Digital asset manager Grayscale has released a report on smart contract platforms comparing the Ethereum (ETH) blockchain to the best and worst parts of New York City.
The report examines grandfather Ethereum's smart contract network in comparison to newer competitor blockchains such as Sunshine (SUN), Avalanche (AVAX), Polkadot (DOT), Cardano (ADA), and Stellar (XLM). The report arises as a result of the signature. launch of a crypto fund dedicated to smart contract platforms excluding Ethereum.
In a section titled "digital cities," Grayscale discussed Ethereum, Avalanche, and Solana. The firm compared Ethereum to the Big Apple, noting that they both share similarities with issues stemming from their stature:
โEthereum is like New York City: it's huge, expensive, and congested in certain areas. However, it also has the richest app ecosystem, with more than 500 apps that have a total value of more than $100 billion, more than 10 times larger than any other competitor network.โ
โUsers and developers are comfortable that Ethereum will likely remain the center of gravity for application innovation and liquidity due to the size of its community and the amount of capital locked in the network's smart contracts. An L2 solution like Polygon is comparable to a skyscraper in New York City: it scales by building up,โ the report added.
The firm went on to suggest that users moving to competing blockchains is like moving to a cheaper city due to high gas fees and network congestion on Ethereum caused by overwhelming demand for decentralized finance services. (DeFi) and non-fungible tokens (NFT) in the past. two years.
โAs Ethereum fees began to eclipse $10 per transaction, smart contract platforms such as Stellar, Algorand, Solana, and Avalanche saw strong growth in daily on-chain transaction counts,โ the report read.
Grayscale described Solana as Los Angeles, noting that it is a "structurally distinct network that is faster and focuses on different use cases" such as chain order books like Mango Markets, which requires fast transaction speeds and low fees. to operate.
โSolana's architecture is based on a different consensus mechanism that prioritizes speed and lower fees, though at the cost of more centralization, rather than scaling across L2 chains, Solana executes transactions across an L1 chain. fast. Executing approximately 2,300 transactions per second as of March 15, 2022,โ the report reads.
Avalanche was compared to Chicago in that its economy is similar to New York's, but it has a smaller network, "transactions are cheaper and less congested, and development is more centralized."
"Game-specific subnets like Crabada and partnerships with companies like Deloitte should offer more differentiation compared to other network apps, helping Avalanche create a distinct identity in the future," Grayscale wrote.
Related: Grayscale Prepares for Legal Battle with SEC over Bitcoin ETF
Regardless of the comparisons, Grayscale emphasized the bullish use cases for smart contract platforms going forward, with the firm targeting DeFi and the promising Metaverse sector in particular:
โThe market opportunity for DeFi and Metaverse applications combined, in our opinion, is probably greater than the $2 trillion market cap of the entire digital asset market today.โ
โSmart contract platforms are the operational layer that DeFi and Metaverse applications build on and leverage for transactions, ultimately creating value for the base chain as users accumulate native tokens for fees,โ added the report.
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