- The delay of Ethereum's merge makes it a good time to look at alternatives.
- Avalanche, Polkadot, and Cosmos could all outperform Ethereum in the coming months.
Check out these smart contract cryptos.
The Ethereum (ETH) merge has been the talk of the crypto town recently. Ethereum struggles with network congestion and high gas fees, and is in the process of a major staged upgrade to address its issues.
The merge is an important step in the process. It will move the second-biggest cryptocurrency from a proof-of-work model to a proof-of-stake model. Proof-of-stake is a more sustainable method blockchains can use to validate transactions, but switching from one model to another is like attempting to change a car engine while speeding down the freeway.
However, in April, Ethereum announced another delay to the much-anticipated merge. It definitely won't happen in June as hoped. On the one hand, Ethereum can't afford to make mistakes so it's better to delay if there are issues. On the other, the longer it takes to complete the upgrade, the more market share it will lose to its faster, lower-cost competitors. Here are three that could beat it this spring.
1. Avalanche (AVAX)
Avalanche is the fourth-biggest blockchain in terms of total value locked (TVL) -- the amount of money on its platform. With almost $10 billion in assets, it still has a long way to go before it can touch market leader Ethereum's $110 billion. Nonetheless, TVL is an important metric by which to judge smart contract cryptos and Avalanche is holding its ground.
Avalanche boasts that it's "the fastest smart contracts platform in the blockchain industry, as measured by time-to-finality." Finality is the point at which a transaction can't be altered. It's a bit like the way a credit card payment takes a while to actually process after you've left the shop. Like many Ethereum alternatives, Avalanche recently announced a $290 million program to incentivize the development of projects on its system.
2. Polkadot (DOT)
Polkadot solves a key problem in the crypto industry: interoperability. Many blockchains can't talk to each other, making it hard to move assets from one to the other. For the crypto industry to thrive, it needs to find ways to address this -- otherwise it would be like having a bank account and only being able to transfer money to certain other banks.
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Polkadot uses something called parachains which connect into a base blockchain. Parachains operate as independent but interconnected blockchains. This year, several of its parachain projects such as Efinity (EFI), Clover Finance (CLV), and Moonbeam (GLMR) have started to gain traction.
3. Cosmos (ATOM)
Like Polkadot, Cosmos is another interoperability blockchain. It calls itself the "Internet of Blockchains," and uses blockchain zones rather than Polkadot's parachains that connect to a central hub.
In April, Ignite, the company behind Cosmos, announced a $150 million investment fund for multichain projects. The fund has several big name backers, and according to CoinDesk, it doesn't only focus on projects built using Cosmos. Nonetheless, attracting developers in all of these ecosystems and funds go a long way to stimulating growth.
Investors should be aware that it is early days for all these projects. Given how quickly blockchain technology is evolving, the future top dogs could be cryptocurrencies that aren't even on our radars yet. Plus, none of these projects are as road tested as Ethereum, so technical glitches and security issues may appear. As we've seen recently with Solana (SOL), outages can impact what seem like extremely promising projects.
Crypto prices are likely to continue to be choppy in the near term as economic and geopolitical issues feed uncertainty. Rather than looking for cryptos that might beat Ethereum this spring, look for projects you think can outperform in the coming five to 10 years or more. That long-term lens will give you a better chance of navigating these unstable times. If you decide to buy, all three cryptos are available from top crypto exchanges.
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We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
Emma Newbery owns Ethereum, Avalanche, Polkadot, and Solana. The Motley Fool owns shares of and recommends Bitcoin.
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