Ever since its launch, Ethereum was considered the second most important crypto project, right after Bitcoin. However, while Bitcoin-focused on being an actual currency, Ethereum shifted the attention towards the cryptocurrency’s underlying technology, the blockchain.
This led to an evolution of blockchain technology, with Ethereum spearheading a new trend of smart contract and dApp development. It has been nearly four years since then, and Ethereum now finds itself at the brink of losing its share of the market. While its move towards dApp development was quite revolutionary at the time, the ETH also inspired many other projects to go down the same path. However, these projects are seemingly managed to outperform it, according to recent data.
— Justin Sun (@justinsuntron) April 1, 2019
Projects such as TRON, EOS, and others who are also dedicated to dApp development seem to be attracting both, dApp developers and users. The reason is simple — until recently, Ethereum was the only option for both of these groups. However, in the last six to nine months, this has changed, and the change has severely damaged Ethereum’s position.
Ethereum suffers due to migration to other networks
dApp developers and users are shifting to other networks, which has brought quite a change on Ethereum’s performance in recent months. Not only did this changed the demand for Ether, Ethereum’s native cryptocurrency, but there are also no more ICOs which would sell coins developed on the ETH network.
Even within the gaming community, gamers do not have to depend on ETH to buy in-game goods. In other words, owning Ether today seems more like an option than a necessity, which might have massive negative consequences on the coin’s price.
In fact, according to recent statistics from DappRadar, only around 28% of total dApp users seem to be on Ethereum network, which is a massive decline from the 100% of them, which Ethereum served a year earlier. Ethereum is still in the lead in terms of new dApp releases, with around 40% of new dApps being launched within its network. Meanwhile, TRON and EOS featured only around 30% each.
Why are dApp users and developers leaving Ethereum?
According to DappRadar’s COO, Patrick Barile, the reason for migration towards EOS and TRON, and away from Ethereum is no secret. The new projects feature much better speeds and a higher number of TPS. Meanwhile, the transaction fees are significantly lower than on Ethereum, almost to the point on non-existence. This is a perfect environment for dApp users, where nearly every move they make needs to be based on making transactions.
Meanwhile, in terms of speed, Ethereum’s average confirmation time is around 13 seconds, although it is often longer. Other networks can do the same in less than a second, which provides a much smoother user experience.
Ethereum’s Vitalik Buterin commented on the migration, seemingly not worried about it. He acknowledged that Ethereum lost lead to an extent. However, he also stated that it was unavoidable and inevitable and that Ethereum’s main focus still remains on smart contracts.
Meanwhile, issues like slow speeds and high cost are also the reason why new tokens are being issued on other networks as well, with Stellar taking the lead in this area. Stellar is also among the fastest and cheapest projects on the market, and many new companies see that as traits of a better, superior project.
Additionally, Ethereum has yet to see what is likely to become its biggest rival, once the world’s largest exchange by trading volume, Binance, launches its own blockchain within a few months. The exchange’s CEO, Changpeng Zhao, recently stated that this would be the year when the exchange will focus on driving adoption.
Is this the end for Ethereum?
With everything going on, it would be easy to write off Ethereum, as the competition seems quite strong at the moment. However, the project is not out of the race just yet, as a large number of token offerings still remain on ETH, as they believe that this is the place for raising funds. Also, Ethereum is known for its vibrant community, which is known for building and supporting the cause, regardless of what outside influences might do.
Meanwhile, Ethereum developers are also working hard to improve the network’s speeds, with plans to improve scaling, speeds, and potentially more in months to come.