• The future of blockchain technology isn’t a winner-take-all world
  • DeFi’s popularity has been a major value creator for Ethereum and other blockchains, but competitors are on the horizon

When Ethereum DeFi exploded over the past year, various blockchains like Solana and Arcana went live for developers to build upon and the public to start using. Now Ethereum has actual contenders that might work better and users are assessing these alternative platforms.

Indeed, the future of blockchain technology isn’t a winner-take-all world, according to two digital asset investors that were panelists on a recent Blockworks webinar.

“We see it more like the way that social media platforms have proliferated, where you have a ‘winner take most’ like Facebook,” said John Wu, president of Ava Labs, the company behind the Avalanche Blockchain. He added that Clubhouse and Tiktok are both good examples.

“But then you have vertical specialists and alternatives that are not taking a share, but instead creating alternative products and a lot of nice business,” he added.

Bridging blockchain platforms

Avalanche describes itself as a platform that bridges all blockchain platforms together into one interoperable ecosystem. Wu said that Avalanche isn’t a competitor to Ethereum; it’s Ethereum-compatible. For example, a user can take assets back-and-forth between Avalanche and Ethereum to do public betas with technology on a lower-cost blockchain before scaling up and rolling it out to the masses via Ethereum.  

“A lot of these next-generation smart contract platforms should start viewing these things in that matter,” he said. “We should be working at creating interoperability, creating efficiencies, and allowing us to take some of the developers from these other places and growing that market.”

The importance of the devs metric

Despite competitors, today there is no obvious replacement for Ethereum because there’s simply not the developer community around other platforms — and even Ethereum’s developer base is quite small, according to Pantera Capital’s Paul Veradittakit, who was also on the webinar.

“There’s only about 2,500 developers on Ethereum right now. It’s still very early growth here,” he said, adding, “I see Polkadot starting to make some room. I think they have 400 developers.”

Wu added that the number of developers “drop off” substantially after Solana, which has also been dubbed an ‘Ethereum Killer’

“The number of devs is the most important metric to pay attention to,” he said.

But Wu also points out that the “universe” of Solidity developers — those that can code in the language of smart contracts, a hybrid of C++, Python and JavaScript — hits 200,000.

Looking into the decentralized future

As digital assets hit their stride as an institutional-grade asset, one can’t help but think as to what the next three to five years hold for the technology that makes it all possible.

“I don’t see it too different from now. I see it as Ethereum as the leader, and Polkadot and Avalanche right behind. I do feel like there are going to be a few winners. Not a winner takes all, but a winner takes most — with some other platforms standing out for different reasons,” Veradittakit said. 

The rise of the vertically focused blockchains

Veradittakit also explained that he thinks there will be more vertically focused blockchains out there for specific use cases such as gaming, healthcare and supply chains with the key differentiator being business development and tooling. There will be a few that stand out, specifically for their tooling that allows interoperability. 

While Wu agreed with Veradittakit’s main premise about a polychain future, he did caution that the emergent technology of DeFi does hold some parallels to the 2008 financial crisis.

Using liquidity provider tokens as collateral in yield farming isn’t a lot different than securitizing a tranche of mortgages and creating a collateralized debt obligation, he said, adding that there are more projects driving the line further to under collateralization.

Learn more about the smart contract platforms challenging Ethereum: listen to a replay of our recent webinar on the topic.

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    Sam Reynolds is a Taipei-based reporter, covering digital assets and regulation throughout Asia. Before joining Blockworks he was an editor at Forkast News and an analyst with IDC.