While the “old season” is in full swing, the CEO of Ether Capital announced what the future could hold for 4 of the top altcoins – including so-called “Ethereum killers” like Polkadot and Solana
The success of Ethereum has sparked fierce competition among the so-called “Ethereum killers”.
- Ethereum is attractive because it can now generate a return, said Brian Mosoff, CEO of Ether Capital.
- Its success has led to fierce competition as critics knock the network’s high fees.
- Mosoff named four altcoins that should be viewed in the current “Alt-Season”.
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A historic run for cryptocurrencies that recently stalled is making some investors nervous that history will repeat itself and digital assets will crash like they did after the blow-off top in late 2017.
But those concerns are exaggerated, says Brian Mosoff, CEO of Ether Capital, even though Bitcoin (BTC), the leading cryptocurrency and a barometer for smaller coins, slipped significantly from its all-time highs when China repeated a crackdown call on digital on Friday Reduce assets.
Mosoff, a self-described “crypto-degenerate”, has been in the room since 2013, making him a veteran in the emerging world of cryptocurrencies. Having seen multiple crypto market cycles, he notes that this crypto bull rally was fueled by a surge of support from non-tech savvy individuals, corporations, and governments that is unlikely to reverse anytime soon.
Bitcoin bulls owe the longstanding crypto skeptic Jerome Powell, chairman of the Federal Reserve, the gigantic value of 46% in the current year. Critics say Powell’s Fed has crippled the value of the dollar by continuously expanding the money supply, while also making rampant inflation a threat. Bitcoin, which has limited supply, is seen as the solution to simple Fed policy.
Bitcoin inevitably inspired legions of hopeful competitors eager to become the next hot coin after drawing mainstream attention in late 2020 as a store of value similar to “digital gold”.
“Bitcoin is the gateway for everyone to get into space,” Mosoff told Insider in an interview. “… You have the Bitcoin season and then the ‘Alt-Season’. And then there is some kind of rotation of capital that goes into Bitcoin first – that drives those rampups – and then it hits those plateaus, and then that capital looks for other ways to find more leverage for the sector. “
Ether’s “hard-to-ignore” success inspires copycats
Those looking for crypto exposure beyond Bitcoin will usually find Ether, the native token of the Ethereum blockchain and the second largest crypto by market cap. Count Mosoff’s Toronto-based company, which prioritizes Ether among the digital assets it stores in this group.
Ethereum is attractive for a number of reasons, Mosoff said: It’s well-established, has widespread developer support, is currently the backbone of the decentralized finance movement (DeFi) that promises to fund the bank without a bank account, and now enables Ethereum holders to do so also to generate passive income with returns of around 6%, which dwarfs the interest payments of the banks.
These steady, low-risk returns can be achieved through staking, a process in which Ether holders are rewarded for locking tokens for a period of time in order to secure the network. Ethereum’s staking previously turned “unproductive commodities” into return-generating assets, Mosoff said.
“Against the backdrop of [interest] with zero interest rates, if you’re looking to bet on crypto for the next five or 10 years, ether is a really compelling investment, ”said Mosoff. “You get that protection, that store of value, that non-political asset, while you get some kind of return by staking it out.”
The growing success of Ethereum is “hard to ignore,” said Mosoff. Of course, competitors have also taken note of this. A new wave of “Ethereum killers” has emerged in the hopes of stealing market share and capitalizing on the network’s most criticized weakness: transaction fees, dubbed “gas fees” and criticized as inappropriately high.
A pair of crypto networks – Polkadot and Solana – have emerged as frontrunners in the race for the leading alternative to Ethereum, Mosoff said. But he said that they are really competing with Ethereum Layer 2, a network that runs on the Ethereum mainnet.
Basically, Ethereum has a first mover advantage that smaller networks are hard to catch up with, even if they offer lower fees or more advanced networks. Transaction fees are far from the only relevant factor that DeFi developers need to consider. Security and stability, two hallmarks of the Ethereum network, are difficult to achieve for competitors like solana – as evidenced by an unexpected 17-hour shutdown of the network in mid-September.
“Many new entrants are very focused on the transaction fee narrative rather than the big picture,” said Mosoff. “… If you can stay in this Ethereum ecosystem and remove all the friction of jumping between different platforms, keep that capital formation in the same ecosystem and have all of the infrastructure, there is no need for the capital to go anywhere else.”
Other than that, Mosoff is not an Ethereum maximalist. He shared four altcoins with insiders, each with a promise and comment on each name. Mosoff said the only one of these altcoins he owns is polkadot.
Use case: A multi-chain protocol designed to connect blockchains with different technical attributes and properties that could enable the cross-transfer of messages and assets
comment: “Ethereum, which is super, super safe, it looks like it will replace what Polkadot should be. That’s not to say that Polkadot can’t be successful here. It’s a top-class project, it has a unique community. … Polkadot is just beginning. The network is not fully operational. You haven’t fully started the network with smart contract support and parachains yet. You get there, but it’s not in his full blown vision. It’s something to watch because it’s a pseudo competitor to Ethereum. “
Use case: An open source project to improve scalability with proof-of-history and proof-of-stake consensus mechanisms
comment: “What solana did is that they looked at this narrative that you either centralized or decentralized [blockchains] and said, ‘Well, maybe it’s not that binary. Perhaps there are gradations in between, and these communities were wrong if they just said, “They are either a centralized chain or a decentralized chain.” And Solana said, “Well, maybe we can put the dial somewhere in the middle. ‘Because the more you try to get decentralized, the harder it becomes to scale. “
Use case: A fast, affordable smart contract platform that offers scalability
comment: “It’s a top-class team. Recently there has been a price spike. There is activity in their world of decentralized finance. It has more scalability than Ethereum, so it’s still in that bucket with the question, ‘Will it stay and be successful or not?’ “
4. NEAR protocol
Use case: A decentralized application platform that promises scalability and constant fees
comment: “NEAR Protocol is closer to Ethereum in design than most of these other projects. In terms of architecture, it actually looks very similar to what the full-blown vision of ETH 2 would like to be. They have what is called a rainbow bridge that allows you to move your assets between Ethereum and NEAR or NEAR back to Ethereum. … Can you provide an environment where only cheaper activities can take place? … Today all these chains are trying to do it and they say: “ETH is moving very slowly, so there is an opportunity here to get in, to build a community, [and] achieve a network effect. [And] Hopefully this activity won’t leave us when Ethereum scales. ‘”