Introduction

Ethereum is the most popular blockchain after Bitcoin, known for offering programmability through smart contracts and support for decentralized applications (dApps). While Bitcoin laid the foundation for blockchain technology, Ethereum expanded its utility, becoming the backbone of innovations like DeFi and NFTs.

Ethereum’s strongest value proposition has been its ability to evolve to meet the demands of developers and users. Ethereum’s flexible framework defined the standard for modern blockchains, making it the driving force behind the 2020–2021 DeFi boom, and cementing its status as a pioneer in the DeFi landscape.

However, Ethereum has faced persistent challenges, particularly with scalability. High gas fees and network congestion during peak periods have tested its usability. To address these limitations, Ethereum initiated different upgrades, including its transition to Proof of Stake (PoS) through “The Merge” and plans to introduce sharding for improved throughput. These shortcomings also created opportunities for a new wave of blockchains, often referred to as “Ethereum Killers”. Layer 1 blockchains like Solana, Sui, and Aptos aim to overcome Ethereum’s limitations by offering faster transaction speeds, lower fees, and greater scalability.

Ethereum’s Position in 2024

While the consensus seems to be that Ethereum has underperformed for the year so far, mainly due to investor attention shifting to Bitcoin’s store-of-value properties, fewer fees generated due to the Dencun Upgrade, and intense competition from blockchains like Solana, Ethereum still maintained its spot as the second-largest cryptocurrency by market capitalization.

The Dencun Upgrade

This major Ethereum upgrade introduced new Ethereum Improvement Proposals (EIPs), including Proto-Danksharding (EIP-4844). Proto-Danksharding enhances scalability by reducing data availability costs for Layer 2 solutions, resulting in lower transaction fees and faster processing. This would lead to the migration of transactions to layer-2 (L2) networks such as Base, Arbitrum (ARB), and Blast (BLAST) as L2 transactions are significantly cheaper.

Crypto Fees data shows Ethereum daily fees hovering between $1 million and $5 million — far less than the $30 million that was consistently reached throughout 2021 and 2022.

Source: Messari

Advancements in Layer 2 Ecosystems

Ethereum’s Layer 2 solutions saw significant adoption growth. Rollups like Arbitrum and Optimism continued to thrive, leveraging the mainnet’s security while improving efficiency and cost-effectiveness for decentralized applications (dApps).

Dominance in DeFi and dApps

Ethereum maintained a stronghold in decentralized applications, with the highest volume of active users and total value locked (TVL) compared to other blockchains. As of November 2024, Ethereum’s TVL exceeds $68 billion, surpassing competitors like Solana and Tron.

Ethereum Leads in Total Value Locked on-Chain.

Source: Artemis

Role of Ethereum ETFs

Ethereum Exchange-Traded Funds (ETFs), launched in July 2024, are steadily gaining traction in traditional financial markets. Although they have yet to achieve the same level of success as Bitcoin ETFs, these funds have elevated Ethereum’s profile among institutional investors, highlighting its value proposition beyond the crypto space.

Solana, Sui, Aptos: Potential Ethereum Killers

The term “Ethereum Killer” first emerged in the crypto space around 2016 – 2017, as alternative blockchains like Cardano began positioning themselves as competitors to Ethereum. The concept gained momentum in 2018 with the launch of EOS, which raised a record-breaking $4.1 billion during its initial coin offering (ICO), drawing significant attention as a potential successor to Ethereum. Since then, various other blockchains, including Solana, Aptos, Sui, BNB Smart Chain (BSC), Avalanche, and Fantom, have been identified as contenders for the title. Each of these networks has sought to address Ethereum’s challenges, such as scalability, transaction speed, and cost, through unique consensus mechanisms and architectural innovations.

Solana — The Biggest Threat so Far

Solana employs a hybrid consensus model that integrates Proof-of-History (PoH) and Proof-of-Stake (PoS), enabling exceptional throughput and low transaction fees. Under optimal conditions, Solana’s network can theoretically process over 200,000 transactions per second (TPS), with a projected capacity of 1 million TPS following the Firedancer upgrade anticipated in 2025.

Solana’s journey leading up to 2024 faced significant challenges. The blockchain experienced a decline in user interest and token value, primarily due to repeated network outages and the repercussions of the FTX collapse in 2022.

The Solana ecosystem started to recover by the fourth quarter of 2023, which continued into 2024. A critical driver of this resurgence was the memecoin frenzy, which found a natural home on the Solana chain. Platforms like Pump.fun capitalized on the network’s low fees and rapid transaction speeds, generating over $240 million in revenue within the year. This surge in memecoin activity not only revitalized interest in the SOL token but also contributed to a broader retail adoption of the platform.

Solana has seen over 200% increase within a year (Source: Coinmarketcap)

The increase in activity also contributed to Solana surpassing Ethereum in the number of daily active addresses. As of December 2024, Solana has over 6 million daily active addresses while Ethereum has over 390,000 daily active addresses. Daily active addresses is used to measure the level of activity in a blockchain.

Source: Artemis

Partnerships with institutional players and involvement in Decentralized Physical Infrastructure Networks (DePIN) also contributed to Solana’s strategic growth.

Collaborations with TradFi institutions like VISA to explore payment settlement in stablecoins, and partnering with Google Cloud, to build GameShift, a gaming development API that aims to bridge traditional Web2 experiences with Web3 services were also bullish indicators that supported its performance.

Solana also saw a wave of Ethereum developer migrations where high-profile projects such as Render, Arkham, and Time.fun originally built on Ethereum were either integrated with or transitioned to Solana.

Over the past year, Solana’s price has surged by approximately 330%, reaching around $224.46 as of December 2, 2024. In contrast, Ethereum’s price has increased by about 50% during the same period, standing at $3,595.65.

Despite these achievements, Solana still grapples with network congestion during periods of high activity leading to transaction delays, cancellations, and failures. It faced network congestion in April 2024, with transaction failures reaching 75% for a week. This congestion was attributed to high demand, meme coin trading activity, and delayed network patches. Discussions around the centralization of its validator network persist, with critics pointing to the reliance on a relatively small group of participants to process transactions.

Sui — Overthrowing Solana and Ethereum

Sui is a blockchain built on a Delegated Proof-of-Stake (DPoS) consensus mechanism and powered by the Move programming language. It is a high-performance and developer-friendly chain, processing up to 297,000 transactions per second (TPS).

Launched in 2023, Sui has made remarkable progress within a short period. By 2024, it secured the second position in total transaction volume, trailing only Solana’s 11 billion transactions while surpassing established competitors like NEAR and Tron.

Source: Torero_Romero on X

Its primary focus has been on powering Web3 applications, particularly gaming and social platforms. In partnership with Playtron, Sui launched the SuiPlay0x1, a handheld gaming console that supports a wide range of PC games that would integrate blockchain technology.

Source: Decrypt

In the DeFi sector, Sui also recorded the highest inflow of bridged funds from Ethereum in the past year.

SUI pulled over $2 billion in inflows from Ethereum in the last 365 days

Source: Wormhole

Sui stands at almost $2 billion in total value locked (TVL), with DeFi protocols, Suilend, and NAVI accounting for 50% of the TVL, implying that DeFi applications contribute significantly to the Sui chain, although the level of concentration suggests room for broader distribution.

Source: DefiLlama

Despite its rapid growth, Sui faces limitations with the Move programming language, which has remained largely untested, so its strengths and weaknesses have yet to be determined.

A network outage lasting two hours disrupted operations on November 21, 2024. The issue stemmed from a bug in the transaction scheduling logic, causing validators to crash. This event raised questions about Sui’s network reliability, especially as its user base and transaction volume grow.

Aptos — Next-Generation Blockchain for DeFi

Aptos, a non-EVM Layer 1 blockchain, is a network designed for high scalability and security. Its foundation is the AptosBFT, a Byzantine Fault Tolerant Proof-of-Stake consensus engine, and it leverages the Move programming language, originally created for Meta’s Diem project. This consensus mechanism prioritizes security such that the network functions properly even if less than one-third of the validators act dishonestly. Its high scalability enables Aptos to achieve remarkable throughput, with a capacity exceeding 160,000 transactions per second (TPS).

2024 saw Aptos set a new record for daily transactions, reaching 326 million in a single day, primarily driven by user engagement with the blockchain-based game Tapos, surpassing Ethereum in daily transactions.

Aptos Surpasses Ethereum in Daily Transactions (Source: Artemis)

Aptos has also made significant strides in the DeFi sector, surpassing $1 billion in total value locked (TVL) across 48 protocols. However, it’s worth noting that over 75% of this TVL is concentrated in its top five protocols, largely liquid staking platforms. This concentration indicates both a reliance on a narrow segment of the ecosystem and the untapped potential for broader DeFi growth.

On the product front, it launched the Aptos Card, an electronic card that can be used to make payments directly from a cold wallet. It also partnered with reputable asset management firm BlackRock, to integrate BUIDL, a tokenized money-market fund designed to offer a stable value of $1 per token while providing yield on US Treasuries.

Despite its achievements, Aptos’s concentrated TVL within a handful of protocols suggests room for diversification.

TVL is concentrated on Lending and Staking Protocols on Aptos (Source: Defillama)

The platform’s success in gaming and user engagement led to increased transaction volumes, but maintaining this momentum may require expanding its ecosystem to accommodate a broader range of use cases. Also, the use of the Move programming language indicates the need for thorough stress testing to identify its strengths and weaknesses.

Nakamoto Co-Efficient

The Nakamoto Coefficient is a metric used to quantify the decentralization of a blockchain. It represents the smallest number of validators, mining pools, or other stakeholders required to compromise or control the network by collusion. Blockchains with a high Nakamoto Coefficient are regarded as very decentralized blockchains, as they reflect a broader distribution of power across the network.

For the blockchains under review, their current Nakamoto Coefficients are as follows:

• Aptos: 20
• Solana: 19
• Sui: 17
• Ethereum: 2

Can Ethereum Be Killed?

As the pioneer of smart contracts and decentralized applications (dApps), Ethereum enjoys a significant first-mover advantage. With over 4,000 active developers, Ethereum has the largest developer community in the blockchain ecosystem.

This community creates a positive cycle:

• More developers build applications
• More users are attracted to the ecosystem
• More capital flows into Ethereum-based projects

The end of Ethereum is nowhere near as it commands an overwhelming share of blockchain activity; over 60% of total value locked (TVL) remains on Ethereum, despite increasing competition.

Source: TheBlock

The rise of layer 2 solutions means Ethereum can address scalability challenges without trading off decentralization and security, although this might reduce revenue for Ethereum, it would be a worthy trade-off.

Also, upcoming upgrades like the Pectra Upgrade expected in 2025 will integrate features like Account Abstraction and Smart Contract Efficiency that will optimize the user experience on the blockchain.

Conclusion

Challenging Ethereum’s dominance is no small feat. Blockchains like Solana, Sui, and Aptos innovatively tackle Ethereum’s scalability issues, often with architectural trade-offs like centralization and network outages. While they may excel in niches like gaming and payment processing, none offer the comprehensive ecosystem, reliable security, and developer activity that Ethereum provides. Rather than “killing” Ethereum, these blockchains are more likely to complement or co-exist with it, addressing specific use cases that Ethereum may not prioritize.

Ethereum will maintain a flexible system that meets user and developers’ demands through regular upgrades.