- Alex Svanevik founded Nansen, a blockchain analytics platform that tracks over 100 million ethereum wallets.
- He told Insider high gas fees have caused “significant problems” for ethereum this year.
- We break down six ethereum-rivalling blockchains that could attract new users next year.
Ethereum has been one of the main crypto winners of 2021.
The second-largest cryptocurrency by market capitalization’s native token, ether, has surged in price by over 500%, from $730 to just under $4,600.
Blockchain data analyst Alex Svanevik pointed to the rise of NFTs as one reason for the ethereum rally. Ethereum was the first blockchain to host non-fungible tokens – essentially, digital collectors’ items – and ether is the most widely-used cryptocurrency for NFT transactions.
“NFTs have to be the biggest theme of 2021,” Nansen’s chief executive told Insider in a recent interview. “They’ve been a huge catalyst for bringing people into the crypto space, including those who’d never engaged with the ideologies of crypto and decentralization before.”
Nansen, which Svanevik co-founded in 2019, analyzes on-chain transactions from over 100 million ethereum wallets.
“We’re a blockchain analytics platform for crypto traders and investors,” Svanevik said. “We study pretty much any type of application or blockchain asset – that’s NFTs, DeFi protocols, stablecoins, even dog tokens.”
Nansen
But ethereum has had its problems this year as well. Users have criticized high transaction costs – also known as gas fees – and blockchains like solana and avalanche have emerged as credible rivals.
“One significant problem for ethereum this year has been high gas costs,” Svanevik said. “Naturally, there’s a spillover effect onto the other chains.”
“Alternative chains have gained a lot of traction, and some of them have millions of users at this point,” he added. “I think you’ll continue to see that world strengthen.”
‘Ethereum killers’
Svanevik identified six layer-one and layer-two blockchains that could rival ethereum in 2022. Some crypto analysts have used the term ‘ethereum killers‘ to describe these alternatives.
Avalanche is one layer-two blockchain to watch, according to Svanevik. Its native token, avax, has soared by over 50% since Ava Labs announced a partnership with Deloitte in mid-November.
“Ethereum are trying to be the world’s largest computer,” Ava Labs’s president, John Wu, told Insider in a recent interview. “They’ve had a head start, but their technology isn’t as good – if they don’t implement upgrades, they’ll end up being MySpace or Friendster, rather than Facebook.”
Svanevik pointed to Binance Smart Chain (BSC) as another threat to ethereum’s dominance. BSC is an alternative DeFi platform managed by the major crypto exchange Binance.
Fantom and polygon are two other potential layer-two ethereum killers, according to Svanevik. Their respective native tokens, FTM and MATIC, have each risen by over 12,000% this year, as altcoins ate into bitcoin and ethereum’s market share.
“The rise of the multi-chain universe could be a huge theme in 2022,” Svanevik told Insider. “The run-up in price for avalanche’s token has coincided with the rise of fantom and polygon, and you could argue there’s a correlation with BSC as well.”
Amongst layer-one blockchains, Svanevik pointed to solana and terra as ethereum’s main threats.
Solana has perhaps emerged as ethereum’s biggest rival this year, rising to become the fifth-largest cryptocurrency by market capitalization and offering an alternative blockchain for hosting NFTs. Its native token, sol, has soared over 15,000%, rising in price from $1.51 to $238. Terra’s luna token has risen by just over 10,000%.
“These blockchains have lower gas fees, higher throughput, and shorter block times,” Svanevik said. “They’re some of the main ones where we’ve seen activity growth.”
But Svanevik noted there’s not always an alignment between a token’s price and its blockchain’s use case, pointing to cardano’s ada token and XRP. He said those coins continue to enjoy popularity with retail investors despite their limited technical applications.
“You can see certain tokens running up in price without much activity,” he said. “Cardano’s the prime example – you can’t really do anything on cardano other than stake your tokens, but the price has exploded and it’s one of the highest
market cap
coins out there.”
“Token prices are much more uncorrelated than you’d think,” Svanevik added.