Modern Blockchains Woo Developers to Build dApps as Ethereum Waits for 2.0
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Almost 60% of the world’s decentralized applications (dApps) are built on the Ethereum blockchain, which speaks volumes about its dominance in the DeFi ecosystem. However, it’s been struggling with network congestion and high gas fees since last year amid the growing number of users and transactions.
Ethereum retains the crown, thanks to L2 solutions
The lack of scalability has come back to haunt Ethereum at a time when it badly needs scalability because DeFi is witnessing explosive growth. Ethereum 2.0 is still more than a year away. The ETH 2.0 will switch the blockchain away from the current Proof of Work to the Proof of Stake consensus mechanism where users stake their tokens to secure the network.
In the meantime, a number of Layer-2 scalability projects have emerged to ease the network congestion. The Layer-2 protocols take some activities off-chain to reduce pressure on Ethereum. Polygon, Optimism, Arbitrum are some of the L2 solutions helping Ethereum scale. For the uninitiated, scalability refers to the number of transactions a blockchain can handle per second.
Blockchains that aim to eat into Ethereum’s market share are already using the Proof of Stake, Proof of History, or another consensus mechanism that offers greater security and scalability. They have positioned themselves as faster and cheaper alternatives to Ethereum.
Better than Ethereum?
Scalability, gas fees, level of decentralization, and cross-chain functionality are some of the most important things developers look at when choosing the blockchain network for their dApps.
Binance Smart Chain (BSC) has become a serious competitor to Ethereum, with more than 800 dApps built on it. BSC is compatible with the Ethereum Virtual Machine (EVM). It is more scalable than Ethereum as it uses a Proof of Staked Authority (PoSA) mechanism.
However, Binance Smart Chain is a bit too centralized. Earlier this year, Messari researchers criticized BSC for having only 21 validators, who are hand-picked daily by just 11 validators of the Binance Chain. Without high decentralization, a blockchain network is vulnerable to single points of failure.
"Demand for DeFi is insatiable," said Denko Mancheski, CEO at Reef Finance. "First it was Ethereum and skyrocketing gas fees, now we are seeing that even others like BSC are starting to have issues with performance. Reef Chain's launch couldn't have come at a better time."
Reef Chain itself is wooing developers who want a faster, cheaper, and secure blockchain platform to build their dApps. It is the most advanced EVM-compatible blockchain with on-chain governance and self-upgradation functionality. The network runs on a Nominated Proof-of-Stake (NPoS) consensus mechanism, which offers scalability and low fees. Reef Chain also supports EVM extensions which allows for native token bridge, scheduled calls (ie. recurring payments), and smart contract in-place code upgrades. In the near future, it will support an additional VM, allowing developers to write code in multiple programming languages.
Cardano, whose founder Charles Hoskinson was one of the founding members of Ethereum, has created a lot of buzz as it inches closer to launching its smart contract functionality on September 12. With smart contracts, it will be competing directly with other programmable blockchain networks.
Cardano is positioning itself as a force of good. It is currently working with the government of Ethiopia on a universal student credentialing system, in what could be one of the world’s most ambitious blockchain projects.
Solana and Polkadot are the other two leading players. In just 18 months of its launch, Solana has become one of the most popular blockchain protocols. It uses a Proof of History consensus mechanism and promises not to increase fees. It is much faster and cheaper than Ethereum in executing smart contracts. However, just like Binance Smart Chain, Solana suffers from a lack of decentralization.
Polkadot uses a sharding mechanism to provide faster and cheaper solutions. It’s a fully decentralized blockchain network that enables the transfer of assets and information between independent blockchains. So far, more than 350 dApps are built on Polkadot.
It’s interesting that almost all the blockchains are trying to take down Ethereum’s dominance by focusing on scalability. They have positioned themselves as faster and cheaper alternatives. Only time will tell whether developers will continue to flock to them once ETH 2.0 arrives.
It’s probably why blockchains like Reef Chain are promising developers much more than faster and cheaper transactions, and cross-chain compatibility. It is helping developers with business development and marketing by allowing them to tap into its existing community of users, partners, exchanges and media.