ETH (ETH) is not the only smart contract platform in the city. While it certainly has a first-mover advantage in its quest to become a decentralized worldwide computer, you will find a growing number of different chains also offering the infrastructure for running decentralized programs (dapps), and some of them appear to be ingesting considerably into ETH’s share of the pie.
The current development of blockchains such as Binance Smart Chain (BSC), Solana (SOL), Cardano (ADA), Cosmos (ATOM), Polygon (MATIC), and Internet Computer (ICP) (to name a few) increases a question, nonetheless. Can these blockchains and platforms peacefully coexist in a’multichain ecosystem’, or are we likely to see consolidation around several dominant networks since the business evolves?
According to industry observers, we will see a multichain future, even if a handful of programs will expand bigger than others. However, while most envision that ETH will continue to play a major part in the ecosystem for a while to come, others are warning that it has to fix its gasoline issue quickly or else fall behind newer rivals.
Rise of the blockchains
The most successful of them is Binace Smart Chain, which has been expanding at a much quicker rate than ETH in recent weeks, in terms of new addresses and trades.
There are a number of simple reasons for this expansion of EVM-compatible chains, according to Jeffrey.
“The first is the gas crisis on ETH appropriate has made transacting there very hard. Charges of USD 30-USD 50 only for sending coins, and charges of USD 130+ for minting new NFTs [non-fungible tokens] have severely retarded ETH’s use and expansion,” he explained, adding that increasing prices has produced a clear opening for competitors.
Second, by developing EVM-compatible chains, competitions to ETH essentially gave themselves a readymade ecosystem of dapps and projects to sponsor.
“The smart’ETH killers’ recognized that if they simply forked ETH and eliminated the gasoline problem by changing the mining and consensus mechanisms, all of the popular projects on ETH could transplant their EVM-compatible code to the new chain. On the user’s side, Metamask along with other ETH-compatible wallets may be utilized immediately with all these new chains,” Jeffrey added.
To put it differently, the present crop of’ETH killers’ — such as BSC, Polygon, and Fantom (FTM) — have a much better chance than ever of becoming a significant share of ETH’s marketplace, distinguishing them from prospective killers from many years back.
“Yes, one could assert that the higher fees on ETH now provide more of an opportunity for competitors than previously,” a spokesperson for BitMEX Research informed Cryptonews.com.
For Binance’s Changpeng’CZ’ Zhao, the development of newer chains is not particularly surprising, since the business is still growing and searching for alternatives to present platforms.
“For example, BSC provides a high-performance and low-fee people permissionless network that’s compatible with all the ETH Virtual Machine,” the CEO informed Cryptonews.com. “The quicker transaction speed and low transaction costs have hastened its utility since its launch last year, and this is one of those efforts to serve users better.”
Nevertheless, few business figures expect any one of those competitors will overtake ETH to such an extent that it will become the dominant chain, relegating ETH (and many others ) to the margins.
Instead, Peng Zhong — the CEO of Tendermint, a core contributor to the Cosmos Network — opined that different chains will essentially need to collaborate in order to flourish, developing a kind of symbiosis that enables them to mutually, if indirectly, encourage each other.
“We have seen incredible advancement and innovation built on and about ETH and, in Cosmos, we wish to help that advancement, especially in the burgeoning area of DeFi [decentralized finance], grow . We believe that blockchains should collaborate to increase the business and gain from one another’s experience,” he informed Cryptonews.com.
Zhong added that chains which place themselves as’ETH killers’ will find it hard to compete without compromising, either on levels of decentralization, consumer base, or network effect. “We shouldn’t be competing internally but searching ways where we could interoperate and help each other develop.”
Not a zero-sum match
Truly, few if any participants in the broader blockchain ecosystem believe that crypto is a zero-sum match where one stage will inevitably defeat everything. If nothing else, this is because pretty much no chain is presently capable, on a technical level, to deal with every user in crypto.
“We are viewing from ETH’s mainframe model the’one blockchain to rule them all’ approach is not sustainable. The network is currently at 99+% capacity which contributes to network congestion and large fees,” said Zhong.
He argues that DeFi software shouldn’t exist exclusively as smart contracts on top of ETH.
“We believe that they ought to exist as sovereign blockchains in an ecosystem, and that’s exactly what Cosmos is all about,” he explained.
Other people concur that crypto and blockchain needs to have a more collaborative, coexistence-focused approach. As Mark Jeffrey suggested, compatibility may now be a necessary requirement to success and survival:
The rule today is you have to be EVM-compatible. If you are that, you can compete today. It’s best if you’re able to get multichain.xyz along with other utilities to support your chain. It’s best if you’re able to get SushiSwap or even a clone of it running on your chain quickly, and receive bonuses supplying farming and all those things running quickly.”
‘A MySpace Moment’ For Ethereum
But even if we assume that crypto will want multiple chains to really flourish and evolve, can we still expect, state, ETH to be the top smart contract stage for the foreseeable future?
For Jeffrey, this is not a given by any means.
“ETH has to fix the gas crisis. And shortly. It absolutely, certainly has to. This is a MySpace Moment for ETH — it solves its acute issues and defends its own turf, or it has left behind as BSC or Polygon beverage its milkshake,” he advised Cryptonews.com.
For BitMEX Research, ETH boasts certain advantages which may be enough to keep it in the lead for a while to come.
It might be trying for rival platforms to make this liquidity, unless the rivals have help from well-financed backers such as FTX and Binance,” its spokesperson said.
BitMEX Research also adds that coin-ownership supply, in the sense of being more widely dispersed than with competitions, may be beneficial for ETH. As may the sheer number of programs and tools which were built for ETH, even if many of these can be moved to additional chains.
Nevertheless, in the longer term, Tendermint’s Peng Zhong suspects that ETH’s dominance may slip to a degree once developers shift more towards building blockchains instead of programs, driven by the urge to have their own sovereign chain and to make their own principles.
“Following the advantages of this freedom become apparent along with the ecosystem of interconnected chains develops, I believe we’ll see a migration away from intelligent contracts to independent blockchains. There will not be a limit on the number of chains, nor possible use cases for the future multichain and multi-protocol surroundings, and ETH will definitely continue to play a major part,” he explained.
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