Ethereum’s blockchain competitors gain ground

As DeFi thrives, Ethereum’s blockchain competitors gain ground

Decentralised finance participants see a ‚multi-chain‘ future as Ethereum’s DeFi competitors continue to attract users and projects

Ethereum is not the only blockchain platform to see a significant increase in value, as the decentralised finance sector continues to move in Bitcoin Evolution parallel with the expansion of the crypto ecosystem. The new year has been very positive for DeFi, as evidenced by the huge amount of value injected into various platforms.

On 20 January, capital committed to staking on DeFi protocols briefly surpassed $27 billion, according to DappRadar, driven in part by the growth of the vast majority of crypto tokens. In addition, the sector has seen increasing adoption and development in recent months.

Currently, Ethereum occupies the top position as the most popular smart contract blockchain among developers and projects on which to build and launch apps and platforms. The DeFi industry in its current state is intrinsically linked to Ethereum, with most of the major DeFi projects and protocols active on its blockchain. Uniswap, the largest automated market maker according to DeFi Pulse, is based on Ethereum, as are the rest of the 10 largest DeFi projects.

Although the growth and success of DeFi’s platforms have strained the network’s ability to process transactions, as well as significantly increased fees, these initiatives have led to a huge amount of value locked up in the Ethereum ecosystem. That said, some competitors are enjoying resounding success in the first weeks of 2021, suggesting that there are more participants to fuel growth in decentralised finance.

Polkadot, Chainlink and Near Protocol register big gains

Polkadot is considered one of Ethereum’s most prominent rivals. It is a next-generation blockchain that connects private and public networks and blockchains. The project was launched by the Web3 Foundation and aims to enable interoperability between blockchains to support the decentralised internet of the future.

In essence, Polkadot operates a multi-chain protocol using so-called ‚parachains,‘ which allow other blockchains to connect to its network as sidechains. Moreover, the protocol is capable of handling thousands of transactions per second, which is why some commentators consider it a competitor to Ethereum. In 2021, Polkadot has seen immense growth, with the price of its DOT token almost doubling since the beginning of the year.

Near Protocol is another blockchain platform for smart contracts that has been increasingly popular in the industry since its launch in April 2020. Its native token, NEAR, has recently tracked a rise of more than 100%. The project operates its own proof-of-stake protocol that leverages sharding. Ethereum is still working on integrating this functionality by the end of the year.

Cardano, which uses its own proof-of-stake blockchain, has also seen remarkable growth. Its native token, ADA, has overtaken Bitcoin Cash (BCH) to become the sixth largest cryptocurrency by market capitalisation. The platform has not yet implemented functional smart contract capabilities, but the update is expected to arrive this year, allowing the development of DeFi platforms on the protocol.

Chainlink is another name on this list for its role in smart contract blockchain and DeFi. Chainlink is a decentralised oracle network that acts as an intermediary to provide data to smart contracts on various blockchains. According to the project, Chainlink has become an important tool for decentralised finance as it provides high quality, non-falsifiable price data to various DeFi protocols.