Several new layer 1 blockchains, like Solana, Cardano, and BBN Chain, have carved out their own place in the growing Web3 ecosystem, posing a challenge to the layer 2 Ethereum blockchain.
According to Pardeep Narwal, blockchain technology expert and founder of New Edge SoftSol Private Limited, an infrastructure-as-a-service (IaaS) company, “With the advent of blockchain innovations, many blockchains are much faster and have better scalability than the Ethereum network. This includes Solana, Cardano and Polygon. »
“New blockchains run on different algorithms and have their own use cases. Besides Proof of Stake, Proof of Time and Space, Proof of Location and Proof of History have real-life applications,” he adds.
Tier 1 tokens have their own blockchains, while Tier 2 tokens are built on top of Tier 1 blockchains, usually using smart contracts.
According to Anshul Dhir, co-founder and COO of EasyFi Network, a Tier 2 DeFi company, “Tier 1 blockchains refer to a backbone network, similar to the foundation layer of a building. We call them layer 1 because they are the main networks in their ecosystem. They can validate and finalize transactions without the need for another network. It should be noted that different layer 1 blockchains are designed and optimized for different purposes. »
Ethereum was the first and most established mainstream blockchain. It was the first to launch the initial wave of dApps and tokens that heralded the arrival of DeFi and Web3.
Despite its success, Ethereum is not without flaws. Chainanalysis, a blockchain data company, stated in its report titled “The Chainalysis State of Web 3”, published in June 2022, that Ethereum can only handle around 15 transactions per second due to its consensus mechanism. Proof of Work (PoW) and current transaction processing methodology, compared to 1500 for non-cryptocurrency solutions like the Visa network.
Although Ethereum has established itself as the most popular blockchain for developing Layer 2 projects, the transaction speed and scalability of its DeFi ecosystem has been hampered by its proof-of-work (PoW) mining method. .
Ethereum prioritizes security and decentralization over scalability. This results in higher expenses and slower service. The new blockchains seek to change this situation.
Despite Ethereum’s continued success, a slew of other projects have surfaced to compete with it, including Solana and Cardano.
“The issues plaguing the Ethereum blockchain are being addressed in various ways by alternatives to Ethereum. In fact, many of Ethereum’s competitors were developed specifically to solve its scalability problem. Ethereum is not really dying out, but new blockchain cryptocurrencies are becoming more popular and eroding Ethereum’s market share,” says Darshan Kothari, Founder and CEO of Vardhaman Infotech, a technology company.
Among the competitors of Ethereum, we can mention:
Solana: This is one of the new upcoming blockchains that can be considered a worthy contender.
Solana’s PoH mechanism embeds the timestamp into the blockchain itself, whereas other blockchains rely on third-party infrastructure, which allows for faster block validation and, therefore, faster transactions.
Solana is less secure but more efficient, allowing fast and inexpensive transactions.
NFTs are an area in which Solana is growing rapidly. Solana’s low-cost structure has made it much easier for creators to launch new projects. Nearly 15 million NFTs were issued via Metaplex, Solana’s NFT standard, compared to just over 1 million on Ethereum.
Cardano: It is an environmentally viable alternative to Ethereum, but its technological progress has been slow.
The main difference between Cardano and Ethereum is that Cardano’s consensus mechanism is much more adaptable than Ethereum. Thanks to its comprehensive and thorough development process, Cardano is one of the safest digital assets. Its price is reasonable and its value could increase as the DApp market develops. On the other hand, Ethereum, with its large market share and the improvements planned in Ethereum 2.0, could also experience long-term growth.
BNB Chain: Cryptocurrency exchange Binance has introduced the BNB Chain blockchain, formerly Binance Smart Chain. The native token of the chain is BNB. BNB Chain’s ability to support new tokens and decentralized applications (dApps) without charging the exorbitant fees associated with Ethereum has been a key factor in its rapid growth. In fact, according to DappRadar, which provides a global decentralized application store, the BNB chain has seen growth in layer 2 projects more than other blockchains.
Tezos: This is a community-managed blockchain compatible with smart contracts, on which many projects are being developed.
What’s stopping new blockchains from becoming Ethereum’s killers?
Many new Tier 1 blockchains have been dubbed “Ethereum killers” poised to replace the second most popular cryptocurrency, but none have succeeded so far. Ethereum continues to lead in terms of transaction volume, especially in popular Web3 domains such as NFTs.
“The Ethereum blockchain continues to expand, leaving a larger hardware footprint on miners’ and users’ systems. Ethereum, like several other digital currencies, has a lot of potential and a huge market capitalization, which proves that it is a cryptocurrency worth investing in,” says Kothari.
Ethereum’s efficient smart contract is one of the many elements that make it one of the most sophisticated blockchains. Additionally, Ethereum continues to be the industry standard for smart contracts and blockchain-based applications.
However, obvious issues are forcing projects to switch to Cardano, Polygon, and other blockchains. One of the main challenges is scalability. “All of these new rivals have intriguing value propositions; however, unlike Ethereum, they must also demonstrate that they can attract a large enough user base to achieve widespread acceptance and success,” adds Kothari.
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Will Solana, Cardano and Other Tier 1 Blockchains Be Ethereum Killers by 2023? – Mag Mirror
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