After several years of development, the first phase of Ethereum 2.0 has started. The comprehensive upgrade has been in the planning stage since 2015 and the fact that it is far more difficult to change the engine in a moving vehicle than to build it from scratch speaks for itself. That is why many former ETH developers took the opportunity and developed their own blockchain. Will Ethereum lose its first mover advantage?
Cardano vs. Ethereum
Cardano (ADA) has been one of the most promising smart contract platforms in the crypto space for some time. The project was originally founded by mathematician Charles Hoskinson, a co-founder of Ethereum. Charles Hoskinson left Ethereum in 2014 and then created the for-profit IOHK Foundation.
The cryptocurrency ADA made more headlines this year as Cardano introduced the Shelly upgrade on its mainnet. Shelly enables Cardano to be staked and, similar to Ethereum 2.0, is just one of many phases. Shelly is only the second phase of the ADA update and three more upgrades will follow. In the end, Cardano should be a scalable blockchain on which smart contracts can also be programmed.
In addition, Cardano ultimately wants to operate an on-chain governance model in which every ADA holder should be able to participate. In the future, Cardano is expected to be best suited for applications in the financial and organizational sectors. This is because, unlike Ethereum, Cardano is programmed in Haskell. Haskell is a programming language that is particularly suitable for business applications and data analysis.
Tezos vs. Ethereum
Tezos was founded in 2018 and the foundation behind Tezos, like Ethereum, is located in Zug, Switzerland’s crypto valley. Arthur and Kathleen Breitman developed Tezos. However, the early years of the blockchain project were often characterized by internal power struggles coined between the Breitmans and the Tezos Foundation.
Tezos uses a delegated proof-of-stake consensus mechanism that it calls “liquid proof-of-stake”. However, researchers have found that Tezos, while not having the same level of decentralization as Ethereum, is more decentralized than many other DPoS blockchains.
This is mainly due to the fact that Tezos has not prescribed an upper limit for the number of nodes. This makes it possible for Tezos to become more and more decentralized as it grows. In the future, Tezos and Ethereum 2.0 could definitely compete with each other in terms of security and decentralization. The main difference between the two blockchain projects is Tezos’ on-chain governance model.
When the Breitmans conceived the Ethereum competitor, their vision was that the Tezos platform could upgrade itself. The goal is to create a competitive blockchain that can effectively evolve from within. Each Tezos holder can vote on what should happen next with the platform.
In contrast, Ethereum has always had off-chain governance. In all likelihood, this will not change anytime soon. However, it is unclear which system will prove to be superior to the other.
Polkadot, the ETH killer?
Gavin Wood is the co-founder of Ethereum. After serving as Chief Technology Officer of the Ethereum Foundation for several years, he felt that the design of Ethereum was ultimately limiting. For this reason, he designed the Polkadot whitepaper in 2016. He decided on the name Polkadot because it is a pattern with no beginning or end that the understanding of decentralized applications takes up.
According to the crypto analysis company Messari, Polkadot is a blockchain project that clearly stands out from the competition:
It absolutely stands out, both from a design standpoint and the size of the community around Polkadot.
More than 250 projects, ranging from stablecoins to social networks, will be PolkaProject, according to the Tracker built on the network launched in May. That is an incredible increase. While developer interest in Bitcoin and Ethereum has declined, the number of monthly active developers on Polkadot has increased more than 40 percent since the project was launched in May.
Instead of running apps like Ethereum via smart contracts that run on a blockchain, Polkadot allows every app developer to create their own blockchain. These blockchains are interoperable, which means that they can communicate with other blockchains. This makes it possible for developers to design their blockchains individually. For example, you can determine how high transaction fees are or how quickly certain transactions can be confirmed.
Gavin Wood therefore believes that a lot of innovative products will develop on Polkadot that cannot establish themselves in Ethereum’s smart contract environment. He cites blockchain games or blockchain applications within consortia as an example.
While all of these platforms have certain advantages, none have so far managed to topple Ethereum. However, given that the full implementation of Ethereum 2.0 is in all likelihood a few years away, things can change quickly. Yet even if Ethereum manages to keep its crown, some other Ethereum competitors might find certain niches in which to thrive.