Ethereum (ETH) became the world's first programmable blockchain in 2015, a decentralized platform on which developers can build self-executing computer programs (i.e., smart contracts). This was a major milestone for the crypto sector, as smart contract technology is at the heart of decentralized apps (dApps) and decentralized finance (DeFi) services.
As a result, since bottoming out in October 2015, the price of Ethereum has grown by 569,000 percent, with a market value of around $292 billion. However, as the platform grows more popular, its scalability difficulties have become more apparent. The network is clogged, and people are frustrated with slower speeds and higher costs. Transaction fees have increased 280 percent in the last year.
For this reason, a growing number of blockchain initiatives are working to tackle those scalability problems. And, if any of them successfully displaces Ethereum, in the next three or four years, the relevant cryptocurrencies may easily deliver returns of 1000% (or more). Here are two candidates to keep an eye on.
1. Avalanche (CRYPTO: AVAX)
In 2019, computer scientist Emin Gun Sirer launched Ava Labs, and a year later the group released Avalanche, a smart contracts platform powered by the AVAX token. In terms of architecture, Avalanche consists of three distinct blockchains. The Exchange Chain (X-Chain) lets investors to trade cryptocurrencies, including the AVAX token. The Platform Chain (P-Chain) connects validators and allows for the creation of new blockchains. And the Contract Chain (C-Chain) is programmable, allowing developers to deploy smart contracts, dApps, and DeFi products.
The Snowman protocol, a form of proof-of-stake consensus mechanism in which validator nodes (computers) randomly sample a small proportion of nodes to confirm transactions rather than exchanging messages with each other, secures the P-Chain and C-Chain. That helps Avalanche operate efficiently and fast.
According to Ava Labs, Avalanche is the quickest blockchain-powered smart-contracts platform in terms of time to completion. The network has reached 4,500 transactions per second (TPS), but it could scale up to 20,000 TPS in the future. In addition, transactions are concluded in less than two seconds. Ethereum, on the other hand, can only process 14 TPS and takes a excruciating six minutes to complete transactions.
Another advantage of the Avalanche Network is that it offers scalability. The C-Chain is compatible with Ethereum's Solidity programming language, which adds to its flexibility. It also suggests that dApps and DeFi products may easily be ported from Ethereum to Avalanche, which has already happened. For example, Aave, a DeFi lending protocol that went live on Avalanche in October 2021.
To summarize, Avalanche is highly scalable, compatible with Ethereum, and able to support its own blockchain ecosystem. dApp developers and DeFi investors alike have expressed a high level of interest in this value proposition. It's also worth noting that Avalanche is the fifth-most-popular DeFi ecosystem, with $8.4 billion invested on the platform. And the network has already been used to launch more than 160 dApps.
The demand for the AVAX token, which is used to pay transaction costs on the Avalanche blockchain, should continue to rise as products become more popular, pushing its price higher. With a market value of $15.4 billion presently, Avalanche is one of the most valuable cryptocurrency firms in the world. However, it is conceivable that its value will rise 1,000% over the next three to four years to reach $170 billion. The fact that Ethereum's market value has reached more than $450 billion in less than six years is evidence enough.
2. Fantom (CRYPTO: FTM)
In 2019, the Fantom Foundation established Fantom, a smart contracts platform run on the FTM token. The most notable innovation is Lachesis, a proprietary PoS consensus protocol in which validator nodes can reach agreement independently - similar to Avalanche, which means that fewer messages are transmitted between the nodes and the network speeds up.
Fantom also touts itself as the most rapid blockchain in the sector, claiming that it can complete transactions in one second. Worth noting is that Fantom's test network (i.e., a blockchain version prior to the main network) was capable of 25,000 TPS in 2018, and the developer team has stated that the major network may eventually reach 300,000 TPS, but this hasn't happened yet.
Fantom can also run Ethereum-based dApps and DeFi services, making it compatible with the Solidity programming language. As a consequence, this blockchain business has gained a lot of attention in the cryptocurrency industry. Fantom is already the third-largest DeFi ecosystem, with $12.7 billion invested on the platform and more than 80 dApps launched on its network.
Assuming Fantom continues to gain market share, demand for blockchain-based products is expected to grow in the future, pushing up the value of the FTM token. On that note, with a current market value of just $5.7 billion, Fantom could certainly surge 1,000% (or more) to $63 billion in the next three or four years.