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Solana, Avalanche, Cardano: which is Ethereum’s best competitor?

Solana, Avalanche, Cardano: which is Ethereum's best competitor?

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Written by Chris MacDonald at The Motley Fool Canada

Ethereum (CRYPTO:ETH) competitors, or “Ethereum Killers”, Solana (CRYPTO:SOL), avalanche (CRYPTO:AVAX)and gimbal (CRYPTO:ADA) are certainly making waves in the crypto market. Each of these tokens has seen incredible increases in recent years as investors search for the “next big thing.”

Each of these Layer 1 networks provides a base blockchain network on which vast ecosystems can be built. For crypto investors looking for the next Ethereum, these three cryptocurrencies are among the most discussed options.

Let’s dive into what makes these Ethereum alternatives attractive right now.

Why do investors need an alternative to Ethereum?

Let’s start by discussing Ethereum.

Ethereum is the second biggest cryptocurrency, sporting a huge market capitalization of $365 billion. This token represents the largest ecosystem of decentralized finance (DeFi) projects in the world.

This size has resulted in network slowdowns and very high fees compared to other cryptonets.

As a result, there are currently two schools of thought surrounding Ethereum. For one thing, given Ethereum’s entrenchment in the DeFi space, some argue that Ethereum is simply too big to go. Additionally, updating this network to Ethereum 2.0 should reduce fees over time and significantly increase speeds. I tend to agree with this point of view.

On the other hand, other networks are rapidly gaining market share due to their fee and cost structure. Solana, Avalanche, and Cardano are three great examples. These networks are all already proof-of-stake options and are developing their own ecosystems accordingly. I can also understand this argument.

Meet Ethereum’s Biggest Challengers

So what makes each of these networks unique?

Well, Cardano is unique in that this network separates its computational layer from its transaction settlement function. Put simply, by separating the transactions and the calculations needed to validate them and put them on the blockchain, Cardano is able to make multiples of Ethereum’s existing volume.

Avalanche is an optimized network, working to build its dApp ecosystem, attracting developers with transaction speeds of up to 6,500 per second and transaction fees of around a tenth of Ethereum.

Solana is perhaps the cheapest and fastest of the bunch. Using a unique proof-of-history proof-of-stake validation variant, Solana has the ability to perform a jaw-dropping 50,000 transactions per second. Most transactions can be made at a fraction of a penny. As a result, Solana’s meteoric rise last year was primarily the result of these two factors.

At the end of the line

These smart contract platforms are all unique. Indeed, each provides their own investment thesis, and I can understand the bullish case behind all three.

Personally, I’m invested in Ethereum and Solana because I think they’re the two networks that could be long-term winners in the smart contract proof-of-stake future. That said, Avalanche and Cardano offer an attractive option for investors interested in DeFi right now.

The post office Solana, Avalanche, Cardano: which is Ethereum’s best competitor? appeared first on Motley Fool Canada.

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Dumb Contributor Chris MacDonald owns Ethereum and Solana. The Motley Fool owns and recommends Ethereum.

2022