Bitcoin and Ethereum are never compared when functionality is considered. The only difference is in the function of Ethereum’s smart contracts. However, all other projects that have smart contracts, at one point or another, have been considered an Ethereum killer.
The trend started in 2018 during the ICO boom, when EOS was seen as a contender for Ethereum’s smart contract competence. Now, there is a reasonable chance that a minority of readers will not be familiar with EOS at all. And, that says a lot.
2021 was different though. The DeFi ecosystem has ranked protocols in a different light and the importance of smart contracts has been taken into greater consideration. The term ‘Ethereum killer’ has received more attention than usual, but might it no longer be relevant in the future?
Ethereum and its killers – To coexist happily ever after?
Over the years, the term has grown from the prospect that new protocols would eventually take over Ethereum’s market share. In 2021, the adoption of new Layer 1 solutions was exceptional with Solana and Avalanche. But here’s the crux: their ecosystem thrives on an individual level.
These protocols have established parallel applications and deployment across all chains, which is also evident on the ETH blockchain. Now one way to measure DeFi demand is basically through TVL or Total Value Locked. Ethereum boasted of a TVL of $ 21 billion in January, with the same amount at around $ 86 billion now. However, its market share across the ecosystem increased from 97% to 73.2% when Polygon and BSC entered the fray.
However, does this make a difference in the long run? Maybe not.
Increases and decreases in TVL don’t take much into account in the long run because it is a variable metric. In the short term, it may mean activity for new projects, but Ethereum has an established and flourishing network effect.
Coexistence doesn’t mean survival now
When it comes to Ethereum, it will always have the edge in terms of market credibility during a bear market. It has survived such market cycles in the past, unlike those protocols which have only emerged in recent months.
On the other hand, Ethereum bridges TVL has continued to grow in recent months. What this indicates is that its TVL share cannot be estimated based solely on locking the parent channel. Over time, some of the contenders, rather than the killers, could be knocked out due to incentive programs drying up the charts or non-innovative protocols becoming less relevant.
Another recipe for disaster would be shortcomings in centralization and the acceleration of regulations and material costs. Therefore, in the long run, Ethereum will never be “killed”. Even so, it’s critical that small protocols work in order to onboard users who continue to be billed outside of Ethereum’s core business layer.