Portfolio diversification: Ethereum killers

By SirGerardThe1st | Tokenomics | 22 Jan 2025


The term “positioning” is a pillar of the marketing universe. It means, in essence, “getting there first.” The first to reach the top of the mountain is the king, and dethroning him is practically impossible. Getting there first means having some attribute that can be indisputably assigned to it and that a competing product does not have. Even though very few products in the entire consumer world are correctly “positioned,” there are emblematic cases such as the “Volvo” automobile brand. If you ask any person in any country, for example, a 35-year-old man in Myanmar, what comes to mind when you say “Volvo,” he will surely say “Safety.” Volvo is not the prettiest, nor the most technical, nor the best-selling, it is simply the “safest,” thanks to the fact that it was the first to achieve this positioning.

Marketing teaches that “unpositioned” products are harder to sell than those that have an undisputed positioning. In the case of the crypto ecosystem, Bitcoin took over the concept of “digital gold”, and no matter how much effort is made from now on and in future generations of the next centuries, it will never be able to dethrone it in the minds of users. Try it if you dare. Some marketers will tell me that the true positioning of Bitcoin is precisely having been the first cryptocurrency. Being the first means the positioning par excellence. But I still believe that “digital gold” is much stronger. Nobody buys Bitcoin to trade. They buy it because it is a guarantee of digital gold with many advantages over physical gold. It is a guarantee of value reserve. And of course, nobody buys Bitcoin because it is the first cryptocurrency that appeared on the market. There is not and will not be any other cryptocurrency that can ever, in all eternity, be positioned as “digital gold”.

Marketing techniques consider in many cases, positioning one product with reference to another. Many gurus recommend this, because they say that the user must have a reference when buying. In the case of ETH, it has undoubtedly taken over the concept of “I am second,” and that is its positioning. Although BTC and ETH have very different conceptualizations, in the minds of users they are both cryptocurrencies, and that makes them equal. But no one doubts that BTC is number one and ETH is number two.

Therefore, neither of these two cryptocurrencies can be missing from any hodler's portfolio. If BTC is the gold to save, ETH is the cash needed to go to the supermarket.

But ETH faces a big problem. The exponential growth of the crypto ecosystem, especially DeFi and dApps in general, has exposed the limitations of blockchain infrastructures, unable to meet the growing demand. So, the second largest cryptocurrency by market capitalization has all the tools to lead the crypto sector, but its growth has not been as explosive as many expected.

Probably the biggest problem facing Ethereum is the cost of transactions. Although second layer solutions such as Optimism and Arbitrum seek to solve this problem, the system is still expensive for everyday use.

ETH's transition to Proof of Stake with “The Merge” promised greater efficiency and scalability, but the tangible benefits for ordinary users are still unclear today. The “gas fees” for operating on ETH are still insane.

Then there are the layer one competitors, which some call “Ethereum killers”. I don't know if they are going to kill ETH, but they are going to take a good number of users away from it, I would say that's for sure.

It just so happens that Bitcoin's narrative is extremely simple, while Ethereum's is extremely diffuse. For example, the discourse of Solana and Avalanche is simpler and more direct. Ethereum continues to appear as if it is in eternal development. And, the worst thing from a marketing point of view, is that it continues trying to position itself as the “total” currency, the one that “covers everything”, from smart contracts, to the basis of decentralized finance, to the home of NFTs and to an ecosystem for decentralized applications. That is the worst thing that exists for a CMO. Wanting to be everything to everyone results in ending up being nothing to no one. Some say that this diversity is a strength, but a strength that is very difficult to explain to Mrs. Jones.

On top of that, Ethereum is constantly changing. From its move from PoW to PoS, raising a lot of doubts about decentralization, to the famous “Sharding” which is a mathematical problem that confuses non-technical investors, who see it as a project that is not finished, generating doubts about its long-term stability.

These are the “Ethereum killer” projects that I am incorporating into my portfolio.

Disclaimer. I am not a Financial Advisor nor intend to Be. Therefore, nothing I say must be interpreted as an advice for investment. All I write is just for information and as a result of my research of the projects I mention, but in no way can it replace the research of each reader.

 

SOL

https://solana.com/

Solana (SOL) was created by Solana Labs in San Francisco in 2017 by Anatoly Yakovenko, who along with several other team members worked for many years at Qualcomm, a company that provides semiconductors, software, and wireless technology services for mobile devices. Qualcomm is based in San Diego, south of Solana Beach in California, which inspired the name of the project.

Yakovenko had the idea to improve the efficiency of the blockchain with Proof of History. Solana published its White Paper and internal test in February 2018, while the Solana mainnet and its SOL token were launched in 2020.

Time is something we all take for granted. But most blockchains make no reference to time when recording transactions. The issue of time is one of the most difficult problems to solve in distributed systems, as nodes cannot rely on an external source for time. Yakovenko realized that no one was effectively recording time, decided to introduce the first clock to the blockchain, and things started to work more efficiently. PoH is a tool that is attached to PoS, which is Solana's consensus protocol. The concept of Proof of History (PoH) involves proving that a message occurred before or after a known event, rather than relying on a timestamp. This is similar to a photo of a hostage with the latest edition of the newspaper proving that the hostage was alive at the time that newspaper was published.

Solana is one of the great promises of the crypto ecosystem, in my opinion, the “most dangerous” for Ethereum of the Ethereum killers. Just look at its spectacular growth these days.

 

SOL Positioning: Proof of History

SOL Tokenomics

SOL White Paper

 

AVAX

https://www.avalabs.org/

Avalanche (AVAX) was launched in 2020, and it was the first to talk about the environment care, even though this meant nothing to anyone. With Avalanche, users can create an unlimited number of custom, interoperable blockchains. An avalanche of blockchains.

Avalanche founders Kevin Sekniqi, Maofan Yin, and Emin Gün Sirer came up with a brilliant solution of three separate blockchains to address the main problems that plague a blockchain, the famous trilemma: decentralization, security, and scalability. Avalanche claims to be the fastest smart contract platform in the industry.

The three blockchains that make up the system are:

X-Chain, which is used for asset management with the Avalanche consensus protocol.

C-Chain, which is used to create smart contracts, with the Snowman consensus.

P-Chain, which is used to coordinate validators, with the Snowman consensus.

Avalanche's consensus protocol randomly checks validator transaction confirmations, causing all nodes to work in parallel. The idea is that doing random checks increases the probability that a transaction is valid.

 

AVAX Positioning: Three Blockchains

AVAX Tokenomics

AVAX White Paper

 

ADA

https://cardano.org/

Cardano is a project launched by Charles Hoskinson and IOHK, a company of which he is also founder and CEO. The project was launched in 2017, after several years of work in which the former Ethereum programmer had the collaboration of professionals from sectors such as finance, technology and engineering.

Hoskinson is closely linked to Ethereum, as he is one of the co-founders along with Vitalik Buterin. The disagreement between the two on how the project should evolve gave rise to Cardano.

I have an emotional connection with Cardano (ADA), because it is the surname of my paternal grandmother, an Italian immigrant who arrived in Argentina at the beginning of the 20th century, like so many others. Her name was María Cristina Cardano and, although there were about 500 years between Girolamo Cardano, the first cryptographer in history who inspired Hoskinson to name his project, and the birth of my grandmother, there must surely be some connection in the family tree.

I was very enthusiastic about Cardano and its ADA token for a long time, but, as time went by, I became a little discouraged, because, like Ethereum, it seems to be in “eternal development”. The explanation I always receive is that it is a “very scientific” project and that it needs a lot of scientific refutation. That is very laudable, but what scientific refutation does Bitcoin need to be the undisputed number one?

Cardano was one of the first to use the PoS consensus protocol, developing the Ouroboros protocol, which is based on proof-based methods from a team of computer scientists and cryptographers from the University of Edinburgh, the University of Tokyo, and other institutions. The protocol allows the Cardano blockchain to scale sustainably without compromising security or energy efficiency. Cardano introduced support for smart contracts in 2021, four years after its launch. This has led observers to point out that the project has been overtaken by newer blockchain projects that have developed more quickly.

Hoskinson is known for being a multi-faceted professional who is leaving an indelible mark on the cryptocurrency space. He could be defined as a sort of programmer with an inordinate passion for mathematics, cryptography, and chess. In fact, the very name of the network and its native token refer to two mathematicians: Girolamo Cardano and Ada Lovelace.

Cardano meant a paradigm shift for many communities, including Ethereum, which ended up adopting PoS for its advantages in terms of energy efficiency, transaction speed, and adaptability. But…

 

ADA Positioning: The Mad Scientist

ADA Tokenomics

ADA White Paper

 

SUI

https://sui.io/

SUI Network (SUI) is a layer-1 blockchain for smart contract processing, employing a unique transaction processing mechanism that allows for parallel processing and horizontal scalability. Instead of processing transactions sequentially, SUI prioritizes processing relevant data, resulting in faster transaction speeds. It also uses a powerful programming language derived from Rust, called Move, which is a major competitor to Ethereum's Solidity language.

SUI was created by a team of former Meta engineers, including Evan Cheng, Adeniyi Abiodum, and others, who founded Mystem Labs to launch the project. They launched a successful testnet in 2022 and the mainnet in May 2023. Meta's Diem (Libra) project was a failed project and these brains went on to found SUI and also APTOS.

Move is a direct competitor to Solidity. Move allows you to design a structure where smart contracts are associated with programmable objects. A smart contract on the SUI network is an object. Thanks to parallel operations, SUI can process up to 120 thousand transactions per second, compared to the 15 transactions per second that Ethereum can process.

 

SUI's positioning: It does not have a defined positioning yet

SUI Tokenomics

SUI White Paper

 

SEI

https://www.sei.io/

SEI (SEI) is the first parallelized EVM, allowing it to take the best of Solana and Ethereum by becoming a hyper-optimized benefit layer that leverages the operations and collective consciousness of the EVM. Thanks to its advanced technological features, such as Twin Turbo consensus, optimistic parallelization, and EVM interoperability, it offers a fast, secure, and scalable platform. The SEI token came to market in the first half of 2023. In the middle of that same year, it is launched as a Layer 1 blockchain, by Sei Labs, testing the first parallel EVM blockchain. The development team initially planned to run it as a scalability solution on Ethereum. However, due to Ethereum's performance, they focused on the Cosmos SDK and Tendermint Core mechanisms to launch as a Layer 1 protocol.

The visible faces of the SEI blockchain are Jeffrey Feng, Dan Edlebeck, and Jayendra Jog. The vision of these brains was focused on solving the problems of DEXs. General-purpose Layer 1 blockchains were not suitable for DEX platforms to thrive. It was impossible to build a fast-paced order book model engine on a general-purpose blockchain due to high network congestion from the competing needs of dApps. A large portion of general-purpose blockchains are limited in throughput, making it impossible for DEX platforms to compete with their centralized counterparts.

SEI aims to solve these problems. Traditional DEX platforms are often faced with two choices. They either validate transactions off-chain and risk security, or they dump transactions on the layer-1 protocol, causing overhead. SEI solves this conundrum by adding orders to the end of each block and jointly validating them, thereby preventing full node operators from getting ahead of them. This process is called parallelization.

SEI is built on Cosmos. This blockchain was specifically designed to transform digital asset trading into a decentralized exchange (DEX) ecosystem, and is known as the “decentralized NASDAQ” of the crypto world due to its focus on efficient and secure trading. By offering interoperability in the EVM environment, Ethereum developers can deploy their applications on SEI without modification.

The big promise of SEI is to enable interoperability across the EVM stack at high speeds and at low cost, allowing a lot of work already done by Ethereum to be incorporated into a decentralized environment (DEX), which allows it to get rid of the CEX scheme.

 

SEI Positioning: It does not yet have a defined positioning

SEI Tokenomics

SEI White Paper

 

APT

https://aptosfoundation.org/

Aptos (APT) is a layer 1 blockchain created by Avery Ching and Mo Shaikh in 2022, also members of the failed Meta experiment called Libra or Diem. It uses its own consensus mechanism called AptosBFT created with the Move smart contract programming language.

Aptos works exactly the same as SUI. It seems that the former members of Meta did not agree among themselves and founded two companies that are the same. Probably the only difference is the origin of the funds they received, even though, in both cases, the money comes from heavyweights. In any case, I do not think there is room for both, since both are enrolled in the armies of the "Ethereum killers." The countrymen are saying that SUI is a competitor of Ethereum and that APT is a competitor of Solana. But this seems more like a negotiation between politicians in a parliament to reach an agreement and share positions, than anything else. That is to say, SUI has a problem, or rather, APT has a problem, and that is that they are very similar. Since the technological proposal seems very promising, for the moment, it would seem logical to allocate some capital in each one until we see what happens. After all, they are both very new, and, in this business, the test of time seems to become more important every day.

 

APT positioning: it does not yet have a defined position

APT Tokenomics

APT White Paper

 

 

Conclusion

You cannot not have ETH in your portfolio.

But, contrary to what happens with BTC, which has no and will never have any competitors, in the case of ETH I am not calm, always speaking of the medium and long term. That is why I think the analysis of the so-called “Ethereum killers” is very logical.

SOL and AVAX seem to me to be far ahead. On the other hand, I would like to be more enthusiastic about ADA, as I was two or three years ago.

SEI, SUI and APT will have to prove that they work well when they are in high demand and that they can deserve the “Ethereum killer” badge. They are still very young and father ETH continues to show enviable robustness. The big challenge for these three coins is the DEX ecosystem. That is where they can shine, because ETH is not showing us a clear idea that one day it will not vilely punish us with insane gas fees.

 

I leave you a Crypto Bubbles chart that shows the current situation.

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Thank you for visiting!

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SirGerardThe1st
SirGerardThe1st

Franchise & Brands veteran. Experienced business owner. I began with Bitcoin in 2011. I am maximalist of nothing. Ok, frankly speaking, I am maximalist of decentralization.


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