Ethereum, according to Grayscale, is similar to New York City in that it is big, expensive, and congested in some regions. It does, however, have the most diverse application ecosystem.
The paper compares Ethereum, the original smart contract network, to newer blockchains such as Solana (SOL), Avalanche (AVAX), Polkadot (DOT), Cardano (ADA), and Stellar (XLM) (XLM). The news comes after the firm announced the establishment of a crypto fund focused on smart contract platforms other than Ethereum.
Just like The Big Apple
Grayscale looked at Ethereum, Avalanche, and Solana in a section headed digital cities. The organization compared Ethereum to New York City, stating that the two cities had similar difficulties arising from their size.
They compared Ethereum to New York City, saying that it is vast, expensive, and congested in some regions. It does, however, have the richest application ecosystem, with over 500 apps worth over $100 billion in total. Its size exceeds that of any other competitive network by a factor of ten.
Center of Gravity
Users and developers can be certain that Ethereum will most likely remain the focal point for application innovation and liquidity. This is due to the community’s growth and the amount of money invested in the network’s smart contracts. Polygon, an L2 solution, is like a skyscraper in New York City: it scales by adding more stories.
Users switching to competing blockchains, according to the corporation, are akin to migrating to a cheaper city. Due to Ethereum’s high gas fees and network congestion, this is the case. Over the last two years, there has been an outpouring of interest in decentralized finance (DeFi) services and nonfungible tokens (NFTs).
The cost of an Ethereum transaction began to exceed $10. As a result, smart contract systems like Stellar, Algorand, Solana, and Avalanche saw a significant increase in the number of daily on-chain transactions.
Coins Compared to Cities
Solana, according to Grayscale, is similar to Los Angeles. It is a functionally distinct network that is faster and focuses on other use cases, according to the report. These are similar to on-chain order books like Mango Markets, which operate with high transaction speeds and cheap fees.
Solana’s architecture is based on a novel consensus method that promotes speed and low fees over centralization. Rather than scaling through L2 chains, Solana uses a fast L1 chain to process transactions. According to the report, it runs around 2300 transactions per second as of March 15, 2022.
Avalanche has been compared to Chicago in terms of its economy. It is similar to that of New York City but with a smaller network. Transactions are less expensive and more efficient, and development is more centralized.
In comparison to apps on other chains, game-specific subnets like Crabada and partnerships with firms like Deloitte should provide additional uniqueness. It aids Avalanche in developing a distinct identity in the future.
Regardless of the parallels, Grayscale stressed the positive future use cases for smart contract systems. DeFi and the up-and-coming Metaverse industry, in particular, were mentioned by the firm.