Ethereum has gained over 150,000% since launch. But these cryptos have done much better this year.
- Ethereum was the first cryptocurrency with the all-important smart contract capability that powers decentralized finance and other applications.
- Many cryptocurrencies have performed better than Ethereum so far in 2021, including Solana, Cardano, Polygon, Decentraland, and Helium.
Ethereum (ETH) is the second-largest cryptocurrency by market capitalization and its price has risen more than 150,000% since its launch in 2015. However, its performance this year – a 500% increase since January 1 – pales . comparison to coins that produced gains of over 5,000%.
One of the reasons many tokens have overtaken Ethereum
It’s fair to say that Ethereum revolutionized our ideas of what blockchain technology could do. Where Bitcoin (BTC) uses blockchain as a sophisticated ledger to track its decentralized money, Ethereum’s blockchain can store smart contracts. Smart contracts are tiny pieces of self-executing code that power things like decentralized finance (DeFi) apps.
Ethereum, the first mover, still hosts the lion’s share of applications. But he was also a victim of his own success. The network is congested and users complain about high transaction fees. As a result, a number of newer, faster, and cheaper platforms — Ethereum’s so-called killers — are nipping at its heels. And several of them have seen dramatic price increases this year.
Indeed, according to data from CoinMarketCap, of the top 100 cryptocurrencies by market cap, 41 have outperformed Ethereum since the start of 2021. We’ve picked out five that look likely to continue to perform well.
1. Solana (SOL)
2021 could well be the year of Solana. The lightning-fast smart contract platform has gained over 11,000% since January 1. Like Ethereum, it is a programmable blockchain. It currently hosts over 500 different projects, from non-fungible tokens (NFTs) to DeFi applications.
The reason Solana caught people’s attention is that it is capable of processing over 50,000 transactions per second (TPS), and each one costs a fraction of a penny. To put this into context, until Ethereum can complete its ambitious upgrade to Eth2, it is only processing 15-45 TPS. Costs vary depending on network occupancy, but can reach over $100.
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2. Gimbal (ADA)
Cardano is another programmable blockchain that has taken a different approach than many block cryptos. It peer reviews every step of its development before it is implemented. As a result, development has been slower than other similar projects – it only launched the smart contract capability in September.
However, in theory, Cardano is built to last – and that’s why it remains one of the top cryptocurrencies by market cap and has gained nearly 1,000% year-to-date. What’s also interesting about Cardano is that it has spent a lot of time building partnerships and real-world use cases. For example, it has a partnership with the Ministry of Education in Ethiopia to store student school records on the blockchain.
3. Polygon (MATIC)
Both Solana and Cardano are what are called Layer 1 solutions, which means that everything is integrated with the original blockchain. There is another group of cryptocurrencies called Layer 2 solutions, which aim to solve Ethereum’s problems by adding an extra layer of processing on top of the existing blockchain.
Polygon is a leader in this field, hence its growth of more than 9,000% this year. It calls itself a Layer 2 solution aggregator, which means it offers several different ways to improve Ethereum performance. Rather than offering a one-size-fits-all solution, developers can choose the path that best suits their project.
4. Decentralized (MANA)
Metaverse tokens have been flying this year – even more so after Facebook announced it would rebrand itself as Meta. It’s no surprise that the world’s leading virtual 3D token outperformed Ethereum with an increase of over 4,600%. Players can use MANA to pay for goods and services in Decentraland, as well as to buy and develop land there.
Mind you, given that Decentraland is currently built on top of the Ethereum ecosystem, one could argue that a win for MANA is also a win for ETH.
5. Helium (HNT)
Helium is one of many cryptocurrencies that use blockchain technology to solve real-world problems. In this case, members of the Helium community manage a series of powerful wireless access points, called LongFi. Hotspots power the Internet of Things (all devices that connect to the internet). As people use the network, hotspot owners earn HNT tokens.
The appeal of Helium is that it can provide cheap and secure internet access around the world, which is perhaps why the price of crypto has risen over 3,000% this year.
Small cryptocurrencies carry more risk
All of the coins listed above are available from major US cryptocurrency exchanges. But before jumping in, be sure to do your own research and understand how the projects are likely to work in the long run.
In truth, it is not really fair to compare Ethereum with smaller, newer and riskier coins. All cryptocurrencies carry risk, but Ethereum’s relative longevity and $500 billion market capitalization make it a safer investment. There are currently 14,000 cryptocurrencies on the market and many haven’t produced Ethereum’s 500% gains this year (not to mention its 150,000% since launch). Smaller parts could produce higher rewards, but they are also more likely to fail.
What’s interesting about the five tokens listed above is that each presents a clear solution to a problem – whether it’s improving the Ethereum ecosystem or providing money for a new virtual world. And this is something worth looking for in any crypto project.
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