It's now been more than a year since the "Ethereum Killer" narrative started unfolding in crypto. Users were outraged with the growing transaction costs on ETH while Layer 1 alternatives were busy boasting about their solutions that seemingly offer an alternative to those that can't afford a single ETH transaction.

It's only fair to look back and see if Ethereum has been killed or is it still holding up with this seemingly fierce competition.

One Of These Things Is Not Like The Other

Now that the dust has settled we can safely assume that only five EVM compatible blockchains are competitors in this race and those include Solana, BSC, Polygon, Avalance, and Fantom.

When put side by side they are only competitive in a few trivial categories.

Unique addresses by blockchain:

Ethereum - 190M

Polygon - 140M

BSC - 145M

Avalanche - 2.3M

Solana - N/A

Avalanche is the chain that is struggling the most with onboarding new users which is probably related to the complexity of the chain. Bridges now send funds directly to the C-Chain but I am sure people still find this whole infrastructure confusing.

Even though things may seem like we are witnessing a close competition the reality is very different. TVL is surely the best measurement of success and readiness of investors to keep larger sums on specific chains. In this race, ETH still has absolutely no competition.

According to DefiLama Ethereum holds more value than all other L1 chains combined. Out of the total DeFi TVL Ethereum has a share of 56% showing clear dominance in this area. Why would that be the case when all these ETH killers offer low transaction fees?

Innovation and Security Matter

No matter how you put it Ethereum is the innovation hub for all things DeFi. Decentralized finance was incepted on Ethereum and nothing has changed over the past few years. Others may have a similar number of Dapps but all of those Dapps are actually clones.

Ever since Uniswap was deployed on ETH all decentralized exchanges in DeFi have adopted this exact model. Now we are in a situation where we need to wait for Uniswap 2.0 and Uniswap 3.0 before other protocols can start adding new features meaning that they have no clue how to innovate complex infrastructure. BSC may have 350 Dapps running on their chain but we all know that they are nothing more than ETH forks using the exact same code their ETH counterparts wrote.

The second issue is security. 2021 and 2022 were big years for exploits and hacks that have been happening all over the place. It would be unfair to say that ETH Dapps didn't have these same problems but that is the whole point. If you can exploit an ETH Dapp you can exploit that same code on other chains. This is why "big money" still isn't ready to keep large sums of money locked in protocols outside of Ethereum, hence the difference in TVL.

Solana has also proven that not all blockchains are created equal. Over there they seem to have a button that can shut down the chain for maintenance at will. Anyone that thinks this is acceptable should go back to the basics and rethink how blockchains are supposed to work.

The Not So Cheap Transaction Fees

Even if we boil it down to the "Achilles heel" of Ethereum the ETH killers will have a hard time coming out as winners. The cheap transaction fees are achieved by sacrificing security, we all know that. For example, Solana is protected by ~1600 validators and others like BSC have already been criticized for their centralized approach.

As if centralization wasn't enough they also all fail to deliver once they are met with heavy traffic. I have personally seen AVAX transactions go up to 20-30 Dollars when activity spikes and I won't even mention the absolutely broken state Fantom is in right now.

In short, they all achieved cheap transaction fees by sacrificing decentralization and security while also having a low token price. As soon as the market started pumping Avax and BNB transaction fees started going up and things only get worse when thousands of people want to use these chains at the same time.

L2 Will Kill All Ethereum Killers

There seems to be a public perception that ETH competitors are close behind but in reality, they are lightyears away. For example, Polkadot, a top 10 cryptocurrency with a $22B market cap has only managed to attract $1.6B in TVL which is embarrassing if you ask me. Even Polygon which is widely advertised as an ETH sidechain is struggling to hold TVL above $4B.

After testing out Layer 2 solutions on Ethereum like Optimism and Metis I am 100% certain that these chains will actually kill ETH killers, not the other way around. If implemented correctly they can be a true alternative for cheap transaction fees and completely eliminate the need for private blockchains like BSC.

What I am saying is this - if L1 innovation remains concentrated exclusively on Ethereum the competition will have nothing to offer in the long run. For now, the low fees narrative seems logical but as soon as Optimism transaction costs get dropped to 10 cents and even less what will be the selling point for Avalanche or Solana? I personally see none.

Posted Using LeoFinance ^Beta