Ethereum is like New York’s best and worst neighborhoods: Grayscale | Cryptocurrency

Digital asset manager Grayscale released a report on smart contract platforms in which it compares the Ethereum (ETH) blockchain to the best and worst neighborhoods in New York.

The report examines the grandfather smart contract network Ethereum against emerging blockchain competitors such as Solana (SOL), Avalanche (AVAX), Polkadot (DOT), Cardano (ADA), and Stellar (XLM). The report comes on the heels of the company’s launch of a dedicated crypto fund for non-Ethereum smart contract platforms.

In a section titled “digital cities,” Grayscale analyzed Ethereum, Avalanche, and Solana. The firm compared Ethereum to the Big Apple, noting that they both share similarities with issues that stem from their stature:

“Ethereum is like New York: it’s big, expensive, and crowded in some areas. However, it also has the richest app ecosystem, with more than 500 apps that represent a total value of over $100 billion, more than 10 times more than any other competing network.

“Users and developers are reassured that Ethereum will likely continue to be the center of gravity for application innovation and liquidity due to the size of its community and the amount of capital locked up in contracts. network smarts. An L2 solution like Polygon is like a skyscraper in New York: it scales by building upwards,” the report adds.

The company went on to suggest that users moving to competing blockchains was tantamount to moving to a cheaper city due to high gas fees and network congestion on Ethereum caused by overwhelming demand for decentralized financial services (DeFi). and non-fungbile tokens (NFTs) in the past. two years.

“As Ethereum fees began to exceed $10 per transaction, smart contract platforms such as Stellar, Algorand, Solana, and Avalanche saw strong growth in the number of daily on-chain transactions,” the report says. report.

Grayscale described Solana as Los Angeles, noting that it’s a “structurally separate network that’s faster and focuses on different use cases” such as on-chain order books like Mango Markets, which requires fast transaction speeds and low fees to operate.

“Solana’s architecture relies on a different consensus mechanism that prioritizes speed and lower fees, but at the cost of greater centralization – rather than going through L2 chains. Solana executes transactions through a fast L1 chain. Executing approximately 2300 transactions per second as of March 15, 2022,” the report states.

Avalanche has been compared to Chicago in that its economy is similar to NYC, but has a smaller network, “transactions are cheaper and less crowded, and development is more centralized.”

“Gaming-specific subnets like Crabada and partnerships with companies like Deloitte should provide more differentiation from apps on other chains, helping Avalanche create a distinct identity going forward,” Grayscale wrote.

Regardless of the comparisons, Grayscale pointed to bullish use cases for smart contract platforms in the future, with the company pointing to DeFi and the burgeoning Metaverse sector in particular:

“The market opportunity for DeFi and Metaverse applications combined, in our view, is likely greater than the $2 trillion market capitalization of the entire digital asset market today. »

“Smart contract platforms are the mining layer that DeFi and Metaverse applications rely on and leverage for transactions, ultimately generating value for the base chain as users accumulate native tokens for fees,” the report adds.

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Ethereum is like New York’s best and worst neighborhoods: Grayscale | Cryptocurrency

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