CRYPTO MOVERS AND PRICES
Results in the Top 10 were mixed this morning while Ethereum (ETH) has achieved a new record high of about USD 2,700. Dogecoin is outperforming among the Top 10 and is up 16%.
Crypto Story of the Day
The USDt balance on the Tron network (USD 25.9 billion) has surpassed Ethereum’s USDt balance (24.4 billion) for the first time. The change comes as USDt surpasses USD 50 billion in market cap and highlights the degree to which blockchain applications are agnostic to the network they’re deployed on.
USDt was launched in 2014 and originally deployed exclusively on the Bitcoin blockchain. In 2017, the stablecoin was deployed to Ethereum and has since been integrated on a number of other networks: EOS, BTC layer 2 Liquid, Algorand, Solana, Polkadot, and Tron, among others. In 2019 Tron became the third blockchain on which the stablecoin was deployed, after Ethereum and BTC.
Tron, a smart contract network launched in 2017 after an ICO which raised USD 70 million, has been accused of copying Ethereum code. For example, the Tron Virtual Machine, a system that allows applications on the network to interact with each other, is largely seen as a copy of the Ethereum Virtual Machine. The 2 networks’ token standards, TRC-20 and ERC-20, are compatible, meaning that Tron wallets can receive and send Ethereum-based tokens.
Similar to Tron, other smart contract networks have been designed with significant similarities and compatibility to Ethereum. For example, the Binance Smart Chain (BSC) is a fork of Ethereum. Major applications on BSC are direct copies of Ethereum-based ones, i.e. PancakeSwap is a fork of UniSwap. BSC’s design features were explicitly chosen in order to “...[make] it easy for developers to port their projects over from Ethereum.”
The Ethereum network, which has achieved the greatest adoption among smart contract platforms, has seen congestion that’s made basic transactions expensive to execute. During heightened use, the cost of a transaction on UniSwap can total about USD 30.
Ethereum’s congestion issues have benefited BSC in terms of market share gain. According to defistation.io, a site dedicated to tracking DeFi apps on BSC, the total value deposited on that network’s venues has reached USD 39 billion, compared to Ethereum DeFi’s USD 62 billion. Google search data shows that searches for “PancakeSwap” have surpassed those for “UniSwap.”
Ethereum proponents have highlighted developments such as the European Investment Bank’s plans to launch a “digital bond” sale on the network or ETH ETFs in Canada as examples of mainstreaming. While this may be true, blockchain-based applications, i.e. USDt and DeFi, have proven to be highly agnostic to particular networks. Applications and users have migrated to networks offering greater throughput for lower fees.
On top of this, the open-source nature of blockchains means new networks and applications will likely continue to build off of competitors’ innovation in order to lower fees or increase throughput. This propensity for blockchain applications to switch networks most significantly threatens Ethereum, a protocol that has reached over USD 300 billion on the back of the narrative that it’s the leading and differentiated smart contract platform.
While crypto investors have historically favored narrative over network statistics, one might expect this to change as mainstream investors learn more about such metrics.