When you’re the king of a highly sought after domain, everyone wants to take your crown. It started with the countless forks of Bitcoin that claimed they could “improve” Bitcoin by adding some new tech or changing some parameters and then of course we’ve had the countless “Ethereum killers” come to market promising to fix all of Ethereum’s issues. Though, as Hasu notes below, it’s never been (primarily) about the tech.
Bitcoin and Ethereum are ranked number 1 and 2 by market cap and they are 2 of the most unscalable chains in crypto. Bitcoin averages around 5 transactions per second (TPS) whereas Ethereum clocks in at around 15 TPS. So obviously Bitcoin and Ethereum aren’t the top protocols because of their technology, rather, they are at the top due to a number of properties that all strengthen each-other.
If I were to rank these properties in order of importance I’d put community/developers (with a heavy emphasis on developers) firmly at the top as the Bitcoin and Ethereum communities are extremely strong. But not only are they strong, they are distributed, diverse, mostly driven by ideology and have been around much longer than other communities. This isn’t to say that other networks don’t have a community but commonly they’ll have one that is primarily focused on price rather than fundamentals which means it’s all short-term - lasting communities and cultures are built over years and usually during bear markets.
Second to community/developers would probably be liquidity. I’ve written about it before, but liquidity begets liquidity and Ethereum is winning the liquidity race and it’s not particularly close. Why does liquidity matter? Because blockchains are economic networks first - they derive their security, decentralization and censorship-resistance guarantees from a strong native asset value and provide extremely strong settlement assurances because of this. In addition to this, over 90% of the DeFi ecosystem exists on Ethereum, almost all actual NFT activity exists on Ethereum, ETH and many Ethereum-based assets are listed on major centralized exchanges & services (important because they’re the on-ramps for new people) and on top of all of this, there are millions of Ethereum wallets that interact with the network each week. All of this culminates into a liquidity network effect that grows like the Borg from Star Trek.
Now, while eth1 may not have the “best tech”, it’s not like it has stopped in place and innovation has ceased. Eth1 is still being worked on and upgraded, the application layer is innovating at a blistering pace, infrastructure such as layer 2 is hotter than it has ever been and of course we have the entire eth2 effort which is making major strides. So if we couple what already makes Ethereum special and dominant with all of the things that Ethereum has to look forward to, we get an extremely strong ecosystem that is very hard to catch up to - let alone overtake.
There are many other properties that strengthen a network including developer tooling, infrastructure support, the number of applications built on top, the general awareness of the network and more. All of this (and the above) culminates into what many in the space refer to as a “network effect” and is the core reason why Bitcoin and Ethereum are near-impossible to dethrone. Though this doesn’t stop many different networks from trying but as Omar Little once said - you come at the king, you best not miss.
Have a great day everyone,
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All information presented above is for educational purposes only and should not be taken as investment advice.