Cardano, Solana, Avalanche, and Polkadot Compete For Ethereum's DeFi Supremacy
Others looking to take a larger market share in DeFi
Ethereum was the first cryptocurrency to feature smart contracts, and its network already hosts numerous projects. Due to this extensive use of smart contracts, Ethereum experienced remarkable popularity in the cryptocurrency world last year. Although this is a positive development for the second-largest cryptocurrency in the world, congestion issues and high transaction fees persist.
Ethereum's developers have already devised a solution to the network congestion and scalability problem, which is Ethereum 2.0. However, until Ethereum completes this upgrade, several alternative smart contract cryptocurrencies will continue to compete for market dominance.
Ethereum is one of the primary participants in DeFi and presently leads the NFT industry, but this is poised to change in the face of severe competition from prominent competing blockchains supporting smart contracts, such as Avalanche (AVAX), Cardano (ADA), Solana (SOL), and Polkadot (DOT). All of these competing blockchains operate differently and offer a range of excellent features.
In terms of market capitalization, Cardano and Solana are Ethereum's closest competitors for smart contracts. While both projects have the potential to be excellent in the long term, Solana has a better track record of rapid expansion and has seen its goals met in less time.
With a well-defined future roadmap, Cardano's blockchain continues to demonstrate its value as an important participant in the cryptocurrency industry, even if it moves slowly and isn't hurrying to be the first with various new technologies. Cardano's ecosystem now contains over 900 active projects.
However, Solana, which has a theoretical throughput of 65,000 transactions per second, is one of the fastest cryptocurrencies currently available. This is an astronomical number compared to Ethereum's 30 transactions per second. This functionality allows Solana to easily provide scalable infrastructure to apps on its blockchain. Solana’s blockchain currently has around 350 projects in its ecosystem.
Other popular ETH rivals are Polkadot and Avalanche. Although these aren't as popular as Cardano and Solana, they are also smart contract blockchains to consider. Polkadot and Avalanche sit in 11th and 13th place respectively on the list of largest cryptocurrencies by market cap.
Polkadot introduces interoperability, a feature Ethereum has yet to successfully implement. It does this by using a series of parachains that feed into its core structure, enabling chains to readily communicate with one another. Parachins are the backbone of the Polkadot network. They are individual and project-specific blockchains operating concurrently on the Polkadot ecosystem's network. Polkadot also has more than 350 projects on its network.
Avalanche was also designed to eliminate many of the issues that Ethereum users face in order to provide improved scalability. In order to accomplish this, the system combines three different blockchains. Avalanche doesn't have as many projects as Solana and the likes, but it is currently better than Ethereum in terms of scalability. Avalanche's ecosystem is also rapidly growing, launching 478 projects in the past 20 months.
Conclusion
As Ethereum is still a major participant in this industry, it would be inappropriate to speak of a replacement. Consequently, the most likely scenario is that the smart contracts market will evolve to include other major competitors, as opposed to Ethereum's current dominance. However, if Ethereum continues to delay its update that aims to address its current issues, developers will be tempted to turn to these other blockchains.