The rise in the value of Ethereum and the high popularity of projects from the niche of decentralized finance based on it have led to a sharp increase in fees on the ETH network.
In such a situation, using the ETH network is quite expensive, which is why market participants are looking for a sane alternative to the most popular platform for smart contracts. However, according to experts from the Weiss Crypto Rating analytical firm, a full-fledged competitor to ETH is unlikely to appear in the foreseeable future. Let’s talk about the situation in more detail.
Note that Ethereum is the most profitable cryptocurrency for mining today. For example, the income from 300 Nvidia GeForce GTX 1070 Ti to ETH per day is the equivalent of $ 1005.
At the same time, mining ETH on one Nvidia GeForce GTX 1080 Ti will bring the equivalent of $ 4.92 per day. Traditionally, the 2CryptoCalc calculator will help you find out the profitability of your equipment.
Who will replace Ethereum?
In a recent tweet, analysts explained that despite all the current problems on the network such as high fees and congestion, the emergence of a “killer” Ethereum is unlikely. And here it supposedly does not matter how promising other blockchains will be. Here is a quote from the experts in which they shared their findings. The replica is given by CryptoPotato.
Some say other L1s are “catching up with Ethereum,” but we are extremely skeptical. This is the same story from 2017, when ETH copycats sacrificed every semblance of decentralization to get cheaper and faster.
Recall that L1 means basic blockchains, that is, those in which transactions are immediately written directly to blocks. L2 scaling solutions like the Lightning Network handle transactions differently. Transactions in them are carried out quickly and cheaply, after which the final result of several transfers is entered into the main network block. Thus, the resources of the main blockchain are saved, in addition, users can save funds on the cost of transfers.
The future of potential competitors of Vitalik Buterin’s project does not look promising, experts say. The firm refers to 2017, when many interesting projects like EOS and NEO fell, which failed to regain their former glory days even during the new bullish trend of the crypto market in 2020 and 2021.
We all know how it ended, but people keep talking about these competitors. Many of Ethereum’s rival projects cannot provide a sane alternative to the project. The only hope for some of these alternative L1s is to become a sidechain for Ethereum.
That is, they assume that it will be possible to achieve success only through interaction with Ethereum. We believe that this point of view is too radical. Still, the cryptocurrency industry is in constant development, and new projects appear with enviable regularity.
It seems to us that one of the main competitors for Ethereum in the future will be Solana, a high-speed blockchain capable of processing thousands of transactions per second. At the same time, the cost of transfers in it does not exceed a cent, and the network itself is much more decentralized against the background of the same Binance Smart Chain.
The network is developing very quickly, which, among other things, affects the cost of the network’s native token called SOL. On January 1, 2021, it was valued at $ 1.52, while tonight the rate set a new intermediate high of $ 41. Here is a graph of the cryptocurrency rate for this year.
Weiss Crypto Ratings periodically evaluates various cryptocurrency projects based on their technology, market performance, adoption rate, and so on. Currently, the only A-rated cryptocurrencies are Bitcoin and Ethereum. Ethereum’s closest competitor is Cardano with a B rating, followed by EOS, NEO, Polkadot, Binance Smart Chain, and Tron with a C + rating.
However, in terms of pure technological development, Cardano and Polkadot are rated “excellent”, while Ethereum is rated “good” and Bitcoin is rated “fair”. And this is quite expected – fresh ideas are offered in innovative projects. However, the vast majority of them will not take root or simply will not be able to surpass Ethereum or Bitcoin in popularity.
However, it is important to note here that the same Cardano began to support smart contacts quite recently. Therefore, it is too early to call it a full-fledged competitor for ETH.
In addition, in the foreseeable future, Ethereum should switch to the second version of the protocol, the Proof-of-Stake consensus algorithm and become much more convenient in terms of fees. With the release of the final version of Ethereum 2.0, the project will easily attract the attention of most market players.
We believe that such a forecast by Weiss analysts can be called premature – especially given their analysis of Cardano, which until recently did not support smart contracts. At the same time, they overlooked the Solana network, which is performing well with the right degree of decentralization.
Obviously, it will not be easy for other blockchains to compete with Eth2, but the release of the new Ethereum will significantly accelerate the development of the cryptocurrency industry. This means that the niche will become more popular, and new projects will receive even more advantages and opportunities.