Ethereum further loses ground against competing blockchains as its active developer count falls behind Solana and Cardano.
Ethereum, the second-largest cryptocurrency by market capitalisation, has slipped to third place in terms of active developers on the blockchain. A tweet from Coin98 analytics shows that the network currently has 45 active developers less than Cardano’s 54 and Solana’s 125.
Ethereum’s Growth A Likely Hindrance
According to several experts, Ethereum has become a victim of its success. This is due to the exponential expansion of DeFi platforms and the meteoric rise of NFTs. These tools deployed on it have led to more users on the network. The result is exorbitant gas fees as the blockchain’s meagre throughput of 15 transactions/sec is unsuited to the large transfer volumes.
Average Ethereum Gas price
Source: ycharts.com
The scalability issues on the Ethereum network are a significant reason why the blockchain seems to be losing its dominance. Developers and users alike have been pushed to seek alternative networks with cheap fees and increased transaction speed.
Blockchains like Solana (65000 TPS), Binance Smart Chain (300 TPS), and Terra (10000 TPS) have all offered better alternatives. A ripple effect is a divergence in the price action of Decentralised exchange (DEX) tokens from Ether.
As reported by Kaiko, these DEX tokens have historically had a tight correlation with Ether. However, since October 2021, they have outperformed ETH due to their deployment on alternative networks.
Source: Kaiko
Ethereum, still the king of smart contracts, will find it difficult to hold onto its crown at this rate. It is only a matter of time before these new “guys” slice off a decent portion of the market share and threaten its position.
Polygon Implements EIP-1559
Layer two scaling protocol Polygon has launched the Ethereum Improvement Proposal (EIP) 1559 introduced to Ethereum in 2021. The upgrade, introduced alongside the London hard fork, aims to implement a partial burning mechanism to a network. Its successful deployment on Ethereum resulted in better gas price predictability.
According to DuneAnalytics, Polygon suffered a similar gas price crisis like Ethereum early this month. The EIP-1559 upgrade, however, adds the exact fee-burning mechanism to Polygon, which destroys MATIC tokens. It also eliminates the first-price auction mechanism for determining network fees, resulting in more accurate cost estimates.
Kingsley is a fintech writer with over 4 years of experience covering blockchain and cryptocurrency news. Alo first discovered Bitcoin in 2016 and has been passionate about it ever since, particularly the various ways blockchain can help Africa and the world at large. He desires to give the crypto space a more geographically balanced narrative and serve as a bridge between Africa and the rest of the world. His articles have been featured in Cointelegraph, Beincrypto, and Forkast.news, among others.
