Is the Ethereum blockchain a thing of the past? Here are the Ether Killers that could outperform ETH in 2022!
This new year has been full of a couple of surprising twists and turns when it comes to crypto. As we all sat down and made resolutions for 2022, Ethereum shocked investors by dropping in price. More recently, ETH had been circling the $3,200 mark but before it entirely slips down the drain, is there hope for this particular blockchain, and why has there been such a sudden price change?
Before we look at recent events and try and figure out what happened, it’s important to note that ETH was gearing up around this time last year to hit its first all-time high of 2021. On January 19, 2021, Ethereum hit $1,050 and topped its previous high, which took place three years prior. The reason for its price blowing up as it did, was purely down to investor sentiment at the time, especially as cryptocurrency suddenly became a global beacon for a good store of value. Furthermore, Ethereum saw a massive surge in price last year with the successful launch of Ethereum 2.0, Phase 0, which effectively addressed some of the previous version’s ongoing concerns.
A delayed upgrade causes frustrations
We know that the Beacon Chain (Phase 0) is live and running. This initial rollout transitioned Ethereum’s proof-of-work to the proof-of-stake concept that was envisioned for this blockchain. However, Ethereum’s Mainnet is still operating on proof-of-work, hence the much-awaited next phase, ‘The Merge’. This had been scheduled for 2022, and The Merge is when the two systems (Beacon Chain and the Mainnet) finally co-exist. When the update comes to life, it will mean that Mainnet can have the ability to run smart contracts into the proof-of-stake system. The aim is to ensure that the transition will be seamless for both ETH holders and developers.
Furthermore, it will mean that Ethereum is just that one step closer to the full update — Eth2. Eth2 is the priority, and it has been made clear that other innovative features, such as the ability to withdraw staked ETH, may have to be placed on the backburner for a while longer.
So we know that there has been a delay in the original timeframe, but why would this mean that prices have slumped? It could be that ETH is just getting cheaper, especially as dominance in the DeFi space could be short-lived. The high transaction fees paired with the slow transaction speeds may not be worth it anymore for stakers and developers — meaning that they could be turning elsewhere. Cue the top ETH killers for 2022, which are now attractive alternatives to Ethereum.
However, is it all doom and gloom for Ethereum? According to experts in the crypto industry, if everything goes well with the update, we may well be seeing a rally unfold. Suppose ETH quickly transitions to Ethereum 2.0, with its full functionality and features working successfully, then, in fact, this could “unlock endless opportunities for blockchain and all other chains in its ecosystem”.
The FED’s Hawkish Pivot
Another reason investors are looking at is that Ethereum has dropped recently due to the US Federal Reserve’s recent decision on monetary policy. After the central bank released its minutes from December’s meeting, both Bitcoin and Ethereum fell. The Fed announced that it could start raising interest rates to tackle high inflation. Macroeconomic events will also affect crypto, just like any other asset.
The Ethereum Killers that are set to rise the ranks in 2022
As mentioned earlier, Ethereum’s upgrade is still a while away. Other blockchains have a much more scalable and efficient ecosystem that appeals more to stakers and developers. Therefore, the prices of these blockchains are set to rise. If Ethereum’s upgrade does occur this year, it could well reclaim its competitive edge. Currently, the issues that have persisted with the Ethereum blockchain consist of slow transactions, high gas fees, and a few concerns around efficiency. So, what are the other blockchains that investors are keeping an eye on in 2022?
Solana
With its main premise, ‘powerful for developers and fast for everyone,’ this decentralised blockchain was built to enable scalable, user-friendly apps. Founded in 2019, Solana is an open-source project boasting numerous features that make it more favourable and potentially give Ether a run for its money. First of all, it beats Ethereum in transactions per second (TPS), making it much more appealing. It takes 10–15 seconds to process one transaction on Ethers network if we compare. It’s not even a close call.
On the other hand, Solana needs only 400 milliseconds to mine one block. That’s not all. It can handle 50,000 TPS.
Furthermore, the gas fees are relatively low; with Solana, the average transaction amounts to $0.00025 per second. Ether’s upgrade will bring its transaction fees down until then; the blockchain doesn’t have a fixed fee and can come to $100 for regular transactions. There isn’t any upper limit for smart contracts, so we are looking at hundreds of dollars depending on how complicated and significant the transaction is.
Cardano
Founded in 2017, this particular blockchain is also trying to race ahead in the dApp space by appealing to developers and everyone. That’s right. With its functionality and accessibility, the aim would be that even the average Joe could create his decentralised application. Again, similarly to Solana, this blockchain also has low transaction speeds and gas fees, but the thing that also sets Cardano apart from the rest is its proof-of-stake consensus algorithm. This algorithm essentially decides how new transactions are added to the blockchain.
Another thing to note is that Cardano’s blockchain is split into two layers, whereas Ethereum’s blockchain consists of one layer. This two-layer blockchain provides Cardano with its uniqueness as one layer is purely devoted to ADA (Cardano’s native currency), and the other layer supports smart contract functionality. Therefore, splitting the two activities makes transaction speeds faster and overall efficiency better.
Avalanche
This particular blockchain hasn’t been shy of the spotlight over the past year. Investors have been paying attention after Avalanche Labs announced a partnership with one of the big five accountancy firms — Deloitte. The partnerships centre around leveraging the blockchain to create and enable a disaster relief platform. Frustrations around Ethereum’s congestive ecosystem paired with Avalanche’s partnership have led AVAZ (Avalanche’s native token) to surge. Avalanche was founded in 2020 and focused on smart contracts — its blockchain is developed to be a lot faster and cheaper than Ethereum. Suppose we compare the number of transactions per second. Avalanche can process over 4,000 transactions per second, whereas Ethereum can only process around 13 transactions per second.
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