Although stock market performance has long been the preferred measure of investor success, the cryptocurrency market has been running circles around Wall Street for quite some time. This year alone, the total value of all digital currencies has more than tripled to $2.39 trillion, as of December 23.
While there are a lot of factors influencing the cryptocurrency space, including the potential for real-world payment currency adoption, arguably the most exciting aspect is the possibility of creating decentralized applications (dApps) on the blockchain.
The ability to transparently and consistently record financial and non-financial transactions provides almost unlimited potential for developers. They can create financially focused applications for payments or lending, or perhaps build play-to-earn games on the blockchain that enhance 3D virtual environments (ie the metaverse). These applications can be applicable to both consumer and enterprise landscapes.
Crypto Investors Are Fascinated By Solana
It is the huge potential of contract-based smart application development that intrigues people Solana (CRYPTO: SOL)The fifth largest cryptocurrency by market capitalization ($58 billion). Smart contracts are the protocols that verify, facilitate, and enforce the negotiation of a contract between two parties.
Solana is famous for his unbridled speed. To put things in context, Bitcoin (CRYPTO: BTC) And Ethereum (CRYPTO: ETH), the two most popular blockchain-based networks, capable of processing 7 transactions per second (TPS) and 13 TPS. Meanwhile, Solana claims to be capable of handling (roll to) 50,000 TPS. This is more than twice the speed of kingpin thrust Visa, which processes at a rate of 24,000 tons per second. Speed and scalability are critical to the success of dApps in the future.
Another aspect of Solana that made it a very interesting network is the unique history proof protocol. Usually, auditors have to talk to each other to determine the amount of time that elapses between the event. With Solana, the Proof of Log protocol effectively makes this call, accelerating the completion of transactions on the network.
The investments of the development teams in Solana are paying off by leaps and bounds. Solana has generated nearly $3.2 million in dApp revenue over the past 30 days, and has generated more than $12.1 million in dApp revenue this year, according to data from TokenTerminal.com.
This encrypted trio revolves in circles around Solana
However, Token Terminal also shows that three very popular cryptocurrencies have left Solana in the dust, in terms of dApp revenue, over the next 30 days and the following year.
Perhaps the least surprising cryptocurrency of all the circles revolving around Solana in dApp revenue is Ethereum. Token Terminal lists Ethereum with revenue of just over $1 billion over the next 30 days and about $4.8 billion over the next year. For some context, the $1 billion amount recorded over the past 30 days is 10 times higher than the number 2 blockchain project.
The reason why investors and dApp developers love Ethereum so much is because it was the first project to offer smart contracts. It is these contracts that have allowed companies to consider moving beyond financially focused applications and looking at Ethereum for tasks such as supply chain management. There is a whole world of applications beyond just sending and receiving money on the blockchain, and Ethereum was the first to reveal this.
Another factor that works for Ethereum is the mountain of support it receives. The Enterprise Ethereum Alliance is a body of more than 100 companies, some of which are well known, whose purpose is to promote the use of the Ethereum blockchain. Although network congestion is not exactly a good thing, the sheer fact that Ethereum deals with congestion and higher transaction fees is indicative of its popularity.
Another cryptocurrency that easily outperformed Solana in the dApp revenue segment is a Blockchain-based game play to earn Axi Infinity (CRYPTO: AXS). Axie brought in $105 million over the past 30 days – it’s second only to Ethereum – and $1.26 billion over the following year.
The game, which is built on the Ethereum blockchain, is rather straightforward. Users collect, breed, breed and fight these monster-like creatures known as Axies. At least three axes are needed to go into battle, with the winner picking up experience points which are used to improve certain aspects of their axes.
What makes the blockchain project so interesting is that every Axie is a non-fungible token (NFT). In other words, users retain ownership of their virtual creations that can be used in the game or sold in the market. This is very different from old game development where companies retain ownership of all creations.
As stock and crypto investors are quite enamored with the prospects of the metaverse, Axie Infinity and its massive dApp returns over the past year are a testament to its potential.
3rd Cryptocurrency With Much More Protocol DApp Revenue Than Solana Avalanche (CRYPTO: AVAX). Over the past 30 days, the avalanche has generated approximately $14.7 million, with the project generating $37.7 million in dApp revenue over the following year.
The lure of Avalanche’s smart contract-based network is its incredible speed and the compatibility of its blockchain with other networks. Regarding the former, the project website states that it can be processed in over 4,500 TPS, with a block expiring in less than 2 seconds (i.e. transactions validation and settlement in less than 2 seconds). By comparison, both Bitcoin and Ethereum process transactions at an average of 60 minutes and six minutes.
As I mentioned earlier, what could really attract dApp developers to Avalanche in the coming months and years is its blockchain compatibility. With the Ethereum Virtual Machine – the software platform that allows developers to create dApps on the Ethereum blockchain – already running on the Avalanche network, it wouldn’t be surprising at all if developers switch their projects to Avalanche to take advantage of lower costs and faster execution.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of the Motley Fool Premium Consulting Service. We are diverse! Asking about an investment thesis — even if it’s our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.