2021 emerges as the breakout for the overall crypto space. Along with cryptocurrencies, elements of the field like Web3.0 and the metaverse game, among others, are also seeing better understanding and adoption in many parts of the world. Moving into 2022, there are other crypto-related technologies that are set to explode. Blockchain is one of the remarkable technologies. Blockchain is the underlying technology that powers cryptocurrencies.
This five-part series will deepen your understanding of the expanding crypto space and its elements.
For 2022, I am optimistic about 5 crypto areas:
- Web Cryptocurrency 3.0
- Games & Cryptocurrency Metaverse
- Blockchains
- Decentralized Finance (DeFi)
- Medium of exchange
In previous versions, we mentioned Top Cryptos Web 3.0 and Top Games and Metaverse Cryptos.
Today, let’s talk about the top 5 Blockchains for 2022.
My top 5 blockchains list are:
- Ethereum
- Binance Smart Chain
- avalanche
- Polygon
- Algorand
Let’s start by comparing the fundamentals of these blockchains as of January 14, 2022:
| Name | Icon | Market capitalization (billion dollars) | TVL (billion dollars) | MCap / TVL |
|---|---|---|---|---|
| Ethereum | ETH | 384 | 147 | 2.6 |
| Binance Smart Chain | BNB | 79 | 15 | 5.4 |
| avalanche | AVAX | 22 | 11 | 1.9 |
| Polygon | MATIC | 16 | 5.4 | 2.8 |
| Algorand | ALGO | 8.7 | NA | NA |
Note:
- Market Cap = Current Price x Circulating Supply
- Total Value Locked (TVL) represents the sum of all assets deposited into the protocol to earn rewards, interest, new coins/tokens, fixed income, etc.
The source: CoinMarketCap, Future Wallet, DefiLlama (rounded)
1. Ethereum (ETH)
Ethereum is NOT a blockchain. It’s not a electronic money one in two! It is actually a protocol (a set of rules or procedures) like “HTTP” or “HTTPS”.
Many independent blockchains run on top of the Ethereum protocol. When most people talk about Ethereum, they are talking about the Mainnet – the main public Ethereum production blockchain. This is where the actual transactions of value happen on the blockchain. This Ethereum’s native cryptocurrency is Ether (ETH).
One of the greatest blockchain innovations is Ethereum Virtual Machine (EVM).
EVM is “the environment in which all ‘Ethereum’ accounts and smart contracts live”. Smart contracts are programs that run automatically when certain predefined conditions are met.
The sole purpose of the Ethereum protocol is to keep the “continuous, uninterrupted, and immutable operation” of the EVM. At any given block, Ethereum has only one “standard” or unique state. The EVM defines rules for calculating new valid states from block to block.
The EVM exists as a single entity maintained by a large number of connected computers (nodes) running an Ethereum client such as Geth or OpenEthereum. A client is a piece of software that allows nodes to read blocks on the blockchain and smart contracts.
The most popular Ethereum standards are ERC-20 (for fungible tokens like stablecoins) and ERC-721 (for non-fungible tokens). Then there are ERC-777 (improved ERC-20) and ERC-1155 (contains both replaceable and non-replaceable content).
Gas is a unit of measurement for the amount of computational effort required to perform specific operations on the Ethereum network.
Every Ethereum transaction requires a fee called “gas“because each transaction consumes computational resources. Gas fees are paid in ETH and denoted in gwei (0.00000001 ETH).
Block time is the time it takes to mine a new block (a series of transactions). The average Ethereum block time is 12 to 14 seconds.
Ethereum started the concept of Decentralized Finance (DeFi) and today an amazing multi-billion dollar ecosystem has grown around it:
- + $100 billion in fiat money and algorithmic stablecoins.
- Creative projects like Uniswap, Chain link, Aave, Unstoppable Domain, Basic Attention Token, Polygonand OpenSea.
- Cryptocurrencies are backed by assets like tokenized stocks.
Consensus Mechanism: Proof of work
2. Binance Smart Chain (BNB)
Binance Chain, Binance’s first blockchain, is optimized for fast decentralized trading but lacks smart contracts and powerful programmability.
That’s why Binance Smart Chain (BSC) was created. It runs parallel to the original Binance Chain, has smart contract functionality, and is compatible with the Ethereum Virtual Machine (EVM).
BSC is a standalone blockchain and not a layer two or off-chain scalability solution.
Binance Smart Chain has a block time of about 3 seconds. The native token of both blockchains is BNB.
Validators bet BNB and can receive transaction fees. Unlike Bitcoin, there is no block reward using newly minted BNB. This is because BNB is not inflationary. Instead, the supply of BNB gradually decreases over time, as the Binance team regularly “burns” coins.
Interestingly, BEP-2 and BEP-8 tokens from Binance Chain can be swapped for BEP-20 tokens on BSC. This can be easily done using the Binance Chain Wallet.
Consensus Mechanism: Proof of the Shares Authority
3. Avalanche (AVAX)
Avalanche is a popular Decentralized Finance (DeFi) blockchain.
The top DeFi protocols running on Avalanche are AAVE, Trader Joe, Wonderland, Benqi, and Curve.
What I like most about Avalanche is that it allows anyone to launch custom public and private blockchains.
Avalanche, with over 4,500 tps transaction throughput, is phenomenally faster than Bitcoin (7 tps), Ethereum (14 tps) and Polkadot (1,500 tps).
In terms of last transaction time, Avalanche (less than 2 seconds) is ahead of Bitcoin (60 minutes), Ethereum (6 minutes) and Polkadot (60 seconds).
AVAX is the native token of Avalanche and it can be used for staking, paying fees, and providing a unit of account between multiple subnets created on Avalanche.
Consensus Mechanism: Snow protocol family (leaderless Byzantine fault tolerance protocol)
4. Polygon (MATIC)
The Ethereum blockchain is slow and expensive. Polygon has a wide range of products and services to address this problem.
Polygon’s software development kit allows building Ethereum sidechains – blockchains linked to Ethereum via a two-way peg. These sidechains come in several varieties:
- Group transactions into blocks that are split into a single submission to the Ethereum blockchain (Plasma Chain)
- Allow multiple transfers to be merged into one transaction (zk-Rollups)
- Plasma Chains also scale Ethereum smart contracts (Optimistic Rollups)
MATIC is Polygon’s native token and has the following uses:
- payment of transaction fees in the network,
- become the payment and settlement unit in the Polygon ecosystem,
- powering the Polygon proof-of-stake sidechain.
Consensus Mechanism: Proof of stake
5. Algorand (ALGO)
Algorand is a new generation blockchain that is bridging the gap between the decentralized and centralized financial world. Its native cryptocurrency is ALGO.
Algorand’s standard assets run on the “Layer-1” of the blockchain and include fungible assets, can not be replaced, the fungible property is restricted and the non-fungible property is restricted.
This is my favorite thing about Standard property of Algorand:
- Role-based asset control is supported for business, compliance, and regulatory requirements.
- Asset accounts may be “quarantined” for investigation.
- “Forced” property transfers may be made to comply with the law.
- Permissions can be configured so that only “whitelisted” addresses can transact.
- Documentation of off-chain assets can be included in the on-chain asset definition.
- Users can “opt-in” to accept new content.
Another feature I like about Algorand is “Rekeying in Layer-1”, which allows users to change their private key without changing the public address.
Consensus Mechanism: Pure proof of stake.
Next version: Top DeFi Cryptocurrencies
Rohas Nagpal is the author of the Future Money Playbook and the Lead Blockchain Architect at the Wrapped Asset Project. He is also an amateur boxer and a retired hacker. You can follow him on LinkedIn.
Cryptocurrency is an unregulated digital currency that is not a legal tender and is subject to market risk. The information provided in the article is not intended and does not constitute financial advice, trading advice or any other advice or recommendation of any kind provided or endorsed by NDTV. NDTV will not be liable for any loss arising from any investment based on any perceived recommendations, forecasts or any other information contained in the article.
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