The Ethereum domain as an outstanding blockchain platform for intelligent contracts was fueled by the popularity of decentralized finance and decentralized app tokens in 2020 and ERC-20 tokens now make up almost half of blockchain assets.
The Smart Contracts platform has been around for almost five years and in this period was established as the blockchain of choice by DApp developers. The data is added to this claim, indicating that Ethereum has exceeded Bitcoin as a blockchain with the highest daily settlement value.
This is mainly due to the large amount of capital raised through various blockchain projects built on the Ethereum blockchain. Ethereum itself collected over 31,000 Bitcoin (BTC) in its first coin offering in 2014, which was equivalent to almost $ 18 million at the time. Now, at around $ 30 billion, Ethereum ranks second in the entire cryptocurrency market.
It is a triumph in the capitalization of Ethereum that illuminates the usefulness of the platform as means developing new blockchain-based projects and products that improve a number of industries around the world. At the same time, the growth of DApps and DeFi applications could impact the future of Ethereum as a platform as developers search for the most appropriate platforms for any project or system they need to build.
Among the competitors
Ethereum is not the only intelligent blockchain platform for contracts. As the analysis company Messari recently announced in a bulletin to subscribers, competing platforms raised large amounts of capital in the first rounds of investment. The Proof-of-stake-based blockchain platforms for smart contracts like Algorand, EOS and Tezos may be Ethereum’s biggest competitors, which dominate a significant part of the market share of intelligent contract platforms.
In addition, Messari stated that in the past 12 months More than 13 blockchain smart contract projects raised over $ 300 million in donation rounds. The inherent trust placed in these projects is evident in the amount of capital put into their coffers.
Cointelegraph contacted Messaris research analyst William Withiam to investigate the impact of these new industry players entering the smart contract space. He considered It is somewhat surprising to see that Ethereum projects increase valuations as the smart contract market is full. However, according to Withiam, there is room for others to take up part of the market share:
“The entire addressable market (TAM) for these platforms that compete for money is potentially huge. It could make sense for investors to use more environmentally friendly intelligent contract platforms as a hedge against ETH. As far as longevity is concerned, the funding is a Factor that attracts new users and developers. The most important factor could be the app and developer ecosystem. The composition rules are strict. The Ethereum ecosystem is currently much more robust than others. “
The popularity of the ERC-20 token is a product of Ethereum’s success
Ethereum’s success as a platform is also evident in the popularity of ERC-20 tokens and its growing market share in the blockchain ecosystem. Ether (ETH), the home currency of the Smart Contracts platform, accounts for only 51% of the total value of the Ethereum network. The other 49% are made up of the various ERC-20 tokens that supply the wealth of projects created on the platform.
Withiam believes that The growth of ERC-20 tokens and their participation in the Ethereum ecosystem market is a natural process in the development of the smart contract platform: “It’s the natural evolution of these general development platforms. The value will eventually reach the top of the stack and into the application levels where projects could have more traditional revenue-generating business models.”
The dilution of Ether’s share of the global market also adds an additional level of network security. Potential attackers are much more likely to attack second-tier projects than Ethereum’s own blockchain. As EthHub founder Anthony Sassano said: “In smart individual contracts, there are always ‘attacks’. These attacks are easier to design and much cheaper to carry out than attacks on the entire network.”
ETH high, but scalability remains a problem
Even if competitors come onto the market and threaten to steal a piece of Ethereum’s virtual cake, the standout platform for smart contracts remains a leader in the blockchain world. Messari has again provided data this month to support this Ethereum has become the most widely used blockchain platform in terms of payment processing value. It even surpassed BitcoinThanks to the increasing popularity of DeFi and DApp tokens based on the Ethereum blockchain.
Ethereum would like to thank Tether (USDT) for this success in trading volumewith more than $ 500,000 million in settlements made in 2020 only for stable coins on the platform. The Ethereum blockchain takes over almost 60% of the circulating supply of tether tokens.
In addition to the broad benefits of Ethereum, the number of DeFi projects running on the platform is also increasing. This raises some interesting questions about Ethereum’s ability to deal with the increasing volume of platforms and users in the blockchain. Ethereum has skyrocketing transaction rates due to the popularity of USDT, DeFi platforms and DApps on the Internet. While this speaks for the effectiveness of Ethereum, it means it Users are faced with high rates and longer waiting times for processing transactions.
This underscores the long-awaited switch to Ethereum 2.0 in the next 12 months. The transition from an energy-hungry proof-of-work system to an energy-efficient sharding system promises to significantly reduce the current load on the Ethereum blockchain. As Withiam explained Switching to Serenity could be the key to ensuring that Ethereum remains the smart contract block chain selected by space developers if all goes well::
“From an optical point of view, an unsuccessful change would not look very good. But Ethereum could work at a high level if layer 2 scaling solutions and stateless customer research continue to advance.”
Do not stop reading: