I have seen several posts shitting on Ethereum, BSC, Solana in their own ways and for very good reasons.
What do these top 3 smart contract platforms have in common and which does not deserve the place they currently occupy in the market?
That's what I'm going to discuss in this post, and I will be comparing them based on the following factors:
Tokenomics
Validators
Team
Network effect
Efficiency
TOKENOMICS
Ethereum tokenomics
One major thing people complain about all 3 chains is the "centralized" nature of their tokenomics.
In 2014 the Ethereum team sold about 60 million ETHs in their ICO worth $16 million. 76.5% of the money (BTC) raised went to the developers, 13.5% went to communications and community outreach, and 10% went to research.
5.9 million ETH was created (premined) to compensate 83 early contributors to the project, with Vitalik receiving the largest share of at about 553,000 ETH. Another 5.9 million ETH was issued to the Ethereum Foundation. Making a total of 11.8 million ETH premined for the "team".
From there on, miners were responsible for the issuance or creation of new ETH, and there's no limit to the number of ETH that can be created. But with transaction fee burning introduced in mid-2021, the coin is now nearly deflationary.
BNB tokenomics
There is a maximum of 200 million BNB that will ever exist to be reduced to 100, million through the quarterly burn by Binance.
BNB was 100% created (premined) by Binance and launched via ICO in mid-2017 where 50% of the supply (100 million) was sold. Leaving 100 million BNB with Binance.
A new upgrade to the BSC network coming by November 30 will introduce transaction fee burning, thus further reducing BNB in circulation.
Solana tokenomics
Like Ethereum, Solana has an uncapped supply with 8% inflation (via staking rewards) which will gradually reduce to 1.5% over time.
A little over 60% of the SOL supply is in the hands of the VCs, foundation, founders, and team. This is why many consider Solana to be too centralized as a few rich early investors hold a very significant amount of the coins.
As you will notice, Solana's token distribution is more centralized, given that these VCs and insiders are also staking to earn even a greater share of the staking rewards, followed by BSC, and then Ethereum.
However, over time, the supply distribution will even out as early investors sell portions or all of the stacks to the public. Hopefully, there would be enough demand to soak up the selling pressure when it starts to avoid a price dump, especially for SOL.
In terms of tokenomics (fair launch, the only crypto project with a "righteous", non-centralized tokenomics is Bitcoin. Every other chain started by giving its founders and insiders a huge advantage.)
- VALIDATORS
Validators on Ethereum
The decentralization of a project is mostly determined by how many validators are securing the network.
Ethereum currently has over 2700 nodes according to ethernodes.org on the current Proof of Work (PoW) blockchain and 260,165 (and counting) validators on the Proof of Stake (PoS) blockchain.
Note that the over 260,000 validators on Ethereum are not necessarily unique individuals. You need 32 ETH for a single validator node on Ethereum. There are whales, staking pools, exchanges, etc controlling hundreds and thousands of nodes. So in reality, there are probably far lesser than 260,000 validators on Ethereum but that's the number we'll work with.
Validators on BSC
Binance Smart Chain has about 100 hundred or a little more groups of validators out of which only 25 are randomly selected to participate in consensus every 24 hours.
So, whereas there are probably hundreds of validators on BSC, only 25 of them are active every 24 hours.
Validators on Solana
Solana currently has exactly 1,209 validators securing the network by processing transactions and participating in consensus.
So in terms of decentralization (by validator count, Ethereum is more decentralized, followed by Solana, and then BSC.)
- TEAM
The three chains have some of the best teams in the crypto and blockchain space working on them. Their respective teams are competent, experienced, and undoubtedly committed to the project.
Developers-wise, Ethereum, with approximately 2,300 average monthly developers, has the highest number of developers contributing to its code. According to GitHub data, there are a total of 139 contributors to BSC code, and 81 contributors to Solana.
Unlike Ethereum, the development and funding of Solana and BSC are closely organized and controlled by the Solana Foundation and Binance respectively. Whereas Ethereum Foundation has a much more loose and limited 'control' over Ethereum development and funding.
In that regard, again, Ethereum is more decentralized than the two challengers.
- NETWORK EFFECT
The network effect simply refers to how much a project has developed its ecosystem mostly in terms of a number of dApps, users, transactions, and liquidity (TVL).
According to DappRadar, there are currently 8,163 dApps across all chains. Of these, 2872 are on Ethereum, 2027 on BSC, and Solana 500.
Whereas the Ethereum chain has been on the lead in terms of dApps for a long time now, other projects are quickly catching up as developers are porting their dApps to chains with lower fees and faster transactions to capture more users.
Furthermore, according to BSCScan BSC is doing over 14 million transactions daily, compared to 1,716,600 for Ethereum and over 200,000,000 for Solana. However, Solana transactions count is kinda controversial, but that's the stat.
Though Ethereum has a much more developed ecosystem, other chains are catching up very fast in terms of the number of dApps, users, and developer activities.
- EFFICIENCY
This is where both BSC and Solana trumps Ethereum.
The average cost per transaction on Solana is $0.00025 with a 400 milliseconds block time.
The average cost per transaction on BSC is $0.1 with a 3 seconds block time
The average cost per transaction on Ethereum is $6 to $75 depending on several factors such as the platform you're using, network congestion, the type of transaction, etc, with a block time of 15 seconds.
Solana is significantly faster and cheaper than both BSC and Ethereum for transactions, and this is more efficient for your DeFi operations.
However, it's more expensive to run a profitable validator node on Solana than on BSC and Ethereum both in terms of hardware and staking requirements.
This is one of the reasons many consider Solana to be centralized as only the "rich" can afford to run nodes. At the same time, Solana supporters will remind you that only the rich can transact on Ethereum due to the exorbitant gas fees.
So depending on which aspect of the efficiency of the chain you choose to look at, each of them have their priorities.
Conclusion
So back to our original question, which of these 3 chains does not deserve to be in the top 5 cryptocurrencies by marketcap?
To me, they all have duly earned their position in the market. And what one lacks, another makes up for it. Thus for the first time, users have good options to choose from based on their unique situation and what's important to them.
Now, over to you, which of the three chains does not deserve the position that they currently occupy in the market and why?