Ethereum developers on why they don’t see Cardano & Binance Chain as rivals

Source: a video screenshot, Youtube / Max Holloway

It has been some interesting weeks for Ethereum (ETH). After hitting an all-time high of $ 2,043 on February 20, it was outperformed by some competing platforms and cryptoassets, Binance Smart Chain (and BNB) and Cardano (and ADA).

While neither BNB nor ADA currently have a market capitalization of more than 20% of ETH, both have increased proportionally more rapidly in the short term. At the time of writing, the BNB has increased its price by around 95% and the ADA by 39% over the past 30 days, while ETH has remained unchanged over the same period.

Both of the smaller altcoins have also outperformed ETH in the past 12 months, raising the question of a) why exactly they are hot on Ethereum’s heels and b) whether they pose a real threat to its dominance as the smart contract platform of Ethereum’s choice. Well, Ethereum developers speaking to gave two answers: a) high gas fees and b) no, even if all three chains are likely to co-exist.

Gas Fees and the Fiction of Ethereum Issues

High Ethereum transaction fees are the main reason Binance Smart Chain and Cardano have had good results lately. However, those fees were also used to create a representation that Ethereum has issues and cannot be scaled, according to Ethereum developer Ryan Berckmans.

“In my view, while BSC has probably been in the works for some time, Binance is trying to capitalize on the startup hype that the community and market seem to perceive as Ethereum’s weak point,” he told .

“At the moment gas prices for end users in Ethereum are high ([layer 2s] Fix that later this year), EIP-1559 has not yet started (probably in July), and the switch to PoS [proof-of-stake] coming next year (not this year), ”added Berckmans. (He spoke before developers tried to speed up that transition.)

If gas charges are too high, it becomes a network for the rich. (It was not designed / intended that way, but … th …

– CZ 🔶 Binance (@cz_binance)

According to Berckmans, the message from BSC is: “Ethereum is great, but not scaled. We can help.” As for Cardano, the reasons for its recent surge may be down to speculators and traders rather than its team, which marks it out as an affordable, scalable alternative to Ethereum.

“There’s no evidence that the recent Cardano pump in the markets is anything other than speculators trying to convince other speculators that (i) Ethereum isn’t scaling and (ii) Cardano might be the answer,” said Berckmans.

More generally, another factor in the recent spike in BNB and ADA prices may be the fact that the market is in an aggressive, speculative expansion.

“We are in a bull cycle, which means that many new investors still don’t have the time to understand why a censable chain is dangerous,” said Dawson Botsford, a co-developer of Ethereum.

“Various options”

The real question, however, is whether Binance Smart Chain and Cardano can continue their respective ascents and firmly establish themselves as real rivals to Ethereum. For their part, the developers of Ethereum are in no way convinced.

For Botsford, this is not a rivalry just because Binance’s control of the Binance Smart Chain makes BSC much more central than Ethereum.

“It’s like saying that Coinbase is going to kill Uniswap. They basically offer different options. “

However, Botsford said there is a place for Binance Smart Chain as well.

“I think BSC will live strong for a long time because for simple DeFi promotions and people who aren’t afraid of Chinese censorship, it’s a cheaper and faster way to do basic swaps and returns. But the size of the ETH community is too big to fail at the moment, ”he added.

Ryan Berckmans broadly agrees with this assessment and admits that BSC “has a viable strategy”.

“BSC is a fork of Ethereum, instantly compatible with any solidity app and backed by one of the richest and most technical crypto ecosystems (Binance), which means project funding and the expectation of co-marketing,” he said .

However, Berckmans doesn’t expect either chain to be a real rival when it comes to outperforming Ethereum on its own terms.

“I think Ethereum will become the ubiquitous settlement layer worldwide. And BSC thrives in a strange, centralized way because they end up finding or buying enough partners who aren’t interested in real decentralization, ”he said.

Berckmans and Botsford have even less positive things to say about Cardano, which is transitioning to the “Goguen Era” and allowing him to get smart contracts.

“Cardano has no features or partners on which to build a credible case to be an Ethereum killer or even a serious competitor. As far as I know, there is a well-intentioned and talented development team behind Cardano. However, Cardano moves too slowly and has no traction, ”said Berckmans.

Network effects and oligopolies

Of course, Cardano founder Charles Hoskinson (who also co-founded Ethereum) would certainly not agree with such views, having recently stated that the fabled network effect of Ethereum “doesn’t exist”.

For the Ethereum community, however, the threat from Cardano or Binance will only decrease in the long term.

“If Ethereum transactions cost as much as a BSC transaction, why would you prefer the centralized alternative with a smaller community? I haven’t seen any ETH DeFi projects that have switched to BSC, so I don’t see this as a threat, ”said Dawson Botsford about the possible launch of Ethereum 2.0.

Aside from these confident remarks, Ryan Berckmans suggested that “all three platforms will co-exist in the long run,” though he also envisions other Ethereum competitors (he declined to mention them) that also show up and possibly either Cardano or Binance Smart Chain will overtake.

He concluded by saying, “In time we will move closer to an oligopoly of chains, each of which has great traction.”

Binance and Cardano did not respond to our requests for comment.
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– The founders of Cardano and Binance aim for Ethereum as ADA & BNB rally
– Cardano meets Mary as ADA still ranks 3rd by market capitalization
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