build out use cases in important areas including finance.
Cardano has long been hyped as an Ethereum killer. Cardano’s founder, Charles Hoskinson, was a co-founder of Ethereum. It has been proof-of-stake since its inception. But one of the primary differences between Ethereum and Cardano relates to Cardano’s research-driven approach to development.
It emphasizes an academic approach to design and development. That makes it boring in the eyes of some. But it also makes it less likely to make mistakes that could prove fatal in the long term. Ethereum has been developed with a different philosophy that depends much less on academically proven concepts. While that allows it more leeway, it opens the door to possible long-term issues.
That could mean that Cardano truly becomes more scalable than Ethereum in the future. It is a long-term perspective to take, but one that would lead to exponential gains.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.