Ethereum is like the best and worst parts of New York: Grayscale

Published at: March 31, 2022

Digital asset manager Grayscale has published a report on smart contract platforms in which it likens the Ethereum (ETH) blockchain to the best and worst parts of New York City.

The report examines the granddaddy smart contract network Ethereum in comparison to newer competing blockchains such as Solana (SOL), Avalanche (AVAX), Polkadot (DOT), Cardano (ADA) and Stellar (XLM). The report comes in the wake of the firm launching a crypto fund dedicated to smart contract platforms excluding Ethereum.

In a section titled “digital cities,” Grayscale analyzed Ethereum, Avalanche and Solana. The firm compared Ethereum to the Big Apple, noting that they both share similarities with issues that arise from their stature:

“Ethereum is like New York City: it is vast, expensive, and congested in certain areas. However, it also features the richest application ecosystem, with over 500 apps that command a total value of over $100 billion—more than 10x larger than any other competing network.”

“Users and developers take comfort that Ethereum will likely continue to be the center of gravity for application innovation and liquidity due to the size of its community and the amount of capital locked into the network’s smart contracts. An L2 solution like Polygon is comparable to a skyscraper in NYC: it scales by building upwards,” the report added.

The firm went on to suggest that users moving to competing blockchains is like moving to a cheaper city due to the high gas fees and network congestion on Ethereum caused by overwhelming demand for decentralized finance (DeFi) services and nonfungbile tokens (NFTs) over the past two years.

“As Ethereum fees began to eclipse $10 per transaction, smart contract platforms like Stellar, Algorand, Solana, and Avalanche experienced strong growth in daily on-chain transaction counts,” the report read.

Grayscale described Solana as like Los Angeles, noting that it is a “structurally distinct network that is speedier and focuses on different use cases” such as on-chain order books such as Mango Markets, which requires fast transaction speeds and low fees to operate.

“Solana’s architecture relies on a different consensus mechanism that prioritizes speed and lower fees though at the cost of more centralization — rather than scaling through L2 chains Solana runs transactions through a speedy L1 chain. Running roughly 2300 transactions per second as of March 15, 2022,” the report reads.

Avalanche was compared to Chicago in that its economy is similar to NYC, but has a smaller network, “transactions are cheaper and less congested, and development is more centralized.”

“Game-specific subnets like Crabada, and partnerships with firms like Deloitte should offer more differentiation compared to apps on other chains, helping Avalanche craft a distinct identity moving forward,” Grayscale wrote.

Related: Grayscale gears up for legal battle with SEC over Bitcoin ETF

Regardless of the comparisons, Grayscale emphasized the bullish use cases for smart contract platforms moving forward, with the firm pointing towards DeFi and the up and coming Metaverse sector in particular:

"The market opportunity for DeFi and Metaverse applications combined, in our opinion, is likely larger than the $2 trillion market cap of the entire digital assets market today.”

“Smart contract platforms are the operating layer that DeFi and Metaverse applications build on and leverage for transactions, ultimately driving value to the base chain as users accumulate native tokens for fees," the report added.

Tags
Blockchain
Nft
Ethereum
Defi
Solana
Metaverse
Grayscale
Avalanche
Related Posts
Time to accumulate? 5 sectors to watch during crypto winter
It’s weird to think that anyone could look forward to downturns in the crypto market, but that is precisely the position held by many developers and project creators who enjoy the low-pressure environment that exists during a bear market. As the saying goes, bear markets are for building, and now is one of the best times to survey the landscape to see which sectors of the market are most active in designing the platforms that will soar to new heights in the next bull cycle. Here’s a look at five sectors of the blockchain ecosystem that may present some of …
Blockchain / July 15, 2022
One platform tries to rejuvenate gamers’ favorite childhood memories using Web 3.0
One virtual world is being reimagined with nonfungible tokens (NFTs) is Neopets, the virtual pet website. The team has announced the launch of their IP on the blockchain to provide new and improved user experiences. For those unfamiliar, Neopets is one of the very first online games to allow users to adopt a pet that they can explore the vast world with. Neopets can be raised, homes could be built, and rare items could be found. Over the last two decades, millions of people have engaged with Neopets characters in their virtual world of Neopia and shared it with their …
Blockchain / Oct. 15, 2021
What are the top metaverse projects besides The Sandbox and Decentraland? | Watch The Market Report live
This week on “The Market Report,” we jump right into our main event. Join Cointelegraph analysts Benton Yaun, Jordan Finneseth, Sam Bourgi and Ornella Hernández as they debate each other on the top metaverse projects on the market. First up, we’ve got Bourgi’s pick of Wilder World, which allows you to interact with its immersive 3D world via nonfungible tokens (NFTs) and is also based on the massively popular Unreal Engine 5. Following Bourgi, we have The Market Report first-timer Hernández, who has decided to go with Boson Portal, which aims to revolutionize metaverse commerce. Will its high-profile partners such …
Decentralization / Feb. 15, 2022
Which tokens should you buy and hodl in 2022? | Find out now on The Market Report live
“The Market Report” with Cointelegraph is live right now. On this week’s show, Cointelegraph’s resident experts discuss which tokens you should buy and hodl in 2022. But first, market expert Marcel Pechman carefully examines the Bitcoin (BTC) and Ether (ETH) markets. Are the current market conditions bullish or bearish? What is the outlook for the next few months? Pechman is here to break it down. Next up, the main event. Join Cointelegraph analysts Benton Yaun, Jordan Finneseth and Sam Bourgi as they debate which tokens you should buy and hodl right now. Will it be Bourgi’s picks? He has selected …
Decentralization / March 15, 2022
Crypto and culture intersecting: Could ApeCoin be the go-to token of the Metaverse?
What is it with these sly, funny, but boring looking apes that continue to make headlines? Many collectors argue that it’s less about the image itself and more about the culture, social capital and wealth the community of owners have gained from Bored Ape Yacht Club (BAYC) that give the collection its value. Amassing over $1.42 billion in total volume, the community entrusted that the creators would deliver on its promise for token emission. On March 17, BAYCs utility and governance token, ApeCoin (APE) was made eligible to claim for BAYC and Mutant Ape Yacht Club (MAYC) holders. According to …
Decentralization / April 5, 2022