Smart Contracts are agreements between two parties that are executed using computer code. A simple, but revolutionary invention first built by Ethereum in 2014. Since its inception, Smart Contracts have created many industries within the cryptocurrency space; namely Non Fungible Tokens (NFTs), Decentralised Autonomous Organisations (DAOs) and Decentralised Finance (DeFi).
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When comparing Smart Contract platforms, there are three vital factors in whether one will succeed or not. Firstly, the speed of transactions is important, as users do not want to wait for too long. Secondly, the gas fee to send coins – if it’s too high, the platform is not economical. Thirdly, and perhaps the most important is adoption, how many users are there on the blockchain? In this piece, we cover these important aspects when comparing Ethereum, Solana, and Polkadot.
Ethereum is by far the most established blockchain in the Smart Contracts space, however, it has issues. The most pressing problem is scalability. When it comes to transactions per second (TPS), the gold standard is a visa. The world’s largest payment processor is able to execute 24K TPS, Ethereum on the other hand is only able to execute 187 TPS. This is where Solana comes into its own claiming to do 65K TPS. Moreover, when it comes to Polkadot, the protocol is able to process 166.66 TPS. Speed therefore is where Solana is king. Consequently, with increased adoption across the world, TPS is vital for a protocol to thrive.
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In addition to TPS, as the previously mentioned cost is crucial for a Smart Contracts protocol to be popular. Ethereum has issues here with gas fees being very high (in USD terms) with some users claiming to be charged $130 to send $5. Solana on the other hand is cheap to send on its blockchain, being below 1c, so it is of no surprise why Solana experienced a breathtaking rise in 2021. The other Smart Contract platform – Polkadot, is free to send transactions on the platform, which scores the highest points in this field.
The final factor is wider adoption, this is where Ethereum leaves its competition behind. The platform has over 600,000 daily number of unique addresses and has by far the largest market cap at over $300bn at the time of writing. In addition, because of the first-mover advantage, Ethereum is the most recognised; with many decentralised apps opting to use the platform especially when it comes to DeFi. Polkadot and Solana are growing, but still have a way to go to take the crown from Smart Contracts king Ethereum.
In conclusion, Solana is the most likely to knock Ethereum off its perch, but with founder Vitalik Butterin’s proposals of sharding the Ethereum blockchain, scalability can be achieved. Polkadot is unique in that it connects blockchains together in contrast to ETH and SOL which are not interchangeable. A major breakthrough in recent years has been NFTs, where many users have opted to use Solana because of its cost and speed. Polkadot is struggling with adoption, but it cannot be written off because the founder was also involved in Ethereum from the start.
Overall, in the short-term future, Ethereum will still rule, but anything can happen in the crypto space. As it continuously evolves, new technologies can be invented, solving the issues of speed and cost. But always remember there can be a lot of hype so always do your own research.