The Ethereum blockchain is like New York — as vast, congested and expensive, yet boasting the richest ecosystem of applications. This was stated by specialists at Grayscale Investments, the digital asset management firm.
NEW REPORT: Thanks to #smartcontracts, services typically provided by expensive intermediaries such as banks, brokers, and custodians can be provided for a small fee on a blockchain in a fraction of the time. https://t.co/vjXxfHK4N4$ADA $SOL $AVAX $DOT $MATIC $ALGO $XLM $ETH
— Grayscale (@Grayscale) March 30, 2022
In a recently published report, the firm’s analysts compared popular smart-contract platforms. Grayscale Investments presented the document after the launch of a fund based on the Ethereum competitors index.
According to the analysts, rising transaction costs on the second-largest cryptocurrency network have increased the appeal of alternative solutions. As of writing, on-chain fees for token swaps on the Ethereum blockchain exceed $12.
Although platforms like Solana and Avalanche can deliver higher throughput and charge lower network fees, the equipment required to power them is more expensive.
Analysts agreed with Dragonfly Research’s thesis on the similarity between blockchain platforms and modern cities.
“Ethereum is like New York — it is enormous, expensive and congested in some areas. Yet it has the richest ecosystem — over 500 applications, with a total value exceeding $100 billion. This is more than ten times larger than that of any other competing network,” the report says.
According to Grayscale, despite high on-chain fees, users and developers believe Ethereum will continue to be the hub of innovation and liquidity thanks to the size of its ecosystem.
In conclusion, the analysts emphasised that smart-contract platforms are “not capable of handling even 10% of global internet traffic” at present. Meanwhile, Grayscale regards this segment as undervalued, as it could have a substantial impact on the traditional financial sector.
“We view these platforms as investments in a decentralized future, where a dynamic ecosystem of applications offers a wide range of services”, the specialists added.
Earlier, in February 2022, Vitalik Buterin proposed solutions based on ZK-Rollups technology to reduce transaction costs on Ethereum.
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