Ethereum: What Are Some Viable Alternatives In 2020

writer 2020-09-15 11:09

Since its conception back in 2013, Ethereum rose to be one of the most utilized blockchain-based platforms. It grew the largest and most active user community in the DLT scene, with several established, well-known crypto-projects, such as Uniswap, Oasis, 0x protocol, OpenSea, running on its blockchain.

The innovation that Ethereum put forward at a time when everything was revolving around Bitcoin was immense, as it offered new capabilities, different than just monetary services, via its smart contract functionality.

It empowered users to create their own dapps through its platform yielding an unlimited array of decentralized services. In such a manner, it paved the way for new services and decentralized applications, most of which comprised the booming DeFi (decentralized finance) scene.

Nevertheless, there is some growing skepticism regarding whether Ethereum, being a second-generation blockchain platform, is or will be able to be the leading supporting network for the upcoming decentralized finance space.

Despite personally being an Ethereum fan and user, I would consider it necessary to discuss some key points from the skeptic’s point of view that may point to a need for an alternative network.

Following that, the present article will explore some existing viable alternatives that may proudly contest the Ethereum blockchain.

Relevant Article: A Beginner’s Guide To Ethereum And Its Applications (pt. 1)

Why Look For An Ethereum Alternative?

According to how I have conceived the DLT, a great benefit is the decentralization of services, which in turn may grant equal and unconditional access to users all over the world for transacting with each other in a peer-to-peer fashion avoiding intermediaries that (usually) want to monitor their data, control their moves and, ultimately, censor their freedom through centralized services.

On that basis, any crypto-project needs to fulfill the basic requirements for decentralization of services and the lack of discrimination regarding who can participate and which transaction is put forward.

Despite its fame and glory, many see Ethereum as being flawed in ways that interfere with its original goal of being a decentralized platform that anyone could have access to in order to create/use a decentralized application, tool, or service. Let’s take a look at some core aspects that may drive one to migrate to an alternative network.

Firstly, there is the gas fees problem. As many ETH users witnessed the last few months Ethereum’s gas fees skyrocket, sometimes reaching even $90 for a transaction of e.g. transferring $10 to your friend’s account or buying an NFT worth around $20.

The problem here lies in the Proof-of-Work (PoW) consensus mechanism that’s in use, which is basically allowing miners to decide which transaction to forward now and which at a later time.

As it comes naturally, a capitalistic mindset would drive mining facilities to prioritize higher-value transactions in order to get a higher cut for the miners.

As an ETH user, you can decide how much you want to spend on the gas fees, with the more you pay the faster the promotion of your transaction. Secondly, although Ethereum’s core team and devs are in agreement for the transition to Ethereum 2.0 and Proof-of-Stake consensus mechanism, it does not look like a very friendly solution.

On the contrary, instead of fulfilling its original purpose of empowering every day non-millionaire folks, the 2.0 version will likely enhance the rich to become richer, as the ones in the position to stake, aka those with more than 32 ETH, will be the ones that decide which transactions to validate and which not.

Thirdly, the current DeFi upsurge is attractive for investors whose budgets allow for paying the extreme gas fees with the goal of having just a 5% annual return. These large investments along with the high fees, make Ethereum unsustainable for non-millionaires and, for some people, create the need to search for alternatives. Let’s get right into the most viable ones for 2020.

EOS

EOSIO is an open-source blockchain protocol and a decentralized operating system. Similarly to Ethereum, EOSIO allows for the creation of decentralized applications through its platform which is powered by its native cryptocurrency, EOS.

The project claims to be offering zero transaction fees in its smart contract platform, as well as the ability to conduct millions of transactions per second. The EOS protocol acts as an operating system that is offering both hardware and software to its users.

The computing resources, such as CPUs and RAMs, are used for processing and are equally distributed among token holders. Regarding the software, EOS consists of a blockchain architecture that is offering greater scalability of dapps, while it is also providing accounts, authentication, databases and dapp support across multiple CPU cores.

Although highly scalable and fast in terms of transaction speed, the downside is that the costs of keeping data stored in RAM are very high. Unlike Ethereum, EOS is using a delegated Proof-of-Stake (DPoS) mechanism, where block producers are verifying each transaction on the blockchain.

Block producers get rewarded for each block with the creation of new EOS tokens. Token investors get to vote the block producers, while the strength of the vote is dependent on how many coins are staked.

Furthermore, EOS holders have the power to vote out block producers. Although in the top 12 coins ranked by market cap, EOS has been quite controversial due to it DPoS system.

Many have argued that the chosen consensus mechanism is the exact reason that makes the project heavily centralized, as there are just a handful of block producers to verify transactions.

The project’s year-long $4 billion ICO has also been considered by community members greedy, fraudulent, and uber-sufficient for the project to still have its fair share of bugs.

In my opinion, despite its effort to put out a massively scalable dapp platform for the everyday user, EOS is not (yet) in the position to dominate over Ethereum. After all, if the idea is to choose the most truly decentralized project out there, EOS is definitely not the one.

Waves

Waves is an open blockchain protocol and development toolset for decentralized applications and solutions for the Web 3.0. The mission of the project is to offer a friendly ecosystem that is easy-to-use and can be massively adopted , accelerating the shift to decentralized systems while putting the emphasis on the individual’s control of their own data, privacy, assets and funds.

NEO

NEO is an open-source, decentralized, community-driven platform. It is very similar to Ethereum in most aspects, such as in that it utilizes smart contract functionality to enable the execution of transactions without intermediaries in a transparent, traceable, and decentralized manner.

However, there are a few aspects that distinguish NEO from any other smart contract platform. Firstly, NEO supports a plethora of common programming languages, such as C#, Python, Java, Go, Js/Ts, and Kotlin, which is facilitating a large community of devs to contribute to the platform with the ease of what they are best at.

Secondly, NEO supports two crypto coins, one being its native cryptocurrency, NEO, and the other being GAS. Additionally, several other cryptocurrencies are integrated into the NEO network, making the ecosystem suitable to become a global digital smart economy.

Another unique feature of NEO is that it aims at being regulatory-compliant. Unlike most other platforms, here a focus point revolves around digital identities.

Any entity operating on the platform is expected to have a unique and verifiable digital identity, which is a necessary requirement to perform transactions between parties. Even nodes of the network are required to have a verified identification before they start contributing to the ecosystem.

The bottom line is that NEO is a very promising and well-established network with the potential of becoming a massively adopted, global, digital ecosystem.

Nevertheless, given the focus of the present article is to provide alternatives to Ethereum from the perspective of a “truly” decentralized platform, NEO is not the right candidate.

In essence, NEO is almost the opposite. After all, its vision is to provide a centralized, government-friendly platform. Sounds good if you are an institution or a government-affiliated entity, though not the best if you are looking to become a part of a decentralized ecosystem.

NEAR

Having received much attention, NEAR has emerged as a decentralized application platform that is built on top of the NEAR protocol. Claiming to offer highly anticipated technologies, NEAR is promising to offer a “developer platform for the Open Web”, where the usual issues of scalability and usability are addressed in innovative ways.

Firstly, the project’s protocol is providing a novel public Proof-of-Stake consensus mechanism that is utilizing a unique sharding design, which makes it easier for developers to use the push-to-deploy simplicity of the network while also providing dynamic scalability and fee stabilization.

The platform has its own native cryptocurrency, NEAR, that is used for payments of validators that provide storage and computing resources powering the network.

Additionally, NEAR is offering a developer toolset that is resembling the familiarity of tools used from the Web 2 world, while at the same time there are deployed, preset examples for beginner devs, as well as protocol-level royalties that allow creators to earn a percentage of transaction fees generated by their smart contracts.

Lastly, NEAR’s vision is to provide a network where users are utilizing a platform that is simplified and is offering a blockchain UX where “users forget they are using a blockchain”. In conclusion, as NEAR founders state, in order for dapps to be highly impactful on the world, they have to be easy to deploy, use and maintain, even when scaled to millions (or billions) of users.

Conclusion

The choice as to whether to keep up with Ethereum or migrate to a viable alternative network is yours to make.

I believe there is not just one way to go about it. Undoubtedly, Ethereum suffers from some drawbacks and, after all, that is why the whole ETH2 race has been going on.

On the other hand, in theory, there is no perfect network and other alternatives may also be flawed to a certain extent, while Ethereum is already offering a wide range of services, tools, and dapps.

Possibly, one’s degree of optimism and personal aspirations may also influence the choice of network deemed “truly decentralized”.

Nonetheless, a recent survey conducted by cryptocurrency market data provider Crypto Compare, found that more than 60% of respondents from Ethereum-based DeFi projects gave their vote of confidence to Ethereum when asked whether the leading network would be overtaken by a competing protocol as the leading DeFi network within the next three years.

Perhaps, Eth-based project CEO’s are fine with what is currently happening, because they either have more than 32 ETH, or they have budgets large enough to be profitable independently of the gas fees rates.

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