Put these cryptos on your 2022 watchlist.
- Solana, Avalanche, Cardano, Elrond, and Tezos are all good smart contract cryptos to keep on your radar.
- First mover Ethereum is struggling with network congestion and high fees. Other cryptos are taking market share, but talking about Ethereum killers oversimplifies the situation.
Ethereum (ETH) was the first cryptocurrency to introduce smart contracts. These are tiny pieces of code that live on the blockchain and mean developers can build apps and other projects on the network. For years, Ethereum has been the undisputed leader in this space and it still hosts the lion’s share of projects.
But unfortunately, Ethereum fell victim to its own success. Until it can complete its upgrade to a more scalable and eco-friendly model, it struggles with high network charges and network congestion. As a result, a slew of so-called Ethereum killers have appeared. These offer faster and cheaper transactions. Here are five to watch in 2022.
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1. Solana (SOL)
Solana was one of the top performing cryptos of 2021. It says it is “the fastest growing crypto ecosystem,” which is backed by the ever-growing list of apps on its network. At last count, there were over 1,350 projects running on Solana. One of the main reasons for Solana’s spectacular growth is its speed. In theory, Solana says the network is capable of processing 65,000 transactions per second, which is far more than Ethereum’s 15-45 transactions per second.
On the negative side, there is growing concern that Solana wasn’t quite ready for the exponential growth she saw. In September, he blamed a load spike for a 17-hour outage, and there have been a number of issues since. According to Fortune, Solana experienced six outages lasting more than eight hours in January. Investors are ready to attribute some technical problems to start-up problems, but their patience could run out.
2. Avalanche (AVAX)
Like Solana, Avalanche has grown dramatically over the past year. It may not have made as many headlines, but its price has risen over 3,000% and it now sits in ninth place by market capitalization. Two metrics stand out for Avalanche:
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- Its total value locked (TVL) is nearly $11 billion. According to DeFi Llama, this puts AVAX in fourth place in terms of the amount of money people have deposited with projects running on its ecosystem. Ethereum still dominates here with over $120 billion in TVL.
- He has the fastest time to completion. Without getting too technical, finality is the point at which a transaction cannot be changed. One way to think about it is that there’s a difference between when you swipe your credit card to pay for an item and when that payment is actually processed. The transaction itself seems almost instantaneous, but the completion time is closer to the processing time and can take longer.
3. Gimbal (ADA)
Cardano has consistently been in the top 20 cryptos by market capitalization for several years. It takes a research-driven development approach, which means it has been much slower to roll out technical developments than other blockchains. For example, it only launched smart contracts in September.
One of the things that sets Cardano apart from other cryptocurrencies is its broad outlook. He wants to use blockchain technology to redistribute power and become a positive force for change. It already has partnerships with governments and other organizations in various African countries. For example, it has partnered with the Ministry of Education in Ethiopia to put the school records of 5 million students on the blockchain.
When it comes to prices, Cardano was in trouble even before the general market collapse. One of the reasons for this is that very few projects are actually running on its network, even after the launch of the smart contract. This has raised questions as to whether its slow development will actually produce superior results.
4. Elrond (EGLD)
Elrond is smaller than the cryptos we have covered so far and is not yet listed on several of the major cryptocurrency exchanges in the United States. It is a scalable and fast blockchain that also focuses on interoperability. Interoperability is the ability of these networks to talk to each other and is a crucial part of blockchain evolution.
Elrond launched a decentralized exchange called Maiar last summer, which currently only lists a few tokens. More recently, Elrond said he would introduce a new metaverse-focused decentralized finance feature called metastake. It’s a good piece to have on your radar in the coming year.
Tezos did not grow as fast as other smart contract cryptos last year. He’s gained around 115%, which is a decent gain, but he’s largely overshadowed by Solana and Avalanche. This eco-friendly blockchain had some leadership issues after its ICO in 2017, which resulted in a $25 million legal settlement.
I’ve included it as a coin to watch in 2022, as it has made great strides in capturing market share in the booming NFT market, and also recently announced a partnership with Manchester United football club. It has held up relatively well against the recent fall in crypto prices. Ethereum’s price is down more than 20% year-to-date while Tezos is down just 15%.
At the end of the line
There are many smart contract cryptos in the market, and it is likely that several will have their moment in the spotlight at different times in 2022. As to whether any of them can really be Ethereum killers, Elrond co-founder Beniamin Mincu summed it up when he tweeted, “To be clear, Elrond is not a Bitcoin or Ethereum killer. It’s a zero-sum, losing game.”
Of course, the longer Ethereum takes to resolve its scalability issues, the more likely it is that other cryptos will take more of its market share. But in the end, it’s unlikely to be a winner-takes-all game. If the cryptocurrency market continues to grow, all of these blockchains could grow alongside it. We’ll probably see four or five come out on top of the pack, but it’s extremely difficult to predict which ones.
As an investor, it’s important to remember that this is a new technology with a lot of unknowns. Each project took slightly different approaches to speed, security, and decentralization. And none of the new players have been road tested to the same degree as Ethereum. Some may fail due to technical, security or management difficulties. And a new crypto could emerge, faster and even more secure than all the existing players.
What is important is to understand the risks, to study each individual investment carefully and to invest only the money you can afford to lose.
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