24 February 2022: One of the hottest subjects surrounding the long term development of crypto is how Ethereum will stack up against so called "Ethereum killers" over time. There are tons of proposed successors to Ethereum, including the likes of Cardano, Algorand, Polkadot, Solana, and others.
With some many different competitors arising, could Ethereum really be replaced? For the foreseeable future this looks extremely unlikely. There are literally thousands of different networks, protocols, and applications built directly on Ethereum. This fact combined with the coming upgrades of Ethereum V2 help to solidify the future of the Ethereum blockchain.
The Revenue Generating Power of Ethereum
currently generates the highest amount of revenue via transaction fees than any other blockchain project. Stated another way - this means more people are willing to pay to use the Ethereum network than any other network. Even better, its not even close. Ethereum is current generating nearly 8x the fees that the next closest competitor (Uniswap) is generating.
In fact, the daily fees generated on Ethereum as twice as big as all other projects combined. This includes all of the following and more:
- Binance Smart Chain
- SushiSwap
- Avalanche
- Compound
It is important to note that transaction fees are split between the miners with the remaining ETH being burned. Since this feature was implemented, a LOT of Ethereum has been burned. Aroud 800 ETH are being burned every single hour with nearly 2 million ETH burned all time so far.
Now, it is imperative to understand that there is no cap on the amount of ETH that can exist. The catch here is that Ethereum is actually going deflationary with increased network activity. This means that more ETH is being burned every hour than minted.
Calculations show that as soon as Ethereum 2 is implemented and the network officially moves to Proof-of-Stake, this is the precise moment in which Ethereum will go permanently deflationary Adrian Zmudzinski, reviewing on chain network data shows that with the changes coming at the end of March 2022, Ethereum will go deflationary by 0.33% to 0.5% per year, depending on
The Ethereum Ecosystem is Irreplaceable
Being first certainly has its merits. As the world's first smart contract platform, there are now literally thousands of applications, networks, and protocols deployed on Ethereum. The diversity and interconnectedness of such a vast ecosystem has allowed protocols within the ecosystem itself to prosper.
Ethereum plays host to a wide variety of decentralized finance applications, arts & collectibles exchanges, blockchain gaming protocols, rising technologies, marketplaces, developer tools, and more. Specifically though, DeFi runs through Ethereum. This much is obvious and contributes substantially to Etheruem's fee generating power.
Some notable DeFi protocols on Ethereum are:
- Compound
- Loopring
Other major networks, protocols, and applications to note:
- Axie Infinity
- Decentraland
- Ethereum Name Service
Adding up all the value of the Ethereum ecosystem and we are talking about hundreds upon hundreds of billions. No other platforms are even close to this comparison. Better yet, the interconnectedness of it all too allows for easy transacting across the Ethereum landscape.
A future based on Ethereum looks pretty inevitable. While other L1 chains may carve out their own niche utilities, the Ethereum ecosystem at this point is already so sophisticated and complex that it will be nearly impossible to actually replace it. Ethereum "killers" may just end up being supporting L1 networks branched off Ethereum should they find solid ground for long term usage.
High fees on the Ethereum blockchain will be a subject of debate into the future, especially as the launch date of Ethereum 2 nears. Considering that ETH may become deflationary soon as well, demand for ETH should be expected to continue to rise.
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