By just about any metric, Ethereum (CRYPTO:ETH) is the premier Layer 1 blockchain in the world. Whether it's non-fungible tokens (NFTs), decentralized applications, or blockchain gaming, Ethereum typically ranks No. 1. So it's perhaps no surprise that, over its lifetime, Ethereum has delivered a staggering return of 66,566.24% to investors.
But there are two under-the-radar cryptos that might have more future potential than Ethereum. One of these is Cardano (CRYPTO:ADA), a blockchain that has been around since 2017 but now seems to be on the cusp of reinventing itself. The other is Avalanche (CRYPTO:AVAX), a former market darling that is making an impressive comeback in 2023. Let's take a closer look at both.
1. Cardano
One major reason why Cardano has been under the radar for many investors is that it has never had the same type of head-spinning, stratospheric rally that other cryptos have had. Cardano, which currently trades for just $0.41, has never traded higher than $3.10. In comparison, Ethereum once traded as high as $4,891.70.
Image source: Getty Images.
But I think Cardano, already up more than 64% in 2023, could be on the cusp of a major breakout. The reason for this is Cardano's recent foray into the field of decentralized finance (DeFi), where it has historically been a non-player. Cardano only added smart contract functionality to its platform in late 2021, while Ethereum has had smart contracts since 2015. Without smart contracts, it's impossible to be a player in DeFi. As a result, Cardano has been ignored in this key sector of the blockchain industry for years.
But Cardano seems to be making DeFi a priority these days, and it's really paying off. In early 2022, the first decentralized exchanges appeared on the Cardano platform. And, in 2023, things have really taken off. In April, the key metric for measuring DeFi strength -- Total Value Locked (TVL) -- reached a 10-month high for Cardano. And Cardano has been generating buzz for a number of innovative DeFi projects, including the launch of its first stablecoin this year.
People once thought non-fungible tokens (NFTs) were going to be the path to success for Cardano, but I disagree with this. While Cardano now ranks as a top five player in the NFT space, it's unlikely Cardano can ever unseat Ethereum as the No. 1 player. But I think it's a different story for DeFi. This is an area where Cardano can win, especially if Ethereum can't figure out a way to keep its transaction fees (known as "gas fees") under control.
2. Avalanche
Next up is Avalanche, which is still tiny compared to Ethereum. While Avalanche has a market cap of $5.66 billion (good enough to rank in the Top 20 of all cryptos), it's nowhere close to Ethereum's market cap, which weighs in at a hefty $225.2 billion.
At one time, it looked like Avalanche was going to make a serious run at Ethereum simply due to its lightning-fast transactions, near-zero transaction fees, and impressive blockchain scalability. That's the big reason why some publications made Avalanche a media darling back during the last crypto bull market rally, even going so far as to tout Avalanche as a potential "Ethereum killer." But things never really materialized for Avalanche, and in 2022, the crypto was down more than 90%.
But things seem to be turning around for Avalanche in 2023. In January, Avalanche inked a partnership deal with Amazon Web Services (AWS), the cloud computing unit of Amazon (AMZN +0.26%), in order to provide blockchain infrastructure services to AWS customers. The focus, according to Avalanche, was going to be on large enterprise and government customers who would be able to leverage Avalanche's blockchain infrastructure.
While Avalanche is currently listed as a service provider within the Amazon Web Services marketplace, there have not yet been any big client wins announced yet. Imagine, though, if an S&P 500 company were to announce a blockchain infrastructure deal with Avalanche -- that would be huge for Avalanche's future growth prospects. If there's one place where Avalanche can take on Ethereum and win, it's in the enterprise space, due to this Amazon relationship.
Can these cryptos really challenge Ethereum?
Both Cardano and Avalanche have enormous untapped potential. But the window of opportunity for both is closing quickly, simply because Ethereum shows no signs of slowing down. Ethereum is a market behemoth with a huge built-in first-mover advantage in many areas.
So the path to success for Cardano and Avalanche will not be easy. But if Cardano can execute on its DeFi strategy, and if Avalanche can leverage its Amazon Web Services partnership, it might just be possible. I'm bullish on both Cardano and Avalanche long-term.
