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Grayscale compares Ethereum, Solana, and Avalanche smart contracts with American cities

Ethereum is similar to New York City in that it is big, costly, and congested at some points in time. However, it also has the most diverse application ecosystem, Grayscale stated.

Grayscale, a digital asset management company, has released a paper on smart contract platforms that compare the Ethereum (ETH) blockchain to the greatest and worst parts of New York City. The paper compares Ethereum, the granddaddy of smart contract networks, to other competitive blockchains such as Solana (SOL), Avalanche (AVAX), Polkadot (DOT), Cardano (ADA), and Stellar (XLM). The story follows the firm’s introduction of a crypto fund targeted at smart contract platforms other than Ethereum.

Grayscale examined Ethereum, Avalanche, and Solana in a section labelled “digital cities.” The business compared Ethereum to the Big Apple, adding that they both have challenges that develop as a result of their size:

Ethereum is similar to New York City in that it is big, costly, and congested in some sections. However, it also has the wealthiest application ecosystem, with over 500 apps worth more than $100 billion—more than ten times the value of any other competitive network. 

Because of the scale of its community and the amount of cash locked within the network’s smart contracts, users and developers can be certain that Ethereum will continue to be the centre of gravity for application innovation and liquidity. The research stressed that an L2 solution like Polygon is like a skyscraper in New York: it scales by growing upwards.

Due to the high gas prices and network congestion on Ethereum created by the huge demand for decentralised finance (DeFi) services and non-fungible tokens (NFTs) during the past two years, the business suggests that customers transferring to rival blockchains is like relocating to a cheaper city.

According to the research,

As Ethereum transaction costs began to exceed $10 per transaction, smart contract platforms including Stellar, Algorand, Solana, and Avalanche showed a considerable increase in daily on-chain transaction counts.

Grayscale also compared Solana to Los Angeles, stating that it is a “structurally unique network that is faster and focuses on various use cases,” such as on-chain order books like Mango Markets, which require rapid transaction rates and minimal fees to function. Rather than scaling through L2 chains, Solana’s design depends on a new consensus process that promotes speed and lowers fees at the expense of increased centralization. According to the Grayscale paper, Solana routes transactions across a lightning-fast L1 chain. As of March 15, 2022, the system can handle around 2300 transactions per second.

The Grayscale research paper emphasised that Avalanche is like Chicago because its economy is similar to that of New York City, but it has a smaller network where “transactions are cheaper and less crowded, and development is more concentrated.” Avalanche’s “game-specific subnets such as Crabada, as well as relationships with organisations like Deloitte, could provide additional uniqueness compared to apps on other chains, aiding Avalanche in crafting a separate identity moving forward,” Grayscale noted.

Regardless of the analogies, Grayscale underscored the optimistic use cases for smart contract platforms in the future, referring specifically to Defi and the emerging Metaverse sector. According to the paper, the market opportunity for Defi and Metaverse applications combined is likely to be more than the $2 trillion market value of the whole digital assets industry today. Smart contract platforms are the operational layer on which DeFi and Metaverse apps are built and used for transactions, ultimately pushing value to the base chain as users acquire native tokens for fees.

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Vaishali Goel
Vaishali Goel
Technology enthusiast, explorer and academic scholar. Currently exploring the crypto world. Join me in my journey to see how crypto, NFT and Metaverse will change the world.
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