Ethereum (ETH) isn’t the only smart contract platform in town. While it certainly has a pioneering edge in its quest to become a decentralized general-purpose computer, there are a growing number of other chains that also offer the infrastructure to run decentralized apps (dApps), and some of them seem to have a significant impact on Ethereum’s share Cake.
The recent emergence of blockchains like Binance Smart Chain (BSC), Solana (SOL), Cardano (ADA), Cosmos (ATOM), Polygon (MATIC), and Internet Computer (ICP) (to name a few) begs the question: however. Can such blockchains and platforms coexist peacefully in a “multichain ecosystem”, or is there likely to be a consolidation around a few dominant networks as the industry matures?
According to industry watchers, we see a future with multiple chains, even if a handful of platforms get bigger than others. While most envision that Ethereum will continue to play a leading role in the ecosystem for some time to come, others warn that it must solve its gas problem quickly or lag behind newer competitors.
“A number of new EVM-compatible blockchains (Ethereum Virtual Machine) are currently successfully taking activities away from Ethereum itself.” said Mark Jeffrey, the CEO of Guardian Circle.
The most successful is the Binance Smart Chain, which has grown much faster than Ethereum in terms of new addresses and transactions in recent weeks.
According to Jeffrey, there are a number of simple reasons for this expansion of EVM-compatible chains.
“The first is that the gas crisis on Ethereum made transactions there very difficult. Fees of USD 30 – USD 50 for sending coins and USD 130+ fees for minting new NFTs [non-fungible tokens] severely delayed the use and growth of Ethereum. “ He added that rising costs had created a clear opening for competitors.
Second, by developing EVM-compatible chains, Ethereum’s competitors have essentially provided themselves with a pre-built ecosystem of dApps and projects.
“The intelligent ‘Ethereum killers’ realized that if they simply forked Ethereum and eliminated the gas problem by changing the consensus and mining mechanisms, all the popular projects on Ethereum could easily carry their EVM-compatible code into the new chain. On the user side, Metamask and other ETH compatible wallets could be used right away with these new chains. “ Jeffrey added.
In other words, the current number of “Ethereum killers” like BSC, Polygon and Fantom (FTM) have a better chance than ever of gaining a significant market share of Ethereum and differentiating them from potential killers several years ago.
“Yes, one could argue that the higher fees for Ethereum now give competitors more opportunities than they did before.” said a spokesman for BitMEX Research FortuneZ.
To the BinanceIn Changpeng ‘CZ’ Zhao, the emergence of new chains isn’t particularly surprising as the industry is still growing and looking for alternatives to existing platforms.
“For example, BSC provides a high-performance and low-cost public network without authorization that is compatible with the Ethereum virtual machine.” said the CEO FortuneZ. “The faster transaction speed and low transaction cost has accelerated the benefits since it launched last year, and this is one of the efforts to better serve users.”
However, few industry metrics expect any of these competitors to overtake Ethereum enough to become the dominant chain and marginalize Ethereum (and others).
Instead, Peng Zhong – the CEO of Tendermint, a key contributor to the Cosmos Network – suggested that different chains essentially need to work together to be successful, developing some sort of symbiosis that allows them to mutually, albeit indirectly, to support.
“We have seen incredible development and innovation built on and around Ethereum, and at Cosmos we want to support that development, especially in the emerging field of DeFi [decentralized finance]grow sustainably. We believe that blockchains should work together to grow the industry and benefit from each other’s expertise. “ he said FortuneZ.
Zhong added that chains positioning themselves as “Ethereum killers” will struggle to compete without compromise, either on decentralization, user base, or network effect. “We shouldn’t compete internally, we should look for ways we can work together and help each other grow.”
In fact, few, if any, participants in the broader blockchain ecosystem believe that crypto is a zero-sum game where one platform will inevitably take over everything. This is not least due to the fact that, at the technical level, almost no chain is currently able to handle every user in crypto.
“We see from Ethereum’s mainframe model that the ‘one blockchain that rules everyone’ approach is unsustainable. The network is already 99% busy, which leads to network congestion and high fees.” said Zhong.
He argues that DeFi applications shouldn’t exist solely as smart contracts on Ethereum.
“We believe they should exist as sovereign blockchains in a networked ecosystem, which is what Cosmos is all about.” he said.
Others agree that crypto and blockchain need to take a more collaborative, coexistence-oriented approach. As Mark Jeffrey suggested, compatibility can now be a necessary requirement for survival and success:
“It’s not a zero-sum game. The rule now is that you have to be EVM compliant. If that is you, now is your time. It is best to get multichain.xyz and other utilities to support your chain. It is.” best of all, if you can get SushiSwap or a clone of it up and running quickly on your chain and get liquidity, agriculture and all of those things up and running quickly. “
But even assuming that crypto will need multiple chains to really thrive and evolve, can we, for example, expect Ethereum to be the leading platform for smart contracts for the foreseeable future?
Jeffrey doesn’t take this for granted.
“Ethereum has to solve the gas crisis. And so on. It has to be. This is a MySpace moment for ETH – they are either solving their grave problems and defending their turf, or they are left behind when BSC or Polygon have their milkshake. “
For BitMEX Research, Ethereum offers certain advantages that could be enough to keep it on top for some time.
“[Liquidity locked inside of DeFi] could be a strong advantage. It could be difficult for competing platforms to generate this liquidity if the competitors are not backed by well-funded backers like FTX and Binance. “ said his spokesman.
BitMEX Research adds that the distribution of coin ownership in terms of greater dispersion than competitors can benefit Ethereum. As well as the sheer number of apps and tools developed for Ethereum, although many of them can be transferred to other chains.
In the long term, however, Tendermint’s Peng Zhong suspects that the dominance of Ethereum could slip to a certain extent if developers develop blockchains rather than apps, driven by the desire to have their own chain of sovereignty and set their own rules.
“As the benefits of this autonomy become clear and the ecosystem of interconnected chains grows, I believe we will see a move away from smart contracts to independent blockchains. There will be no limit to the number of chains or potential use cases for the future multichain and multi-protocol environment, and Ethereum will definitely continue to play an important role. “ he said.