Ethereum has evolved from a small proof-of-work (PoW) blockchain project to become one of the most important ones. The project helps developers to build decentralized applications, commonly known as DApps. However, recently, other similar projects have come up.
In this article, we will look at some of the top alternatives to Ethereum from both the developers’ and investors’ points of view.
What is Ethereum?
Started in 2014 by a team of computer engineers led by Vitalik Buterin, Ethereum has become a core part of the blockchain industry. The platform helps blockchain developers to build applications, some of which have become a key part of the ecosystem.
For example, the Decentralized Finance (DeFi) industry mostly relies on Ethereum. The industry has more than $50 billion in total value locked (TVL). Notably, most of the biggest DeFi projects like Aave, Maker, Uniswap, and Curve Finance are all built using Ethereum’s network.
This growth has led to more demand for the ecosystem and made it relatively slow and unreliable. For example, the network handles about 30 transactions per second. Also, the gas fees in the network are incredibly high.
Bitcoin vs Ethereum
Still, Ethereum has done well for investors. As shown below, Ether has jumped by more than 22,000% in the past five years. In the same period, Bitcoin has risen by more than 6,000%.
So, which are the top alternatives to Ethereum? Read on to find out!
Binance Chain (BNB)
Binance is the world’s biggest cryptocurrency exchange in the world by volume. The exchange processes cryptocurrencies worth more than $80billion every day. In addition to its crypto exchange business, Binance offers other services like derivatives, wallers, exchange, cloud exchange, and investment solutions. It has more than 13.5 million active users.
As part of its business strategy, Binance launched the Binance Smart Chain (BSC) network in 2018 and launched its ICO. BNB is the native currency for the BSC ecosystem, just as Ether is to Ethereum.
At the time of writing, BNB was trading at $370, bringing its total market capitalization to more than $57 billion. This makes it the fourth-biggest cryptocurrency in the world after BTC, ETH, and Tether. At its peak, the BNB coin was trading at $675 and was the second-biggest coin in the world. All these are notable because Binance raised less than $50 million in its ICO.
Ethereum vs Binance Coin
Over the years, many developers have moved to the Binance Chain network. Some of the most prominent ones are DeFi projects like Binance USD, PancakeSwap, MDex, and The Graph. The four have a market capitalization of more than $14 billion combined. The chart above shows the performance of Ethereum and Binance Coin.
Solana (SOL)
Solana is a fast-growing blockchain project that has received enormous backing from some of the biggest players in Silicon Valley. In 2021, Andreessen Horowitz and Polychain Capital unveiled a giant $314 million investment in Solana Labs. The investment was in the form of a private token sale, meaning that they bought the SOL tokens.
Other investors who participated in the acquisition were Alameda Research, Coinfund, and Coinshares.
Solana is a good Ethereum alternative that is handling the challenge of scalability and security at once. Unlike Ethereum, Solana was built from the ground up using the proof-of-stake technology that is often fast and energy-efficient. Ethereum is transitioning to this technology through its ETH 2.0 update.
In addition, Solana uses a process that is known as sharding that breaks blocks into small pieces, which in turn leads to faster speeds. It also uses a proof-of-history architecture to make transactions faster. This makes it able to process as many as 50,000 transactions per second.
Solana vs Ethereum
For this reason, many developers are switching to the network. Some of the biggest projects built in the ecosystem are Chainlink, USDT, Terra, and Ren. The chart above compares Solana to Ethereum.
Polkadot (DOT)
Polkadot is a blockchain project that shares some history with Ethereum. The network was started by Gavin Wood, who was one of the co-founders of Ethereum.
The main difference between Polkadot and Ethereum is that the latter was built with a proof-of-stake in mind. This made it faster and more scalable than Ethereum.
Another difference is that Polkadot uses a technology known as heterogeneous sharding, which means that its projects can interact with other blockchain networks. As such, each chain in the network can be optimized for a specific use case.
Polkadot vs Ethereum
Some of the other features of Polkadot are its ease of upgradeability and cross-chain composability. All this makes its speed faster than that of Ethereum. Some of the most popular projects built on Polkadot are Kusama, Acala Network, ChainX, and Edgeware. The chart above shows that Polkadot has outperformed Ethereum in the past few years.
Polygon (POLY)
Polygon is a relatively new blockchain project that is known as a layer 2 project. Its goal is to solve projects that we have mentioned above about Ethereum. As such, it helps to build and connect Ethereum-compatible blockchain networks.
Polygon vs Ethereum
As a result, many projects built on Ethereum have migrated to the network. Some of the most popular projects that have embraced Polygon are Aave, Zapper, Ox, SushiSwap, Curve Finance, and Tidal Finance. The chart above shows that Polygon has outperformed Ethereum in the past few years.
Summary
Ethereum is at the top of blockchain technologies. Today, it is the most popular Dapp-developing blockchain project in the world. However, it has flaws such as increased congestion and higher gas fees. In this article, we have looked at some of the most common alternatives to the network from both a developer and investor standpoint.
Other notable mentions are projects like Crypto.com and VeChain.