What are the best smart contract platforms in 2021 and do we really need anything besides Ethereum? Plenty of projects compete in the arena of smart contracts, yet rarely anyone claims victory. With the arrival of ETH2 and rising stars like Polkadot, understanding this special segment is now more important than ever.
Since its launch in 2015, Ethereum acts as the king of smart contracts. Although many competitors have attempted to become ‘Ethereum killers,’ none of them have bested Vitalik Buterin’s creation. Even the infamous NEO ecosystem, formerly known as Antshares, did not manage to establish a position as a prominent smart contracts hub, despite having the chance during the last bull run.
Thanks to the rise of the $40 billion worth decentralized finance (DeFi) market, smart contract platforms have an even bigger significance in 2021. The ICO gold rush of our time is here, and developers are pushing their respective ecosystems as the prime nest for dApps and other blockchain projects.
What are the best smart contract platforms of 2021, and is there anything that can challenge Vitalik Buterin and the crew, especially with the upcoming launch of a scalable Ethereum 2.0? Before finding out, let’s first quickly remind ourselves about the importance of smart contracts.
What are smart contracts?
Smart contracts are a revolutionary layer of blockchain technology that enables users to interact and perform transactions with each other through a ‘robotic intermediary.’ You can view a smart contract as a self-executable pile of code that can perform specific actions that usually need to be made manually.
Why are smart contracts so important? Because they provide the aspect of trustlessness that blockchains truly need. Can you really trust an anonymous individual to follow up with an online deal? Of course not. First-generation blockchains like Bitcoin have nothing akin to a smart contract that can replace the lack of trust.
Just imagine finding someone on the internet willing to buy your 2 BTC. He demands that you send your assets first before he wires fiat money to your bank account. This $100,000 transaction is supported solely by your trust in the other individual. There is no mechanism nor 3rd-party that can confirm that the person will wire the money once you make that transfer.
In that sense, smart contracts make a gigantic difference. But apart from providing trust, they are also capable of automatizing tasks and hosting decentralized applications (dApps). DeFi developers commonly use them to automatize flash loans, standard loans, staking, and other cool features.
Ethereum stands as the number one smart contract and dApp hub, with a market cap of almost $200 billion. Polkadot, EOS, Binance Smart Chain, Solana, and many others still compete for the throne, but none of them are capable of defeating the industry’s first mover.
The five best smart contract platforms
Now that we have reminded ourselves about the importance of this not-so-new technology, it is time to take a look at the best smart contract platforms and analyze how they are positioned against each other. If not replaced, will Ethereum at least encounter the possibility of having its throne shaken up?
Ethereum is a smart contract ecosystem created by Vitalik Buterin and four other co-founders in 2013. Headed by the Ethereum Foundation, the project launched as a decentralized solution two years later after a token sale that collected a grand total of $16 million.
At its current state, Ethereum is a Proof of Work blockchain network hosting the Ethereum Virtual Machine (EVM), a so-called Turing-complete system. It is famously regarded as being the world’s computer for its ability to simulate a nearly perfect machine. Developers create applications on the EMV via Solidity, an object-oriented programming language for writing smart contracts.
Today, Ethereum is a hotspot for DeFi applications and projects alike, similarly to how it harbored ICOs during the last bull run. New ecosystems seeking to take a piece of the DeFi cake have arrived, but not a single project has seriously destabilized Ethereum’s status.
At the time of writing, Ethereum 2.0 is live under Phase 0. Practically, it is a Proof-of-Stake network that introduced sharding and staking for the purpose of creating a more decentralized, scalable, and securer platform. The full version of this network is set to launch by the end of the year if the development goes smoothly.
Ethereum mainly owes its success to being a first mover in the smart contracts niche. With the help of a committed and development-oriented team of talented programmers, the project established itself as the best and perhaps only viable solution for smart contracts.
Polkadot is yet another smart contract ecosystem created by no other than one of Ethereum’s co-founders: Gavin Wood. After realizing that ETH is nowhere close to reaching its imagined state as a secure and scalable protocol, the ex-CTO decided to create a blockchain network of his own.
Currently the fifth largest crypto project by market cap, Polkadot is a blockchain network created by the Parity Technologies software development company. It is also supported by the Web3 Foundation, another team of like-minded individuals with the mission to create a decentralized web.
Polkadot is famous for its ability to host parachains on its blockchain network. This means that the platform can run multiple chains inside an existing blockchain, a feature that we know today as sharding. As previously mentioned, sharding scales blockchains in the sense that they can process more transactions than usually.
The flexibility of parachains helps Polkadot with integrating multiple features commonly found in other projects. For example, certain parachains are free to run ZK-snarks, UTXO transactions, smart contracts, and other decentralized technology.
Truth be told, Polkadot is too complex to overview in only a few paragraphs. Despite being relatively new, the smart contract ecosystem still managed to reach fifth place on crypto leaderboards in such a short time. Is it because of their governance model, staking capabilities, or sharding? No one really knows. However, it is evident that Polkadot is a strong candidate in this competitive niche.
Solana is a project created to solve the blockchain trilemma and bring scalability to smart contracts without damaging decentralization and security.
The platform can supposedly support a record-high of 65,000 transactions per second thanks to its unique Proof of History consensus mechanism. Since March last year, Solana processed more than $5.5 billion in transactions with the help of 330 global validators at fees more than a thousand times lower compared to Ethereum.
Solana was created in 2017 by former engineers from software giants such as Qualcomm, Intel, and Dropbox. It is even openly recommended by Sam Bankman-Fried, the CEO of FTX and Alameda Research.
Just like Polkadot, Solana is also unique for its staking, governance, and scalability aspects. Rather than parachains, in this case, Tower Byzantine Fault Tolerance and Proof of History are used to support the network.
Ranked 34th on the Coingecko leaderboard, Solana is not as nearly popular as Ethereum nor Polkadot. Nevertheless, it hosts a dApp ecosystem composed of many in-demand DeFi and CeFi products, such as Serum.
Another Solana’s quirk is that developers are not forced to learn an entirely new programming language since smart contracts are written with either C or rust.
Who could ever forget about EOS? Although infamous for being overly centralized, the blockchain network still to this day competes for the position of the number one smart contract ecosystem. Despite being far from dominating in this niche, EOS is still a notable option that any real crypto enthusiast should know about.
Similar to the previous contenders, EOS runs on its own consensus model called the Delegated Proof-of-Stake (DPoS). According to the team, their platform can process millions of transactions per second through the power of staking alone. Moreover, the system generates blocks faster and does it at cheaper fees.
EOS utilizes WebAssembly (WASM) as its virtual machine to execute smart contracts and C++ to write them. This makes it exceedingly easier for EOS to onboard new developers since they deal with a familiar software environment.
But then again, EOS does not have an esteemed reputation as a result of its centralized structure. Many fear that Chinese whales control the blockchain and that investors have no way of bringing back control over the network. The situation is so severe that a portion of the community called the EOS Tribe decided to leave the platform as a block producer.
Binance Smart Chain (BSC)
A decentralized smart contract ecosystem created by a centralized exchange? It may sound strange, but reality is always stranger than fiction.
Aiming to capture the decentralized DeFi market, CEO Changpeng Zhao announced the birth of the Binance Smart Chain as an alternative to Ethereum. It is a blockchain that runs in parallel with the original Binance Chain, with the noteworthy difference that BSC supports smart contracts and features compatibility with the EVM.
The blockchain network uses its own Proof of Staked Authority (PoSA) consensus model to process transactions and reward stakers. Blocks are generated every three seconds, and those who actively stake BNB can join as a network validator.
Because of the aforementioned compatibility, developers can easily port Ethereum dApps to BSC. There, tokens are issued under the BEP-20 format but are compatible with the previous BEP-2 and BEP-8 standards as well.
Since it is developed by the industry’s largest retail crypto exchange, it is no wonder that the Binance Smart Chain has a high position in the world of smart contracts. Developers have truly adopted the platform for the creation of DeFi platforms. The ecosystem’s largest project, PancakeSwap, even managed to outpace Uniswap in trading volume last week.
Same as the previous four, BSC features interoperability, low fees, and a high transaction throughput as well. The only difference is that the Binance Smart Chain is not that decentralized for a number of reasons, mainly due to the high concentration of BNB whales and a low number of validators.
There is an incredible demand for good smart contract ecosystems, mainly due to the fact that transactions are becoming more expensive by the day. Even Ethereum is privy to congestion, and everyone is aware of what an influence it has on the entire industry. Unless profound changes are made, investors will be forced to participate in a highly inefficient market. What is the purpose of disruptive and decentralized technology when fees cost more than hundreds of dollars?
In this article, we have taken a look at the best smart contract platforms of 2021. Many of them already claim to feature scalability, but truth be told, none of them had the chance to service a large number of users so far. Ethereum and Polkadot are the only serious players, and not much will change in the near future.
Unless another project beats Ethereum and replaces it within the span of a year, the new PoS network will cement itself as the dominant smart contract figure once and forever. There is nothing bad about that fact considering that many would rather entrust both the DeFi and standard crypto market to Vitalik Buterin and his crew, but it is sad to see that no team of developers managed to outpace the leading smart contract platform for the last six years.
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