With crypto marketplace heating up, we are noticing significant blockchain technology advancements. One such focus area is building Ethereum Killers or an alternative platforms to Ethereum. I do believe that the modular blockchains and zero knowledge technology are a paradigm shift in crypto and are poised to change the landscape. Let us take a deep dive into reality of “Ethereum Killers”.

Ethereum’s Scalability Challenges

Ethereum was the first to launch this technology, but it’s not perfect. It’s slow and suffers from heavy network congestion, resulting in high gas (transaction) fees. It’s also energy intensive and doesn’t communicate well with other blockchains. It’s a bit like having a cellphone that can only call users on the same network.

Ethereum is in the process of a staged upgrade to Eth2, which will make it faster and more environmentally friendly. Several other projects, like Polygon (MATIC), add an additional layer to Ethereum’s blockchain to reduce costs and process transactions faster. These are called layer 2 solutions.

But Eth2 won’t be completed until at least 2022, and it won’t solve all of Ethereum’s problems. There are, however, several newer cryptos that are already more scalable, cheaper, and more environmentally friendly — and they don’t require layer 2 solutions. The following table summarizes few platforms to address this challenge.

Reality Check 1: “DApps” The Core of Development Activity

The landscape of smart contract platforms and emerging competitors vying to challenge Ethereum’s dominance. DApps are decentralized applications which are enabled by smart contracts, self-executing agreements that remove the need for a centralized intermediary. DApps have the potential to cover a universe of use-cases, including financial services (DeFi), gaming, social media, and many others. Over time, Dapps can be collectively managed by a community; operate entirely according to their code rules; and provide a level of global inclusion, censorship resistance, and eventual efficiency not possible in traditional web apps. Because a Dapp provides transparency into user behavior and usage, it can also share its monetization with users of the product in an automated fashion, usually by issuing its own digital asset that is used in operating the underlying application itself. It’s no wonder that the “Utility Phase” of the crypto-economy, where a thousand Dapps can bloom, is such a tantalizing possibility.

This is the market that Ethereum and other smart-contract blockchains are targeting. They are effectively developer platforms, selling their technology stack and their level of decentralization (“economic security guarantees”) to Dapp developers. In turn, as more Dapps coalesce to a specific platform, more economic activity flows through the base layer (helping set asset prices and transaction fees via protocol operation), providing greater security guarantees. Similar to how mobile OS operates as a common operating layer that has consolidated to iOS and Android, there are similar network effects at play currently in crypto protocols, where the leading platforms could generate critical mass and network effects leading to further growth.

It’s no wonder that there is strong competition among smart-contract enabled blockchains, with several new entrants poised to come to market. The reality is, over 78% of DApps are built and deployed on Ethereum as of the date.

Reality Check 2: Key Operating Metrics

Focus here is how many people in this industry (not just VCs) tend to miss these paradigm shifts because they are either pushing stale narratives to further their own agenda/investments or they simply don’t see what is happening right in front of them. When it comes to people betting on “Ethereum killers” or other layer 1 blockchains, it can be seen as a “logical” bet to make because there’s an easy narrative to sell right now. Of course, that narrative is that Ethereum’s gas fees are high so Ethereum is broken and everyone will eventually just use the other chains. Obviously, Ethereum is not broken, it’s innovating on scaling more than any other ecosystem, and still has a huge network effect across all fronts. Not to mention the social legitimacy Ethereum has that works to attract the best and brightest minds to work within its ecosystem.

Take a look at the table above. The ecosystems are evolving fast and there is a merit to closely evaluate these operating metrics with the technology advancements in pipeline. While Ethereum has a firm and clear first mover advantage among the smart contract platforms. It is not only the highest in terms of the network value at $465B, but also dwarfs the competition in several key factors:

• Developer Activity / Traction: The majority of blockchain applications today live on Ethereum. ERC-20 (Ethereum) is by far the most adopted standard for newly issued crypto-assets.
• Distribution / Integration: Other third-party services also lean heavily to support ETH, including developer tools, wallets, cloud infrastructure, exchange integrations, and more. For example, the two largest stablecoins by issuance (USDT and USDC) live mostly on Ethereum.
• # of Users: The number of active addresses continues to grow substantially.
• Network Value / Security: Owing to their lead in users and traction, Ethereum poses a high cost of corrupting the chain. Ethereum Classic, the chain from which Ethereum forked, by comparison has been 51% attacked multiple times.

Reality Check 3: Ethereum’s Horizontal & Vertical Scaling

Refer to Vitalik’s original rollup-centric roadmap post to broaden the understanding. asically, Ethereum is going to scale horizontally at layer 1 via sharding and vertically at layer 2 via rollups (and other similar technologies). These 2 technologies will work in tandem to offer the most scalable, secure and decentralized blockchain that has ever existed.

Put simply, the Ethereum ecosystem is aligned on scaling to the world via layer 2 systems (such as rollups) while keeping layer 1 as secure and decentralized as possible. This means that layer 1 will always have significantly less capacity for executing transactions than layer 2 (even with sharding) but it will in-turn offer incredibly strong settlement guarantees that layer 2’s can leverage for their own security. This way, we keep it easy for users to run validators and full nodes on consumer-level hardware and don’t just devolve the Ethereum network into being run by supernodes in data centers – all while still scaling the network to the world.

One thing that’s important to note about layer 1 and layer 2 is that on the rollup-centric path, Ethereum is aiming to make layer 1 the settlement layer whereas layer 2 will be the execution layer. What this means in plain English is that layer 1 will be where layer 2 proofs/batches are settled (aka secured) and layer 2 will be where transactions are executed. The reason why this works wonders to scale Ethereum is that we take the heavy load off of layer 1 (the computation/execution), push it to layer 2 (off-chain), and then post a “proof” to layer 1 that provides cryptographic guarantees that the execution/computation was completed successfully. In addition to this, in a correctly constructed rollup, users will always be able to withdraw their funds from the bridge contract on layer 1 even if the entire rollup system they were using goes offline forever.

What’s wonderful about this rollup-centric design is just how elegantly it will all work in just a few short years. What may happen is that layer 2 batch/proof transactions on layer 1 will end up pricing out all other transactions – even whale transactions – this is the tradeoff that must be made in order for layer 1 to stay maximally decentralized and secure. Though in return, layer 1’s blockspace becomes significantly more efficient because layer 2 protocols will seek to minimise their on-chain costs as much as possible. For example, today layer 1 is full of all different kinds of transactions (DeFi, NFT, simple sends etc) that use different amounts of gas and it can be very volatile (such as when there’s an NFT drop happening randomly). In a world where layer 1 is only used for layer 2-related transactions, we can have a much more efficient and orderly settlement layer.

Sharding is a major part of the rollup-centric design but it is not talked about nearly as often because it’s still probably 12-18 months away from going live on mainnet. It’s important to note that “sharding” as a concept fits into 2 categories – data sharding and execution sharding. Data sharding is basically splitting the blockchain into some number of shards and using those shards (effectively creating new chains) as pure data layers – no execution happens on them – whereas execution sharding does both. Ethereum will be prioritizing data sharding because it’s a much simpler design and allows for layer 2’s to leverage the extra blockspace for their proofs/batches. To quantify this – if we assume that Ethereum can offer enough blockspace for an average of 4,500 transactions per second (TPS) today and then 64 shards are added, we can assume that we could get 288,000 TPS (4,500 * 64 shards). Long-term, with more shards and efficiency/tech improvements at layer 1 and layer 2, Ethereum can easily scale to millions of transactions per second – all while not sacrificing its core properties.

Thinking about the next 5 to 10 years of Ethereum development gives me literal goosebumps – we are going to create what is potentially the most decentralized, most secure, most resilient, most scalable and most elegant computing network to ever exist. On top of that, this network will have a very high chance of lasting for centuries (as one of the eth2’s design goals is to prioritize liveness) – our great great great grandchildren may one day be able to do some “chain archaeology” of our on-chain activity!

The rollup-centric design is the only way to scale a blockchain in a maximally decentralized and secure way to billions of users – and Ethereum is best positioned to take full advantage of this grand design.

Reality Check 4: Institutional & Retail Investment Interest

Many institutional and retail investors are actually see this new paradigm and are actively investing in it (while also not spreading bad narratives about Ethereum). Absolutely there’s anything wrong with people investing in things outside of the Ethereum ecosystem – the issue is just when people invest in something and then tear down Ethereum to push a narrative for those investments. There are plenty of legitimate things to criticize Ethereum about and it’s better if people would focus on those things so that constructive debate could actually be had – not just targeting the “obvious” weaknesses instead of digging down into the weeds.

Reality Check 5: Monolithic to Modular Blockchain Era

The next 5 years in the crypto ecosystem are going to look dramatically different to the previous 5 years. The 2016-2021 is a monolithic blockchain era (chains trying to do everything at layer 1) and we are transitioning into a modular blockchain era where hardly any new layer 1’s will come to market – we’ll just simply see new layer 2’s secured by Ethereum. Maybe you have doubts about this future – well, just look at layer 1 chains today – none of them launch as proof of work – all of them are proof of stake. The last proof of work blockchain to launch was Grin in 2019 and it’s down 99.8% from its all time high. Why is this the case? Because PoW is viewed as “outdated” technology compared to PoS and same will apply to monolithic vs modular blockchains. Why spin up an entirely new layer 1 when you can just create a layer 2, outsource your security to Ethereum, and inherit all of Ethereum’s network effect and community.

In Summary…

The new modular blockchain paradigm with layer 2’s, the bridges that connect them, the Ethereum is best positioned to be the settlement and security layer from both a technical and social standpoint. It’s worth pointing out that given the speed of technical development, there’s a chance the real Ethereum killer hasn’t even been invented yet. Some argue the true risk to Ethereum won’t be another blockchain, but something like quantum computing, which could undermine the security of all major cryptos.

New tech aside, the main challenge for all these coins is adoption. It’s one thing to develop extraordinary new technology, it’s another to get people to use it. And since almost 80% of dApps are built on Ethereum’s network, any potential Ethereum killer has a lot of catching up to do.

One of the coins on the list above might dethrone Ethereum, but the more likely scenario is that several programmable blockchains will come out on top. Indeed, most of the projects mentioned here say they want to complement Ethereum, not replace it.

Related blog post: “The Flippening”

SPONSERED

A New Way To Search Privately

Have You Tried Presearch Yet? When you search, you will be rewarded with Presearch’s PRE crypto tokens. These tokens can be used to buy services, or traded for other cryptocurrencies.

The Future of Cryptocurrency Mining is Here

Over 100,000 Users Earning More Coins by using Cudo’s Cryptocurrency Miner. From automated mining with Cudo Miner, to an end-to-end solution that combines stats, monitoring, automation, auto adjusting overclocking settings, reporting and pool integrations with Cudo Farm. We have a solution for all miners from PC / laptop owners to large scale mining farms.

Cudo mining platforms create efficiency and reduce manual intervention by up to 95%, while increasing profitability. Click HERE To Start Crypto Mining!

Mastering Ethereum: Building Smart Contracts and DApps

If you’re looking to get started with the Ethereum protocol–or are among the many open source developers, integrators, and system administrators already working with this platform — Mastering Ethereum is the definitive book on the topic.