In 2015, Ethereum became the world's first programmable blockchain, a decentralized platform on which developers can build self-executing computer programs (i.e., smart contracts). That marked a major milestone for the crypto industry, as smart contract technology forms the basis of decentralized applications (dApps) and decentralized finance (DeFi) services.
As a result, Ethereum's price has skyrocketed 569,000% since hitting a low in October 2015, and it currently commands a market value of about $292 billion. But as the platform has become more popular, its scalability problems have become more evident. Network congestion has translated into slower speeds and higher fees -- in fact, transaction fees have spike 280% in the last year alone.
For that reason, a growing list of blockchain projects are working to resolve those scalability issues. And if any successfully displace Ethereum over the next three or four years, the relevant cryptocurrencies could easily generate returns of 1,000% (or more). Here are two prospects worth considering.
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1. Avalanche
Computer scientist Emin Gun Sirer founded Ava Labs in 2019, and a year later the organization launched Avalanche (AVAX -10.15%), a smart contracts platform powered by the AVAX token. In terms of architecture, Avalanche comprises three distinct blockchains. The Exchange Chain (X-Chain) allows investors to trade crypto assets, including the AVAX token. The Platform Chain (P-Chain) coordinates validators and supports the creation of new blockchains. And the Contract Chain (C-Chain) is programmable, meaning developers can deploy smart contracts, dApps, and DeFi products.
Both the P-Chain and the C-Chain are secured by the Snowman protocol, a type of proof of stake (PoS) consensus mechanism in which validator nodes (computers) randomly sample a small subset of nodes to confirm transactions, rather than engaging in a time-consuming message exchange with every other node. That makes Avalanche fast.
In fact, Avalanche is the fastest blockchain-powered smart-contracts platform in terms of time to finalization, according to Ava Labs. The network has been clocked at 4,500 transactions per second (TPS), but it could eventually scale to 20,000 TPS. Moreover, those transactions are finalized in less than two seconds. By comparison, Ethereum handles just 14 TPS and requires an agonizing six minutes to finalize transactions.
In addition to scalability, Avalanche also possesses another important quality. The C-Chain is compatible with Solidity, the programming language used to create Ethereum smart contracts. That means developers can easily port dApps and DeFi products from Ethereum to Avalanche, and some have already done just that. For instance, DeFi lending protocol Aave went live on Avalanche in October 2021.
To summarize, Avalanche is highly scalable, compatible with Ethereum, and capable of supporting its own ecosystem of blockchains. That value proposition has generated strong interest among dApp developers and DeFi investors. In fact, Avalanche ranks as the fifth-most-popular DeFi ecosystem, with $8.4 billion invested on the platform. And more than 160 dApps have already been deployed on the network.
As products on the Avalanche blockchain become more popular, demand for the AVAX token -- which is used to pay transaction fees -- should continue to rise, driving its price higher. Currently, Avalanche has a market value of $15.4 billion, but that figure could certainly grow 1,000% to reach $170 billion over the next three or four years. After all, Ethereum achieved a peak market value of more than $450 billion (it has fallen with other cryptos since then) in less than six years.
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2. Fantom
The nonprofit Fantom Foundation launched Fantom (FTM -3.49%) in 2019, a smart contracts platform powered by the FTM token. Its core innovation is Lachesis, a unique PoS consensus protocol that allows validator nodes to reach consensus independently -- similar to Avalanche, that means fewer messages are exchanged between nodes, which accelerates the network's throughput.
Fantom also claims to be the fastest blockchain in the crypto industry, citing its ability to finalize transactions in about one second. Also noteworthy, Fantom's test network (i.e., a version of the blockchain that preceded the main network) was clocked at 25,000 TPS in 2018, and the developer team has indicated that the main network could eventually scale to 300,000 TPS, though that hasn't happened yet.
Additionally, Fantom is also compatible with the Solidity programming language, meaning it can run Ethereum-based dApps and DeFi services. As a result, this blockchain project has generated significant buzz in the crypto community. In fact, Fantom currently ranks as the third-largest DeFi ecosystem, with $12.7 billion invested on the platform. And more than 80 dApps have been deployed on the network.
In the coming years, assuming Fantom continues to gain traction, demand for products on the blockchain should rise, driving the price of the FTM token higher. On that note, with a current market value of just $5.7 billion, Fantom could certainly surge 1,000% (or more) to $63 billion in the next three or four years.
