In 2013, Ethereum (ETH -0.08%) became the first programmable blockchain. Whereas preceding blockchains served solely as digital ledgers for transaction data, Ethereum could also support self-executing computer programs known as smart contracts. That technology has since evolved into a vibrant ecosystem of decentralized applications (dApps) and decentralized finance (DeFi) products.

Today, Ethereum is a thriving ecosystem of software and services, but that popularity has exposed its lack of scalability. As more people have flooded the network with transactions, the resulting congestion has caused fees to spike. Of course, the developer community has a solution in the works, but it won't launch until 2023. In the meantime, rivals like Fantom (FTM 0.54%) and Solana (SOL 0.73%) have a chance to gain ground.

Here's what you should know.

Investor studying price charts at his desk.

Image source: Getty Images.

1. Fantom

The Fantom blockchain went live in December 2019. Its core innovation is the Lachesis protocol, a proof of stake (PoS) consensus mechanism that accelerates throughput to thousands of transactions per second. Fantom can also finalize transactions in one or two seconds, and those transactions cost a fraction of a cent. By comparison, Ethereum handles about 14 transactions per second, and the average fee is more than $13.

Better yet, Fantom is actually compatible with Solidity, the programming language used to build smart contracts on Ethereum. That means developers can easily deploy Ethereum-based software and services on the Fantom blockchain, boosting performance and lowering costs. For instance, Ethereum-based yield aggregator went live on Fantom last October, joining its rapidly growing network of DeFi services. In fact, Fantom currently ranks as the sixth-most-popular DeFi ecosystem, with nearly $6 billion invested on the platform.

In the coming years, Fantom's value proposition -- transactions that are fast and cheap, and compatibility with Solidity -- make it an excellent candidate to disrupt Ethereum. What does that mean for investors? Fantom currently has a market cap of just $3 billion. That's less than 1% of Ethereum's $365 billion market cap. But if the adoption of Fantom-powered software and services continues to rise, demand for the cryptocurrency (the FTM coin) will rise as well, pushing its price higher. And if its market cap were to hit $365 billion, investors would see 120-fold returns based on its current price.

2. Solana

Solana brands itself as the world's most-performant blockchain. Its unique PoS consensus mechanism accelerates throughput by time-stamping incoming transactions, creating a verifiable order of events that can quickly be confirmed by validators. Solana can process 50,000 transactions per second, and it can finalize those transactions in about 13 seconds. Thanks to that scalability, transactions cost a fraction of a cent.

Solana went live in February 2020, shortly after Fantom, but it has generated even more buzz among developers and DeFi investors. Over 1,500 projects are live on the blockchain, including the popular non-fungible token marketplace Magic Eden and disruptive payment protocol Solana Pay, which eliminates bank and card fees by allowing consumers to transact directly with merchants. Collectively, Solana ranks as the fifth-most-popular DeFi ecosystem, with $6.5 billion invested on the platform.

Unlike Fantom, Solana is not compatible with Solidity, but its ecosystem of decentralized software and services has still grown more quickly. Assuming the adoption of dApps and DeFi products on the blockchain continues, demand for the native cryptocurrency (the SOL coin) should increase, driving its price higher. And if Solana -- currently valued at $34 billion -- were to achieve a market cap of $365 billion (i.e., Ethereum's current market cap), investors would see 10-fold returns.

The fine print

I think Fantom and Solana could be rewarding long-term investments, whether or not they surpass Ethereum in terms of price and popularity. However, the blockchain industry is incredibly competitive, and the crypto market is known for its volatility. For that reason, I think investors should follow these simple rules: Build a diversified portfolio -- a combination of stocks and cryptocurrency is a great way to go. And never invest money you might need in the next three years.