Take a look at the top ten cryptos.
Nearly all these are what's
known as general-purpose blockchains.
These are projects where other projects
can be built on top.
This is important.
Buying Ethereum is kind of like
buying a share of the internet.
Buying a project built on Ethereum is
like buying Facebook built on the internet,
but isn't the internet itself.
This is exciting because buying Ethereum is like buying
a small stake in hundreds of different businesses.
But there's a problem. In crypto,
there are competing internets.
Most of these top ten cryptos are trying to be the
number one platform that all other platforms are built on.
They're attempting to take the crown from
this guy, and this could happen.
Competitors are already faster and cheaper.
However, they don't quite have the same name
recognition, but with how fast things are changing
in crypto, there could be a completely new
king in a short period of time.
So I set out on a mission.
What does the data say as to who may be
the most likely winner in the general purpose race?
Because the winner here will see
far more rewards than anyone else.
And so it began, painstakingly pulling all the
data possible from Ethereum, BNB, ADA, Solana, and
Avalanche in order to build this report and
uncover hints into the future of crypto.
Before we get into the surprising results, I
need to do a quick portfolio update.
The markets have been playing nice recently, and
my one year chart says the same.
So if you'd like access to all my
buy alerts, daily coaching, research reports, and much, much more,
make sure you grab a spot to my Patreon.
Linked in the description below.
Here are some of the metrics I
looked at, starting out with the basics.
Market cap and past growth rate.
Ethereum by far has the largest market cap and more
than four times its closest competitor.
In terms of growth.
Solana takes the cake, increasing by more
than 700% in the last twelve months.
The runner up for growth is Avalanche.
As we can see, Avalanche in red saw a large surge
at the end of 2021, and this was largely due to
the popularity of DAOs in the end of the year.
It was at this point that people became aware
of the extremely low fees and usability of Avalanche.
Solana, of course, saw a similar explosion in
price earlier in the year when they came
under the scene with their proof-of-stake
system that could rival even Ethereum.
Of course, not without some drama along the way.
Looking at this chart, it's pretty telling.
We should be wary of massive price action because things
tend to settle in the long run, so it's always
useful to have some strategy in your back pocket.
Something like if this project doubles in price, I
will sell 25% to 50% so I don't miss
out if prices do come back down to Earth.
I also want to point out that Terra would be high
on the list for twelve month price increases as well.
But we ended up not including them in this
report because it was impossible to find the sufficient
data we needed for the whole report.
And then we have fees.
I think we can all guess who's in last place here.
Really, I don't even think we would be
having this conversation if Ethereum's fees were reasonable.
If they were low, no one
could compete with Ethereum, period.
It would be impossible.
He would forever be king.
We can see Solana has the lowest fees by
far at a fraction of a cent on average.
This is partially due to how transactions work
on their system, which I'll discuss more in
depth in just a little bit.
But then we have Cardano, Avalanche and
Binance who all have similar fee structures
of between $0.30 and $0.60 per transaction.
I feel this should probably be lower in the
long run as to not hurt users who have
less money, but it isn't an outrageous amount either.
And then we have Ethereum, with an average
fee of nearly $30 in the last month.
And if you've used Ethereum, you know
that this is often much higher.
In fact, I currently have a small position of this little
ERC-20 token that's worth about like $300, and in order
to sell it I have to pay $120 in fees.
Absolutely ridiculous.
Something else important to note is all the
projects here except Ethereum are proof-of-stake.
And this matters because it's much easier to
lower fees on a proof-of-stake network.
So take Cardano, for example.
Once Cardano upgrades to the Voltaire era, users will be
able to simply vote to lower transaction fees if they
think that fees are too expensive on Cardano.
This isn't exactly the case for proof-of-work
like Ethereum, where miners need to be paid for
the resources that they're using to process transactions.
But fees don't matter if there are no users.
So how do these networks compare in
terms of actual wallets using the blockchain?
So here I put together a chart of the
active accounts over the last twelve months for each
blockchain, and the results are pretty telling.
The light blue color is Ethereum.
Here we can see active daily wallets are fairly
flat through the whole year, which is a little
bit strange given that crypto in general is much
more popular now than it was a year ago.
But then I sat there and I thought about it
and I thought when do you actually use Ethereum?
For me it's only when I absolutely have to.
So basically if I can't do whatever I'm trying
to do on Binance, I end up using Ethereum.
So I think as the options have
grown in crypto, people are beginning to
explore non-Ethereum options more and more.
So Binance in yellow on this chart has
seen very, very steady growth over the last
year, starting at around 250,000 daily average addresses
peaking nearly ten times higher and eventually settling
at around 1.2 million daily.
Solana in purple is all over the place.
Seeing wild spikes and dips, Cardano is fairly flat
through 2021, which isn't a big surprise, as there
weren't many usable dApps until 2022, and we'll likely
see more growth here throughout the year of 2022.
Avalanche was a bit surprising.
I expected to see some more wild spikes around
November of 2021, but we can see that the
addresses were really minimal until the end of the
year, and nevertheless, this will also be an interesting
one to follow through 2022 as well, especially if
DAOs become more and more popular.
I think Avalanche will see another explosion.
Now, maybe you're not that interested in
actually using these blockchains, but you'd like
to hold them for the investment potential.
You see the potential here.
Let's check out the staking return on investment that
you can earn on each of these projects.
Something very important when it comes
to staking is network inflation.
This is because most blockchains have
what's called an emission schedule.
They release new tokens into the ecosystem,
which slowly dilutes current token value.
These emissions can dramatically reduce staking rewards, and because
of this, I tend to think that it makes
most sense to stake cryptos only when you plan
to hold them long term anyways.
So starting with Solana, staking Solana
on average earns you around 6%.
But factoring in inflation of nearly 5%, your net return
on investment is actually only about 1%, which is basically
nothing compared to the fact that the token is up
more than 700% in the last year.
Cardano and Avalanche are similar in their staking rewards
are in the mid 5% range, but after inflation,
your net rewards are just over 1%.
Again, this is why I think it makes
most sense to stake cryptos like this if
you plan to hold them long term anyways.
If you do, then it's a no brainer
because you're just guaranteed to make more money.
I actually have a Cardano stake pool,
which I'll have linked in the description.
If you are a long term holder
of ADA, you can check that out.
All the information will be down below.
Moving up on the list is Ethereum 2.0, with
much lower inflation than the last few, and current
rewards are about four and a half percent.
Finally, the last and best in this criteria is BNB.
BNB actually has no inflation because their
entire supply is already on the market.
This means the entire 8% staking
reward is yours to keep.
Of course, not without the dash of volatility
risk that comes withholding any crypto, but this
is the best by far in this list.
Now, in crypto, we know how
important community and popularity is.
It's actually arguable that popularity, at least in
the short run, is more important than technology.
In the long run, that's likely not going
to be the case, but until then, we'll
continue to see meme coins blow up.
The true winners, though, will be the projects
that are both popular and insanely functional.
One of my favorite ways to measure
popularity is by pulling data from Reddit.
There we can take a look at each project's
subreddit and not only see their subscriber growth over
time, but how engaged the community is.
If a community is constantly engaging and exploring a
blockchain, it's much more likely to succeed because at
the end of the day, you need people to
use these projects for them to matter.
Surprisingly, those with the lowest growth on Reddit in
the last twelve months are Avalanche and Solana.
Now, this could simply be the case
that their users tend to use other
means of engagement, like Twitter or Discord.
But it's harder to pull real engagement
data from those sites, and that's something
that I want to point out here.
This data isn't perfect,
real world data never is.
Unfortunately, real life isn't math class, where you just
have this perfect set to pull data from.
So we have to make do with the
best possible data that we can find.
On this chart, we can see the
daily engagement mapped over an entire year.
It's interesting to see that there are general trends
for everyone rising and falling with the market,
when the market does well, people are more engaged.
Solana in purple saw a huge spike in the
end of the summer of 2021 before totally dying
off by the end of the year.
Ethereum is more stable, swaying with the market.
Binance and Cardano saw the
biggest spikes in engagement.
Now, in order to keep users happy
and stay ahead of the competition, projects
need to be innovating and developing.
One way we can monitor development activity
is by looking at GitHub commits.
So this is basically a change to a file
or a bit of code on a software project.
Now again, this isn't perfect because a single commit
could be a small change or a large change,
and we wouldn't exactly know from the outside.
So this could be gamified a little bit.
But again, it's the best information that I can find.
Here we have the average weekly commits.
As you can see, Ethereum and Avalanche are similar,
followed by Solana and Cardano is at the top.
BNB commit data was a little bit muddled
because I couldn't distinguish commits on the coin or the
smart chain from commits on the Binance exchange.
And then we can see weekly commits over time.
What I found most surprising here is that
all of the projects, especially Avalanche, have lower
commits now than they did a year ago.
But really all of this developer activity is
to enhance the usefulness of blockchain projects.
So let's look at how they perform.
One of the biggest drawbacks of decentralized
systems is efficiency and network speed.
It takes much more work for
a decentralized system to be fast.
This is typically measured in transactions per second.
On this chart, I've outlined the current and
future transaction speeds for each blockchain, future being
what the systems are eventually capable of.
Starting with current speeds, Ethereum is the slowest
at 16 transactions per second, followed by Binance
at 160 and Cardano at 250.
Then we have a big jump up to 4500 transactions
per second for Avalanche and finally over 700,000 for Solana.
But hold on because we need to
put an asterisk on Solana's transactions because
this network is built a little bit
differently where they include blockchain confirmations as
transactions, making this number look much higher.
So based on my research, a more accurate number
for Solana is around 180 transactions per second.
So nevertheless, it's a very capable
system when there's no blackouts.
Now, with future upgrades like Ethereum 2.0,
this network could be capable of up
to 100,000 transactions per second.
And similarly, Cardano, after its Hydra
upgrade can theoretically reach speeds of
1 million transactions per second.
Of course, neither of those things have
happened yet, so let's not count our
crypto chickens before they hatch.
We then have transactions per day,
so similar to active addresses.
This helps us separate hype from actual use because
we can see what's happening on each network.
Again, Solana's numbers are inflated due to their
accounting model, so their's isn't as telling.
But what I found far more interesting is Binance's
on-chain transactions. Binance is regularly racking up more
than twice the network activity of Ethereum, despite having
a market cap more than four times smaller.
Similarly, Avalanche's numbers aren't far off from
Ethereum again despite being much smaller.
Cardano's low transactions aren't a big surprise
due to the fact that dApps are
now just beginning to come online.
So after all of this data collection
and research, where does this leave us?
How do I feel?
I think if Ethereum can fully switch over to
proof-of-stake within six months to a year, meaning far
lower network fees to use Ethereum, then it will be
extremely hard for anyone else to compete.
If that happens, then I see other blockchains working
to kind of find a niche that isn't Ethereum.
Kind of like how Terra seems to
be doing their niche within stablecoins.
If Ethereum can't transition within a reasonable
time, there's a strong case we made that
someone else will take the crown. I mean, $30 transaction
fees just aren't feasible for most investors.
Looking at the current data, I think the most
likely usurper would be BNB, the Binance smart chain.
The chain has low fees.
It's insanely usable.
The token has utility on the Binance exchange.
They have the best staking rates, the most
active addresses, and the most daily transactions.
I was honestly surprised at how much
they knocked this out of the park.
The only thing that they would need to be
extremely dominant would be higher transactions per second.
That being said, it appears that if we look
at use and functionality, all of these projects may
be undervalued when compared to Ethereum and with how
quickly things change it may be best to diversify
yourself among several large layer-1s.
Now from here I recommend checking out the link in
the description for iTrust, with iTrustCapital you
can actually place your crypto in a Roth retirement account.
What that means is you can buy, sell and trade to
your heart's content and pay no capital gains on your wins.
This is amazing for traders, with a Roth you
pay your tax upfront when putting money in the
account and then at retirement you pay no tax,
once you start pulling out at age 59
and a half, this is probably the most
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iTrust will be linked in the description and if
you use that link to open an account you'll
receive $100 in Bitcoin for free just for joining.
So that's going to do it for today.
I hope that this was helpful and I would
like to thank you so much for watching and
I hope that you have a profitable day!